VARIABLE INSURANCE PRODUCTS FUND II, 497, 1999-05-03

VARIABLE INSURANCE PRODUCTS FUND II
497, 1999-05-03

Previous: GROUP V CORP, 10QSB, 1999-05-03

Next: VARIABLE INSURANCE PRODUCTS FUND II, 497J, 1999-05-03

SHARES OF THE FUND ARE OFFERED ONLY TO THE SEPARATE ACCOUNTS OF
INSURANCE COMPANIES, FOR THE PURPOSE OF FUNDING VARIABLE ANNUITY AND
VARIABLE LIFE INSURANCE CONTRACTS. THE FUND MAY NOT BE AVAILABLE IN
YOUR STATE DUE TO VARIOUS INSURANCE REGULATIONS. PLEASE CHECK WITH
YOUR INSURANCE COMPANY FOR AVAILABILITY. IF THE FUND IN THIS
PROSPECTUS IS NOT AVAILABLE IN YOUR STATE, THIS PROSPECTUS IS NOT TO
BE CONSIDERED A SOLICITATION. PLEASE READ THIS PROSPECTUS TOGETHER
WITH THE VARIABLE ANNUITY OR VARIABLE LIFE INSURANCE CONTRACT
PROSPECTUS THAT ACCOMPANIES IT.

Like securities of all mutual funds, these securities have
not been approved or disapproved by the Securities
and Exchange Commission, and the Securities and
Exchange Commission has not determined if this
prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.

VARIABLE
INSURANCE PRODUCTS
FUND II
INITIAL CLASS

ASSET MANAGER PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 3 INVESTMENT DETAILS

4 VALUING SHARES

SHAREHOLDER INFORMATION 5 BUYING AND SELLING SHARES

5 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

5 TAX CONSEQUENCES

FUND SERVICES 5 FUND MANAGEMENT

6 FUND DISTRIBUTION

APPENDIX 6 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return and/or yield may be quoted in advertising in
accordance with current law and interpretations thereof.

Total returns and yields quoted for a class include the class's
expenses, but may not include charges and expenses attributable to any
particular insurance product. Because shares of the fund may be
purchased only through variable annuity and variable life insurance
contracts, you should carefully review the prospectus of the insurance
product you have chosen for information on relevant charges and
expenses. Excluding these charges from quotations of a class's
performance has the effect of increasing the performance quoted. You
should bear in mind the effect of these charges when comparing the
fund's performance to that of other mutual funds.

The following information illustrates the changes in the fund's
performance from year to year and compares the fund's performance to
the performance of a market index and a combination of market indexes
over various periods of time. Returns are based on past results and
are not an indication of future performance.

YEAR-BY-YEAR RETURNS

The returns in the chart do not include the effect of charges and
expenses attributable to any particular insurance product. If the
effect of the charges and expenses was reflected, returns would be
lower than those shown.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET MANAGER PORTFOLIO -
INITIAL CLASS

Calendar Year 1990 1991 1992 1993 1994 1995 1996 1997 1998

6.72% 22.56% 11.71% 21.23% -6.09% 16.96% 14.60% 20.65% 15.05%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 6.72
Row: 3, Col: 1, Value: 22.56
Row: 4, Col: 1, Value: 11.71
Row: 5, Col: 1, Value: 21.23
Row: 6, Col: 1, Value: -6.09
Row: 7, Col: 1, Value: 16.96
Row: 8, Col: 1, Value: 14.6
Row: 9, Col: 1, Value: 20.65
Row: 10, Col: 1, Value: 15.05

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF ASSET
MANAGER PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 12.80%
(QUARTER ENDING DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER
WAS -6.67% (QUARTER ENDING SEPTEMBER 30, 1998).

AVERAGE ANNUAL RETURNS

The returns in the following table do not include the effect of
charges and expenses attributable to any particular insurance product.
If the effect of the charges and expenses was reflected, returns would
be lower than those shown.

For the periods ended Past 1 year Past 5 years Life of class*
December 31, 1998

ASSET MANAGER PORTFOLIO - 15.05% 11.81% 13.38%A
INITIAL CLASS

S&P 500 28.58% 24.06% 17.90%A

Fidelity Asset Allocation 18.61% 14.42% 12.14%A
Composite Index

* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE CLASS'S
COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1990.

If FMR had not reimbursed certain class expenses during these periods,
the fund's returns would have been lower.

Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.

Fidelity Asset Allocation Composite Index is a hypothetical
representation of the performance of the fund's three asset classes
according to their respective weightings in the fund's neutral mix
(50% stocks, 40% bonds and 10% short term/money market). The following
indexes are used to calculate the Composite Index: stocks - the S&P
500, bonds - the Lehman Brothers Aggregate Bond Index, and short
term/money market - the Lehman Brothers 3-Month Treasury Bill Index.
Prior to January 1, 1997, the Lehman Brothers U.S. Treasury Index was
used for the bond class. The index weightings of the Composite Index
are rebalanced monthly.

The Lehman Brothers Aggregate Bond Index is a market value-weighted
index of investment-grade fixed-rate debt issues, including
government, corporate, asset-backed, and mortgage-backed securities,
with maturities of one year or more.

The Lehman Brothers 3-Month Treasury Bill Index represents the average
of Treasury Bill rates for each of the prior three months, adjusted to
a bond equivalent yield basis (short-term and money market
instruments).

The Lehman Brothers U.S. Treasury Index is a market value-weighted
index of public obligations of the U.S. Treasury with maturities of
one year or more.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

FMR allocates the fund's assets among the following classes, or types,
of investments. The STOCK CLASS includes equity securities of all
types. The BOND CLASS includes all varieties of fixed-income
securities, including lower-quality debt securities, maturing in more
than one year. The SHORT-TERM/MONEY MARKET CLASS includes all types of
short-term and money market instruments.

FMR may use its judgement to place a security in the most appropriate
class based on its investment characteristics. Fixed-income securities
may be classified in the bond or short-term/money market class
according to interest rate sensitivity as well as maturity. FMR may
also invest the fund's assets in other instruments that do not fall
within these classes.

FMR has the ability to allocate the fund's assets within specified
ranges. The fund's neutral mix represents the benchmark for its
combination of investments in each asset class over time. FMR may
change the neutral mix from time to time. The approximate neutral mix
and range for each asset class are shown below:

Neutral Mix

STOCKS 50%
(can range from 30-70%)

BONDS 40%
(can range from 20-60%)

SHORT-TERM/MONEY
MARKET 10% (can range
from 0-50%)

Row: 1, Col: 1, Value: 10.0
Row: 1, Col: 2, Value: 50.0
Row: 1, Col: 3, Value: 40.0

FMR will not try to pinpoint the precise moment when a major
reallocation should be made. Instead, FMR regularly reviews the fund's
allocation and makes changes gradually to favor investments that it
believes will provide the most favorable outlook for achieving the
fund's objective. Normally, a single reallocation will not involve
more than 10% of the fund's total assets.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

In buying and selling securities for the fund, FMR generally analyzes
the issuer of a security using fundamental factors (e.g., growth
potential, earnings estimates and management) and/or quantitative
factors (e.g., historical earnings, dividend yield and earnings per
share) and evaluates each security's current price relative to its
estimated long-term value.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible securities and
warrants.

DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest,
but are sold at a discount from their face values. Debt securities
include corporate bonds, government securities, and mortgage and other
asset-backed securities.

MONEY MARKET SECURITIES are high-quality, short-term securities that
pay a fixed, variable or floating interest rate. Securities are often
specifically structured so that they are eligible investments for a
money market fund. For example, in order to satisfy the maturity
restrictions for a money market fund, some money market securities
have demand or put features which have the effect of shortening the
security's maturity. Taxable money market securities include bank
certificates of deposit, bank acceptances, bank time deposits, notes,
commercial paper and U.S. Government securities.

PRINCIPAL INVESTMENT RISKS

Many factors affect the fund's performance. The fund's share price and
yield change daily based on changes in market conditions and interest
rates and in response to other economic, political or financial
developments. The fund's reaction to these developments will be
affected by the types and maturities of the securities in which the
fund invests, the financial condition, industry and economic sector,
and geographic location of an issuer, and the fund's level of
investment in the securities of that issuer. When you sell your shares
of the fund, they could be worth more or less than what you paid for
them.

The following factors may significantly affect the fund's performance:

STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market and economic developments. In
the short term, equity prices can fluctuate dramatically in response
to these developments. Different parts of the market and different
types of equity securities can react differently to these
developments. For example, large cap stocks can react differently than
small cap stocks, and "growth" stocks can react differently than
"value" stocks. Issuer, political or economic developments can affect
a single issuer, issuers within an industry or economic sector or
geographic region, or the market as a whole.

INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities and mortgage
securities can be more sensitive to interest rate changes. In other
words, the longer the maturity of a security, the greater the impact a
change in interest rates could have on the security's price. In
addition, short-term and long-term interest rates do not necessarily
move in the same amount or the same direction. Short-term securities
tend to react to changes in short-term interest rates, and long-term
securities tend to react to changes in long-term interest rates.

PREPAYMENT. Many types of debt securities, including mortgage
securities, are subject to prepayment risk. Prepayment occurs when the
issuer of a security can repay principal prior to the security's
maturity. Securities subject to prepayment generally offer less
potential for gains during a declining interest rate environment and
similar or greater potential for loss in a rising interest rate
environment. In addition, the potential impact of prepayment features
on the price of a debt security can be difficult to predict and result
in greater volatility.

ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. The value of securities of smaller,
less well-known issuers can be more volatile than that of larger
issuers. Lower-quality debt securities (those of less than
investment-grade quality) tend to be more sensitive to these changes
than higher-quality debt securities.

In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect the fund's
performance and the fund may not achieve its investment objective.

FUNDAMENTAL INVESTMENT POLICIES

The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

A class's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates Initial
Class's NAV as of the close of business of the NYSE, normally 4:00
p.m. Eastern time. However, NAV may be calculated earlier if trading
on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). The fund's assets are valued as of this
time for the purpose of computing Initial Class's NAV.

To the extent that the fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of the fund's assets may not occur on days when the
fund is open for business.

The fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Certain short-term securities are valued on the basis of
amortized cost. If market quotations or information furnished by a
pricing service is not readily available for a security or if a
security's value has been materially affected by events occurring
after the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market), that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. A security's valuation may
differ depending on the method used for determining value.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Only "separate accounts" of insurance companies that have executed
certain agreements with the fund can buy or sell shares of the fund. A
separate account is a segregated asset account. Separate accounts fund
variable annuity contracts and variable life insurance policies.
Please refer to your insurance company's separate account prospectus
for investing information.

Each insurance company separate account places a single order to buy
or sell shares of the fund each business day. The insurance company
calculates the amount of the order based on the aggregate instructions
to the insurer from owners of the insurer's variable annuity contracts
and variable life insurance policies. Instructions received from
owners before the close of the NYSE on a given day usually result in
fund share purchases and redemptions at the NAV calculated as of the
close of the NYSE that day. In some cases, the applicable NAV is the
next NAV calculated after the order is received by the fund.

The fund will normally send the proceeds from redemption orders to the
insurance company one business day after the fund receives the
redemption order. The fund must send the proceeds within 7 days after
the fund receives the redemption order.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

Agreements executed with insurance companies obligate the fund to sell
and redeem fund shares each day that the NYSE is open for business.
Notwithstanding anything else in the agreements, the Board may refuse
to sell shares of the fund to any separate account, or suspend or
terminate the offering of shares of the fund if such action is
required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in
light of its fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of the fund.

The fund sells its shares to separate accounts of insurance companies
that are affiliated with FMR and to separate accounts of insurance
companies that are unaffiliated with FMR. The fund currently does not
foresee any disadvantages to policyowners arising out of the fact that
the fund offers its shares to separate accounts of various insurance
companies to serve as the investment medium for their variable
products. Nevertheless, the Board of Trustees intends to monitor
events in order to identify any material irreconcilable conflicts
which may possibly arise, and to determine what action, if any, should
be taken in response to such conflicts. If such a conflict were to
arise, one or more insurance companies' separate accounts might be
required to withdraw its investments in the fund and shares of another
fund may be substituted. This might force the fund to sell securities
at disadvantageous prices.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund earns dividends, interest and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gains distributions.

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

Please refer to your insurance company's separate account prospectus
for a discussion of the tax status of your variable annuity or
variable life insurance contract. It is suggested you keep all
statements you receive to assist in your personal recordkeeping.

It is expected that shares of the fund will be held by insurance
company separate accounts under the terms of variable annuity and
variable life insurance contracts. Under current tax law, dividends or
capital gains distributions from the fund are not currently taxable to
holders of variable annuity and variable life insurance contracts when
left to accumulate within a variable contract. Depending on the
variable contract, withdrawals from the contract may be subject to
ordinary income tax and, in addition, to a 10% penalty tax on
withdrawals before age 59.

FUND SERVICES

FUND MANAGEMENT

Asset Manager Portfolio is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.

Affiliates assist FMR with foreign investments:

(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for the fund. FMR
U.K. was organized in 1986 to provide investment research and advice
to FMR. Currently, FMR U.K. provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services for the fund.

(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for the fund. FMR
Far East was organized in 1986 to provide investment research and
advice to FMR. Currently, FMR Far East provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for the fund.

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is responsible for
choosing certain types of investments for the fund.

FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.

The fund could be adversely affected if the computer systems used by
FMR and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised the fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on the fund.

Dick Habermann is Vice President and lead manager of Asset Manager
Portfolio, which he has managed since March 1996. Other Fidelity
investment professionals assist Mr. Habermann in selecting investments
within each asset class for the fund. He also manages several other
Fidelity funds. Mr. Habermann is a Senior Vice President of FMR Co. He
joined Fidelity in 1968.

The fund has an investment objective similar to that of an existing
Fidelity fund. Asset Manager Portfolio is most similar to Fidelity
Asset Manager.

The performance of the fund is not expected to be the same as the
performance of the existing Fidelity fund to which it is most similar
due to differences in investments, economies of scale, and other
factors. Various insurance-related costs at the insurance company's
separate account level will also affect performance.

Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.

The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is calculated by
adding a group fee rate to an individual fund fee rate, dividing by
twelve, and multiplying the result by the fund's average net assets
throughout the month.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.

For December 1998, the group fee rate was 0.29%. The individual fund
fee rate is 0.25%.

The total management fee for the fiscal year ended December 31, 1998,
was 0.54% of the fund's average net assets.

The total annual Initial Class operating expenses for the fiscal year
ended December 31, 1998, were 0.64% of the class's average net assets.
The total annual class operating expenses do not reflect the effect of
any reduction of certain expenses during the period.

A portion of the brokerage commissions that the fund paid was used to
reduce the fund's expenses. In addition, the fund entered into an
arrangement with its custodian whereby credits realized as a result of
uninvested cash balances were used to reduce custodian expenses.
Including these reductions, the total annual Initial Class operating
expenses would have been 0.63% for the fiscal year ended December 31,
1998.

FMR pays FIMM, FMR U.K., and FMR Far East for providing assistance
with investment advisory services.

FMR may, from time to time, agree to reimburse each class for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a class if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated by FMR at any time, can decrease
a class's expenses and boost its performance.

Effective January 1, 1990, FMR has voluntarily agreed to reimburse
Initial Class of the fund to the extent that total operating expenses
(excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses), as a percentage of its
average net assets, exceed 1.25%. This arrangement can be terminated
by FMR at any time.

FUND DISTRIBUTION

The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

Initial Class of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 that
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with providing services intended
to result in the sale of Initial Class shares and/or shareholder
support services. FMR, directly or through FDC, may pay
intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees of the fund has authorized such payments for Initial
Class.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Variable Insurance Product funds,
provided that the fund receives brokerage services and commission
rates comparable to those of other broker-dealers.

No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC. This Prospectus and the related SAI do
not constitute an offer by the fund or by FDC to sell shares of the
fund to or to buy shares of the fund from any person to whom it is
unlawful to make such offer.

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand
Initial Class's financial history for the past 5 years. Certain
information reflects financial results for a single class share. Total
returns for each period include the reinvestment of all dividends and
distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the fund's financial highlights and financial statements,
are included in the fund's Annual Report. A free copy of the Annual
Report is available upon request.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning $ 18.01 $ 16.93 $ 15.79 $ 13.79 $ 15.42
of period

Income from Investment
Operations

Net investment income .59C .57C .63 .30 .45

Net realized and 1.84 2.58 1.55 1.99 (1.33)
unrealized gain (loss)

Total from investment 2.43 3.15 2.18 2.29 (.88)
operations

Less Distributions

From net investment income (.57) (.59) (.57) (.29) (.29)

From net realized gain (1.71) (1.48) (.47) -- (.46)

Total distributions (2.28) (2.07) (1.04) (.29) (.75)

Net asset value, end of $ 18.16 $ 18.01 $ 16.93 $ 15.79 $ 13.79
period

Total returnA,B 15.05% 20.65% 14.60% 16.96% (6.09)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 4,905,468 $ 4,399,937 $ 3,641,194 $ 3,332,844 $ 3,290,527
(000 omitted)

Ratio of expenses to .64% .65% .74% .81% .81%
average net assets

Ratio of expenses to .63%D .64%D .73%D .79%D .80%D
average net assets after
expense reductions

Ratio of net investment 3.46% 3.43% 3.60% 3.54% 4.07%
income to average net assets

Portfolio turnover 113% 101% 168% 256% 85%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.

You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

The SAI, the fund's annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the fund, including the fund's SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.700586.101 VIPII-AM-pro-0499

VARIABLE
INSURANCE PRODUCTS
FUND II
INITIAL CLASS

ASSET MANAGER: GROWTH PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 3 INVESTMENT DETAILS

4 VALUING SHARES

SHAREHOLDER INFORMATION 4 BUYING AND SELLING SHARES

5 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

5 TAX CONSEQUENCES

FUND SERVICES 5 FUND MANAGEMENT

6 FUND DISTRIBUTION

APPENDIX 6 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return and/or yield may be quoted in advertising in
accordance with current law and interpretations thereof.

YEAR-BY-YEAR RETURNS

ASSET MANAGER: GROWTH
PORTFOLIO - INITIAL CLASS

Calendar Year 1995 1996 1997 1998

23.02% 20.04% 25.07% 17.57%

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF ASSET
MANAGER: GROWTH PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 17.69%
(QUARTER ENDING DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER
WAS -10.12% (QUARTER ENDING SEPTEMBER 30, 1998).

AVERAGE ANNUAL RETURNS

For the periods ended Past 1 year Past 5 years Life of class
December 31, 1998

ASSET MANAGER: GROWTH 17.57% n/a 21.42%A
PORTFOLIO - INITIAL CLASS

S&P 500 28.58% n/a 30.55%A

Fidelity Aggressive Asset 22.74% n/a n/a
Allocation Composite Index

A FROM JANUARY 3, 1995 (CLASS'S COMMENCEMENT OF OPERATIONS).

If FMR had not reimbursed certain class expenses during these periods,
the fund's returns would have been lower.

Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.

Fidelity Aggressive Asset Allocation Composite Index is a hypothetical
representation of the performance of the fund's three asset classes
according to their respective weightings in the fund's neutral mix
(70% stocks, 25% bonds and 5% short term/money market). The following
indexes are used to calculate the Composite Index: stocks - the S&P
500, bonds - the Lehman Brothers Aggregate Bond Index, and short
term/money market - the Lehman Brothers 3-Month Treasury Bill Index.
Prior to January 1, 1997, the Lehman Brothers U.S. Treasury Index was
used for the bond class. The index weightings of the Composite Index
are rebalanced monthly.

The Lehman Brothers U.S. Treasury Index is a market value-weighted
index of public obligations of the U.S. Treasury with maturities of
one year or more.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

PRINCIPAL INVESTMENT STRATEGIES

Neutral Mix

STOCKS 70%
(can range from
50-100%)

BONDS 25%
(can range from 0-50%)

SHORT-TERM/MONEY
MARKET 5% (can range
from 0-50%)

Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 70.0
Row: 1, Col: 3, Value: 25.0

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect the fund's performance:

FUNDAMENTAL INVESTMENT POLICIES

The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

The fund's assets are valued primarily on the basis of market
quotations. Certain short-term securities are valued on the basis of
amortized cost. If market quotations are not readily available for a
security or if a security's value has been materially affected by
events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or
market), that security may be valued by another method that the Board
of Trustees believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining
value.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Asset Manager: Growth Portfolio is a mutual fund, an investment that
pools shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.

Affiliates assist FMR with foreign investments:

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is responsible for
choosing certain types of investments for the fund.

FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.

Dick Habermann is Vice President and lead manager of Asset Manager:
Growth Portfolio, which he has managed since March 1996. Other
Fidelity investment professionals assist Mr. Habermann in selecting
investments within each asset class for the fund. He also manages
several other Fidelity funds. Mr. Habermann is a Senior Vice President
of FMR Co. He joined Fidelity in 1968.

The fund has an investment objective similar to that of an existing
Fidelity fund. Asset Manager: Growth Portfolio is most similar to
Fidelity Asset Manager: Growth.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.

For December 1998, the group fee rate was 0.29%. The individual fund
fee rate is 0.30%.

The total management fee for the fiscal year ended December 31, 1998,
was 0.59% of the fund's average net assets.

The total annual Initial Class operating expenses for the fiscal year
ended December 31, 1998, were 0.73% of the class's average net assets.
The total annual class operating expenses do not reflect the effect of
any reduction of certain expenses during the period.

FMR pays FIMM, FMR U.K., and FMR Far East for providing assistance
with investment advisory services.

Effective January 3, 1995, FMR has voluntarily agreed to reimburse
Initial Class of the fund to the extent that total operating expenses
(excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses), as a percentage of its
average net assets, exceed 1.00%. This arrangement can be terminated
by FMR at any time.

As of December 31, 1998, approximately 68% of the fund's total
outstanding shares were held by FMR affiliates.

FUND DISTRIBUTION

The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand
Initial Class's financial history for the past 4 years. Certain
information reflects financial results for a single class share. Total
returns for each period include the reinvestment of all dividends and
distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the fund's financial highlights and financial statements,
are included in the fund's Annual Report. A free copy of the Annual
Report is available upon request.

SELECTED PER-SHARE DATA

Years ended December 31 1998 1997 1996 1995C

Net asset value, beginning $ 16.36 $ 13.10 $ 11.77 $ 10.00
of period

Income from Investment
Operations

Net investment income .41B .36B .21 .10

Net realized and 2.19 2.92 2.08 2.20
unrealized gain (loss)

Total from investment 2.60 3.28 2.29 2.30
operations

Less Distributions

From net investment income (.34) -- (.21) (.11)

From net realized gain (1.59) (.02) (.75) (.42)

Total distributions (1.93) (.02) (.96) (.53)

Net asset value, end of $ 17.03 $ 16.36 $ 13.10 $ 11.77
period

Total returnA,F 17.57% 25.07% 20.04% 23.02%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 528,874 $ 483,231 $ 253,024 $ 68,247
(000 omitted)

Ratio of expenses to .73% .77% .87% 1.00%D
average net assets

Ratio of expenses to .72%E .76%E .85%E 1.00%
average net assets after
expense reductions

Ratio of net investment 2.60% 2.44% 2.63% 1.69%
income to average net assets

Portfolio turnover 98% 90% 120% 343%

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS OF
INITIAL CLASS SHARES) TO DECEMBER 31, 1995.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.700587.101 VIPII-AMG-pro-0499

VARIABLE
INSURANCE PRODUCTS
FUND II
INITIAL CLASS

CONTRAFUND PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 3 INVESTMENT DETAILS

4 VALUING SHARES

SHAREHOLDER INFORMATION 4 BUYING AND SELLING SHARES

4 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

4 TAX CONSEQUENCES

FUND SERVICES 4 FUND MANAGEMENT

5 FUND DISTRIBUTION

APPENDIX 5 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return may be quoted in advertising in accordance
with current law and interpretations thereof.

Total returns quoted for a class include the class's expenses, but may
not include charges and expenses attributable to any particular
insurance product. Because shares of the fund may be purchased only
through variable annuity and variable life insurance contracts, you
should carefully review the prospectus of the insurance product you
have chosen for information on relevant charges and expenses.
Excluding these charges from quotations of a class's performance has
the effect of increasing the performance quoted. You should bear in
mind the effect of these charges when comparing the fund's performance
to that of other mutual funds.

The following information illustrates the changes in the fund's
performance from year to year and compares the fund's performance to
the performance of a market index and an average of the performance of
similar funds over various periods of time. Returns are based on past
results and are not an indication of future performance.

YEAR-BY-YEAR RETURNS

CONTRAFUND PORTFOLIO -
INITIAL CLASS

Calendar Year 1995 1996 1997 1998

39.72% 21.22% 24.14% 29.98%

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF CONTRAFUND
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 23.56% (QUARTER ENDING
DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -9.89%
(QUARTER ENDING SEPTEMBER 30, 1998).

AVERAGE ANNUAL RETURNS

For the periods ended Past 1 year Past 5 years Life of class
December 31, 1998

CONTRAFUND PORTFOLIO - 29.98% n/a 28.62%A
INITIAL CLASS

S&P 500 28.58% n/a 30.55%A

Lipper Growth Funds Average 22.86% n/a n/a

A FROM JANUARY 3, 1995 (CLASS'S COMMENCEMENT OF OPERATIONS).

Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.

Lipper Growth Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR invests the fund's assets in securities of companies whose value
FMR believes is not fully recognized by the public. The types of
companies in which the fund may invest include companies experiencing
positive fundamental change such as a new management team or product
launch, a significant cost-cutting initiative, a merger or
acquisition, or a reduction in industry capacity that should lead to
improved pricing; companies whose earnings potential has increased or
is expected to increase more than generally perceived; companies that
have enjoyed recent market popularity but which appear to have
temporarily fallen out of favor for reasons that are considered
non-recurring or short-term; and companies that are undervalued in
relation to securities of other companies in the same industry.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates and
management.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

Many factors affect the fund's performance. The fund's share price
changes daily based on changes in market conditions and interest rates
and in response to other economic, political or financial
developments. The fund's reaction to these developments will be
affected by the types of the securities in which the fund invests, the
financial condition, industry and economic sector, and geographic
location of an issuer, and the fund's level of investment in the
securities of that issuer. When you sell your shares of the fund, they
could be worth more or less than what you paid for them.

The following factors may significantly affect the fund's performance:

FUNDAMENTAL INVESTMENT POLICIES

The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Contrafund Portfolio is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.

Affiliates assist FMR with foreign investments:

Will Danoff is Vice President and manager of Contrafund Portfolio,
which he has managed since January 1995. He also manages another
Fidelity fund. Since joining Fidelity in 1986, Mr. Danoff has worked
as an analyst and manager.

Jason Weiner is associate manager of Contrafund Portfolio, which he
has managed since April 1998. He also manages another Fidelity fund.
Since joining Fidelity in 1991, Mr. Weiner has worked as an analyst
and manager.

The fund has an investment objective similar to that of an existing
Fidelity fund. Contrafund Portfolio is most similar to Fidelity
Contrafund.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.

For December 1998, the group fee rate was 0.29%. The individual fund
fee rate is 0.30%.

The total management fee for the fiscal year ended December 31, 1998,
was 0.59% of the fund's average net assets.

The total annual Initial Class operating expenses for the fiscal year
ended December 31, 1998, were 0.70% of the class's average net assets.
The total annual class operating expenses do not reflect the effect of
any reduction of certain expenses during the period.

FMR pays FMR U.K. and FMR Far East for providing assistance with
investment advisory services.

As of December 31, 1998, approximately 26% of the fund's total
outstanding shares were held by an FMR affiliate.

FUND DISTRIBUTION

The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

APPENDIX

FINANCIAL HIGHLIGHTS

SELECTED PER-SHARE DATA

Years ended December 31 1998 1997 1996 1995D

Net asset value, beginning $ 19.94 $ 16.56 $ 13.79 $ 10.00
of period

Income from Investment
Operations

Net investment income .13C .16C .14 .06

Net realized and 5.54 3.73 2.76 3.91
unrealized gain (loss)

Total from investment 5.67 3.89 2.90 3.97
operations

Less Distributions

From net investment income (.14) (.14) -- (.06)

From net realized gain (1.03) (.37) (.13) (.12)

Total distributions (1.17) (.51) (.13) (.18)

Net asset value, end of $ 24.44 $ 19.94 $ 16.56 $ 13.79
period

Total returnA,B 29.98% 24.14% 21.22% 39.72%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 6,388,592 $ 4,107,868 $ 2,394,103 $ 877,000
(000 omitted)

Ratio of expenses to .70% .71% .74% .72%
average net assets

Ratio of expenses to .66%E .68%E .71%E .72%
average net assets after
expense reductions

Ratio of net investment .62% .90% 1.33% 1.07%
income to average net assets

Portfolio turnover 201% 142% 178% 132%

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS OF
INITIAL CLASS SHARES) TO DECEMBER 31, 1995.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.477906.101 VIPII-CTRA-pro-0499

VARIABLE
INSURANCE PRODUCTS
FUND II
INITIAL CLASS

INDEX 500 PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 3 INVESTMENT DETAILS

4 VALUING SHARES

SHAREHOLDER INFORMATION 4 BUYING AND SELLING SHARES

4 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

4 TAX CONSEQUENCES

FUND SERVICES 4 FUND MANAGEMENT

6 FUND DISTRIBUTION

APPENDIX 6 FINANCIAL HIGHLIGHTS

7 ADDITIONAL INFORMATION ABOUT
THE STANDARD & POOR'S 500
INDEX

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

Bankers Trust Company (BT)'s 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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

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.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return may be quoted in advertising in accordance
with current law and interpretations thereof.

YEAR-BY-YEAR RETURNS

INDEX 500 PORTFOLIO - INITIAL
CLASS

Calendar Year 1993 1994 1995 1996 1997 1998

9.74% 1.04% 37.19% 22.71% 32.83% 28.31%

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: 9.74
Row: 6, Col: 1, Value: 1.04
Row: 7, Col: 1, Value: 37.19
Row: 8, Col: 1, Value: 22.71
Row: 9, Col: 1, Value: 32.83
Row: 10, Col: 1, Value: 28.31

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF INDEX 500
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 21.36% (QUARTER ENDING
DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -9.96%
(QUARTER ENDING SEPTEMBER 30, 1998).

AVERAGE ANNUAL RETURNS

For the periods ended Past 1 year Past 5 years Life of class*
December 31, 1998

INDEX 500 PORTFOLIO - INITIAL 28.31% 23.72% 21.27%A
CLASS

S&P 500 28.58% 24.06% 21.61%A

Lipper S&P 500 Index 28.05% 23.56% 21.12%A
Objective Funds Average

* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE CLASS'S
COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1993.

If FMR had not reimbursed certain expenses during these periods, the
fund's returns would have been lower.

Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.

Lipper S&P 500 Index Objective Funds Average reflects the performance
(excluding sales charges) of mutual funds with similar objectives.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

BT normally invests at least 80% of the fund's assets in common stocks
included in the S&P 500. The S&P 500 is a widely recognized, unmanaged
index of common stock prices.

The fund may not always hold all of the same securities as the S&P
500. BT may choose, if extraordinary circumstances warrant, to exclude
an index stock from the fund and substitute a similar stock if doing
so will help the fund achieve its objective.

The fund seeks to achieve a 98% or better correlation between its
total return and the total return of the index. The fund may not track
the index perfectly because differences between the index and the
fund's portfolio can cause differences in performance. In addition,
expenses and transaction costs, the size and frequency of cash flow
into and out of the fund, and differences between how and when the
fund and the index are valued can cause differences in performance.

BT may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

BT may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If BT's
strategies do not work as intended, the fund may not achieve its
objective.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect the fund's performance:

In response to market, economic, political or other conditions, BT may
temporarily use a different investment strategy for defensive
purposes. If BT does so, different factors could affect the fund's
performance and the fund may not achieve its investment objective.

FUNDAMENTAL INVESTMENT POLICIES

The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Index 500 Portfolio is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for handling the fund's business
affairs.

BT serves as sub-adviser and custodian for the fund. BT chooses the
fund's investments and places orders to buy, sell and lend the fund's
investments.

As of December 31, 1998, BT had approximately $319.4 billion in
discretionary assets under management.

BT's principal offices are at 130 Liberty Street, New York, New York
10006.

BT is a wholly owned subsidiary of Bankers Trust Corporation. On
November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust
Corporation and all of its subsidiaries would merge with and into a
subsidiary of Deutsche Bank AG. The merger is contingent upon various
regulatory approvals. The fund's Board of Trustees will consider
approval of a new subadvisory agreement among the fund, FMR and BT or
its successor by merger that would be effective at the time of the
merger and would be presented to the fund's shareholders for approval.

On March 11, 1999, BT announced that it had reached an agreement with
the United States Attorney's Office in the Southern District of New
York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record keeping problems that occurred
between 1994 and early 1996. Pursuant to its agreement with the U.S.
Attorney's Office, BT pleaded guilty to misstating entries in the
bank's books and records and agreed to pay a $60 million fine to
federal authorities. Separately, BT agreed to pay a $3.5 million fine
to the State of New York. The events leading up to the guilty plea did
not arise out of the investment advisory or mutual fund management
activities of BT or its affiliates.

As a result of the plea, absent an order from the SEC, BT would not be
able to continue to provide investment advisory services to the fund.
The SEC has granted a temporary order to permit BT and its affiliates
to continue to provide investment advisory services to registered
investment companies. There is no assurance that the SEC will grant a
permanent order.

The fund could be adversely affected if the computer systems used by
BT, FMR and other service providers do not properly process and
calculate date-related information from and after January 1, 2000. BT
and FMR have advised the fund that they are actively working on
necessary changes to their computer systems and expect that their
systems, and those of other major service providers, will be modified
prior to January 1, 2000. However, there can be no assurance that
there will be no adverse impact on the fund.

The fund has an investment objective similar to that of an existing
Fidelity fund. Index 500 Portfolio is most similar to Spartan Market
Index Fund.

BT investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.

The fund pays management and sub-advisory fees to FMR and BT,
respectively. These fees are calculated and paid every month. The fund
pays a management fee at an annual rate of 0.24% of its average net
assets to FMR, and a sub-advisory fee (representing 40% of net income
from securities lending) of less than 0.01% to BT. The total
management and sub-advisory fee for the fiscal year ended December 31,
1998, was 0.24% of the fund's average net assets.

FMR, independently of the fund, also compensates BT for investment
management, securities lending and custodial services.

The total annual Initial Class operating expenses for the fiscal year
ended December 31, 1998, were 0.35% of the class's average net assets.
The total annual class operating expenses do not reflect the effect of
any expense reimbursements or reduction of certain expenses during the
period.

A portion of the brokerage commissions that the fund paid was used to
reduce the fund's expenses. In addition, on behalf of the fund, FMR
entered into an arrangement with the fund's custodian whereby credits
realized as a result of uninvested cash balances were used to reduce
custodian expenses. Including these reductions, the total annual
Initial Class operating expenses, after reimbursement, would have been
0.28% for the fiscal year ended December 31, 1998.

FMR may, from time to time, agree to reimburse the fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by the fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated by FMR at any time, can decrease the fund's
expenses and boost its performance.

Effective August 27, 1992, FMR has voluntarily agreed to reimburse
Initial Class of the fund to the extent that total operating expenses
(with the exceptions noted below) exceed 0.28% of its average net
assets. Expenses eligible for reimbursement do not include interest,
taxes, brokerage commissions or extraordinary expenses. In addition,
sub-advisory fees paid by the fund associated with securities lending
are not eligible for reimbursement. This arrangement can be terminated
by FMR at any time.

As of December 31, 1998, approximately 31% of the fund's total
outstanding shares were held by an FMR affiliate.

FUND DISTRIBUTION

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

BT may allocate brokerage transactions in a manner that takes into
account the sale of shares of the fund, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.

APPENDIX

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning $ 114.40 $ 89.05 $ 75.71 $ 56.22 $ 55.74
of period

Income from Investment
Operations

Net investment income 1.65C 1.80C 1.04 .85 1.14

Net realized and 29.70 26.67 15.55 19.72 (.56)
unrealized gain (loss)

Total from investment 31.35 28.47 16.59 20.57 .58
operations

Less Distributions

From net investment income (1.36) (1.03) (.91) (.95) --

From net realized gain (3.15) (2.09) (2.34) (.11) (.10)

In excess of net realized -- -- -- (.02) --
gain

Total distributions (4.51) (3.12) (3.25) (1.08) (.10)

Net asset value, end of $ 141.24 $ 114.40 $ 89.05 $ 75.71 $ 56.22
period

Total returnA,B 28.31% 32.83% 22.71% 37.19% 1.04%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 3,772,068 $ 2,098,042 $ 823,243 $ 245,700 $ 51,301
(000 omitted)

Ratio of expenses to .28%D .28%D .28%D .28%D .28%D
average net assets

Ratio of net investment 1.33% 1.74% 2.26% 2.70% 2.81%
income to average net assets

Portfolio turnover 4% 9% 14% 16% 2%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.

ADDITIONAL INFORMATION ABOUT THE STANDARD & POOR'S 500 INDEX

S&P does not guarantee the accuracy and/or the completeness of the S&P
500 Index or any data included therein and S&P shall have no liability
for any errors, omissions, or interruptions therein. S&P makes no
warranty, express or implied, as to results to be obtained by
licensee, owners of the product, or any other person or entity from
the use of the S&P 500 Index or any data included therein. S&P makes
no express or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or
use with respect to the S&P 500 Index or any data included therein.
Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential
damages (including lost profits), even if notified of the possibility
of such damages.

The product is not sponsored, endorsed, sold, or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners
of the product or any member of the public regarding the advisability
of investing in securities generally or in the product particularly or
the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to the licensee is the licensing
of certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed, and calculated by S&P without regard to
the licensee or the product. S&P has no obligation to take the needs
of the licensee or the owners of the product into consideration in
determining, composing, or calculating the S&P 500 Index. S&P is not
responsible for and has not participated in the determination of the
timing of, prices at, or quantities of the product to be issued or in
the determination or calculation of the equation by which the product
is to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing, or trading of the
product.

"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Fidelity Distributors Corporation.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.700585.101 VIPII-i500-pro-0499

VARIABLE
INSURANCE PRODUCTS
FUND II
INITIAL CLASS

INVESTMENT GRADE BOND PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 4 INVESTMENT DETAILS

5 VALUING SHARES

SHAREHOLDER INFORMATION 5 BUYING AND SELLING SHARES

5 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

5 TAX CONSEQUENCES

FUND SERVICES 6 FUND MANAGEMENT

6 FUND DISTRIBUTION

APPENDIX 6 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return and yield may be quoted in advertising in
accordance with current law and interpretations thereof.

YEAR-BY-YEAR RETURNS

INVESTMENT GRADE BOND
PORTFOLIO - INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

10.26% 6.21% 16.38% 6.65% 10.96% -3.76% 17.32% 3.19% 9.06% 8.85%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 10.26
Row: 2, Col: 1, Value: 6.21
Row: 3, Col: 1, Value: 16.38
Row: 4, Col: 1, Value: 6.65
Row: 5, Col: 1, Value: 10.96
Row: 6, Col: 1, Value: -3.76
Row: 7, Col: 1, Value: 17.32
Row: 8, Col: 1, Value: 3.19
Row: 9, Col: 1, Value: 9.060000000000001
Row: 10, Col: 1, Value: 8.85

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF INVESTMENT
GRADE BOND PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 6.23%
(QUARTER ENDING JUNE 30, 1995) AND THE LOWEST RETURN FOR A QUARTER WAS
- -2.80% (QUARTER ENDING MARCH 31, 1994).

AVERAGE ANNUAL RETURNS

For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998

INVESTMENT GRADE BOND 8.85% 6.70% 8.36%
PORTFOLIO - INITIAL CLASS

Lehman Brothers Aggregate 8.69% 7.27% 9.26%
Bond Index

Lipper Intermediate 7.25% 6.35% 8.28%
Investment Grade Debt Funds
Average

If FMR had not reimbursed certain expenses during these periods, the
fund's returns would have been lower.

Lipper Intermediate Investment Grade Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets in U.S. dollar-denominated
investment-grade bonds.

FMR uses the Lehman Brothers Aggregate Bond Index as a guide in
structuring the fund and selecting its investments. FMR manages the
fund to have similar overall interest rate risk to the index. As of
December 31, 1998, the dollar-weighted average maturity of the fund
and the index was approximately 8.1 and 8.6 years, respectively. In
determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated maturity.

FMR allocates the fund's assets among different market sectors (for
example, corporate or government securities) and different maturities
based on its view of the relative value of each sector or maturity.

In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to its
estimated long-term value, and any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.

In order to earn additional income for the fund, FMR may use a trading
strategy that involves selling mortgage securities and simultaneously
agreeing to purchase similar securities on a later date at a set
price. This trading strategy may result in an increased portfolio
turnover rate which increases transaction costs and may increase
taxable gains.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in response to other economic, political or financial
developments. The fund's reaction to these developments will be
affected by the types and maturities of the securities in which the
fund invests, the financial condition, industry and economic sector,
and geographic location of an issuer, and the fund's level of
investment in the securities of that issuer. When you sell your shares
of the fund, they could be worth more or less than what you paid for
them.

The following factors may significantly affect the fund's performance:

FOREIGN EXPOSURE. Foreign securities and securities issued by U.S.
entities with substantial foreign operations can involve additional
risks relating to political, economic or regulatory conditions in
foreign countries. All of these factors can make foreign investments
more volatile than U.S. investments.

ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities.

FUNDAMENTAL INVESTMENT POLICIES

The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations. Certain
short-term securities are valued on the basis of amortized cost. If
market quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the
exchange or market on which the security is principally traded (for
example, a foreign exchange or market), that security may be valued by
another method that the Board of Trustees believes accurately reflects
fair value. A security's valuation may differ depending on the method
used for determining value.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund earns interest, dividends and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gains distributions.

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Investment Grade Bond Portfolio is a mutual fund, an investment that
pools shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.

FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.

Kevin Grant is Vice President and manager of Investment Grade Bond
Portfolio, which he has managed since February 1997. He also manages
several other Fidelity funds. Mr. Grant joined Fidelity as a portfolio
manager in 1993.

The fund has an investment objective similar to that of an existing
Fidelity fund. Investment Grade Bond Portfolio is most similar to
Fidelity Investment Grade Bond Fund.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.

For December 1998, the group fee rate was 0.13%. The individual fund
fee rate is 0.30%.

The total management fee for the fiscal year ended December 31, 1998,
was 0.43% of the fund's average net assets.

The total annual Initial Class operating expenses for the fiscal year
ended December 31, 1998, were 0.57% of the class's average net assets.

FMR pays FIMM for providing assistance with investment advisory
services.

Effective December 5, 1988, FMR has voluntarily agreed to reimburse
Initial Class of the fund to the extent that total operating expenses
(excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses), as a percentage of its
average net assets, exceed 0.80%. This arrangement can be terminated
by FMR at any time.

As of December 31, 1998, approximately 40% of the fund's total
outstanding shares were held by an FMR affiliate.

FUND DISTRIBUTION

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

APPENDIX

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning $ 12.560 $ 12.240 $ 12.480 $ 11.020 $ 11.480
of period

Income from Investment .725B .759B .670 .320 .733
Operations Net investment
income

Net realized and .335 .291 (.290) 1.530 (1.163)
unrealized gain (loss)

Total from investment 1.060 1.050 .380 1.850 (.430)
operations

Less Distributions From (.590) (.730) (.620) (.390) --
net investment income

From net realized gain (.070) -- -- -- (.010)

In excess of net realized -- -- -- -- (.020)
gain

Total distributions (.660) (.730) (.620) (.390) (.030)

Net asset value, end of $ 12.960 $ 12.560 $ 12.240 $ 12.480 $ 11.020
period

Total returnA 8.85% 9.06% 3.19% 17.32% (3.76)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 674,813 $ 324,525 $ 228,594 $ 181,546 $ 111,381
(000 omitted)

Ratio of expenses to .57% .58% .58% .59% .67%
average net assets

Ratio of net investment 5.85% 6.34% 6.49% 6.53% 6.53%
income to average net assets

Portfolio turnover 239% 191% 81% 182% 143%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.478076.101 VIPII-IGB-pro-0499

SHARES OF THE FUNDS ARE OFFERED ONLY TO THE SEPARATE ACCOUNTS OF
INSURANCE COMPANIES, FOR THE PURPOSE OF FUNDING VARIABLE ANNUITY AND
VARIABLE LIFE INSURANCE CONTRACTS. PARTICULAR FUNDS MAY NOT BE
AVAILABLE IN YOUR STATE DUE TO VARIOUS INSURANCE REGULATIONS. PLEASE
CHECK WITH YOUR INSURANCE COMPANY FOR AVAILABLE FUNDS. IF A FUND IN
THIS PROSPECTUS IS NOT AVAILABLE IN YOUR STATE, THIS PROSPECTUS IS NOT
TO BE CONSIDERED A SOLICITATION. PLEASE READ THIS PROSPECTUS TOGETHER
WITH THE VARIABLE ANNUITY OR VARIABLE LIFE INSURANCE CONTRACT
PROSPECTUS THAT ACCOMPANIES IT.

Like securities of all mutual
funds, these securities have
not been approved or
disapproved by the
Securities and Exchange
Commission, and the
Securities and Exchange
Commission has not
determined if this
prospectus is accurate or
complete. Any
representation to the
contrary is a criminal
offense.

VARIABLE
INSURANCE PRODUCTS
FUNDS
INITIAL CLASS

GROWTH AND GROWTH & INCOME FUNDS:

Index 500 Portfolio
Mid Cap Portfolio
Growth Opportunities Portfolio
Contrafund Portfolio
Growth Portfolio
Overseas Portfolio
Balanced Portfolio
Equity-Income Portfolio
Growth & Income Portfolio

ASSET ALLOCATION FUNDS:

Asset Manager Portfolio
Asset Manager: Growth Portfolio

INCOME FUNDS:

Investment Grade Bond Portfolio
High Income Portfolio

MONEY MARKET FUND:

Money Market Portfolio

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

9 PERFORMANCE

FUND BASICS 21 INVESTMENT DETAILS

28 VALUING SHARES

SHAREHOLDER INFORMATION 28 BUYING AND SELLING SHARES

29 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

29 TAX CONSEQUENCES

FUND SERVICES 29 FUND MANAGEMENT

33 FUND DISTRIBUTION

APPENDIX 35 FINANCIAL HIGHLIGHTS

59 ADDITIONAL INFORMATION ABOUT
THE STANDARD & POOR'S 500
INDEX

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

Bankers Trust Company (BT)'s 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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

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.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

MID CAP PORTFOLIO seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(small solid bullet) Investing primarily in common stocks.

(small solid bullet) Investing at least 65% of total assets in
securities of companies with medium market capitalizations (those with
market capitalizations similar to companies in the S&P MidCap 400).

(small solid bullet) Potentially investing in companies with smaller
or larger market capitalizations.

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

GROWTH OPPORTUNITIES PORTFOLIO seeks to provide capital growth.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

GROWTH PORTFOLIO seeks to achieve capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(small solid bullet) Investing primarily in common stocks.

(small solid bullet) Investing in companies that it believes have
above-average growth potential (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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) "GROWTH" INVESTING. "Growth" stocks can perform
differently than the market as a whole and other types of stocks and
can be more volatile than other types of stocks.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

OVERSEAS PORTFOLIO seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 and industry position and market and economic
conditions to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

BALANCED PORTFOLIO seeks both income and growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 tends 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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause prices of debt securities to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

EQUITY-INCOME PORTFOLIO seeks reasonable income. The fund will also
consider the potential for capital appreciation. The fund's goal is to
achieve a yield which exceeds the composite yield on the securities
comprising the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) "VALUE" INVESTING. "Value" stocks can perform
differently than the market as a whole and other types of stocks and
can continue to be undervalued by the market for long periods of time.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them

INVESTMENT OBJECTIVE

GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of debt securities to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

HIGH INCOME PORTFOLIO seeks a high level of current income while also
considering growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and liquidity.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) FINANCIAL SERVICES EXPOSURE. Changes in
government regulation or economic downturns can have a significant
negative affect on issuers in the financial services sector.

(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.

An investment in the fund 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.

PERFORMANCE

A fund's total return and/or yield may be quoted in advertising in
accordance with current law and interpretations thereof.

Total returns and yields quoted for a class include the class's
expenses, but do not include charges and expenses attributable to any
particular insurance product. Because shares of the funds may be
purchased only through variable annuity and variable life insurance
contracts, you should carefully review the prospectus of the insurance
product you have chosen for information on relevant charges and
expenses. Excluding these charges from quotations of a class's
performance has the effect of increasing the performance quoted. You
should bear in mind the effect of these charges when comparing a
fund's performance to that of other mutual funds.

The following information illustrates the changes in each fund's
performance from year to year, compares the performance of each fund
(other than Money Market) to the performance of a market index, and
compares the performance of each fund (other than Money Market, Asset
Manager and Asset Manager: Growth) to an average of the performance of
similar funds over various periods of time. Each of Asset Manager,
Asset Manager: Growth and Balanced also compares its performance to
the performance of a combination of market indexes over various
periods of time. Each of Growth and Equity-Income also compares its
performance to the performance of an additional index over various
periods of time. Returns are based on past results and are not an
indication of future performance.

Because Mid Cap was new when this prospectus was printed, its
performance history is not included. Performance history will be
available for Mid Cap after the fund has been in operation for one
calendar year.

YEAR-BY-YEAR RETURNS

INDEX 500 PORTFOLIO - INITIAL
CLASS

Calendar Year 1993 1994 1995 1996 1997 1998

9.74% 1.04% 37.19% 22.71% 32.83% 28.31%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES
PORTFOLIO - INITIAL CLASS

Calendar Year 1995 1996 1997 1998

32.52% 18.27% 29.95% 24.61%

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF GROWTH
OPPORTUNITIES PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 20.74%
(QUARTER ENDING DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER
WAS -7.29% (QUARTER ENDING SEPTEMBER 30, 1998).

CONTRAFUND PORTFOLIO -
INITIAL CLASS

Calendar Year 1995 1996 1997 1998

39.72% 21.22% 24.14% 29.98%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH PORTFOLIO - INITIAL
CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

31.51% -11.73% 45.51% 9.32% 19.37% -0.02% 35.36% 14.71% 23.48% 39.49%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 31.51
Row: 2, Col: 1, Value: -11.7
Row: 3, Col: 1, Value: 45.51
Row: 4, Col: 1, Value: 9.32
Row: 5, Col: 1, Value: 19.37
Row: 6, Col: 1, Value: -0.02
Row: 7, Col: 1, Value: 35.36
Row: 8, Col: 1, Value: 14.71
Row: 9, Col: 1, Value: 23.48
Row: 10, Col: 1, Value: 39.49

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF GROWTH
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 24.29% (QUARTER ENDING
DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -20.80%
(QUARTER ENDING SEPTEMBER 30, 1990).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OVERSEAS PORTFOLIO - INITIAL
CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

26.28% -1.67% 8.00% -10.72% 37.35% 1.72% 9.74% 13.15% 11.56% 12.81%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 26.28
Row: 2, Col: 1, Value: -1.67
Row: 3, Col: 1, Value: 8.0
Row: 4, Col: 1, Value: -10.72
Row: 5, Col: 1, Value: 37.35
Row: 6, Col: 1, Value: 1.72
Row: 7, Col: 1, Value: 9.74
Row: 8, Col: 1, Value: 13.15
Row: 9, Col: 1, Value: 11.56
Row: 10, Col: 1, Value: 12.81

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF OVERSEAS
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 18.14% (QUARTER ENDING
DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -17.65%
(QUARTER ENDING SEPTEMBER 30, 1998).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCED PORTFOLIO - INITIAL
CLASS

Calendar Year 1995 1996 1997 1998

13.92% 9.98% 22.18% 17.64%

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF BALANCED
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 11.83% (QUARTER ENDING
JUNE 30, 1997) AND THE LOWEST RETURN FOR A QUARTER WAS -5.79% (QUARTER
ENDING SEPTEMBER 30, 1998).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY-INCOME PORTFOLIO -
INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

17.34% -15.29% 31.44% 16.89% 18.29% 7.07% 35.09% 14.28% 28.11% 11.63%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 17.34
Row: 2, Col: 1, Value: -15.29
Row: 3, Col: 1, Value: 31.44
Row: 4, Col: 1, Value: 16.89
Row: 5, Col: 1, Value: 18.0
Row: 6, Col: 1, Value: 7.0
Row: 7, Col: 1, Value: 35.09
Row: 8, Col: 1, Value: 14.28
Row: 9, Col: 1, Value: 28.11
Row: 10, Col: 1, Value: 11.63

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF
EQUITY-INCOME PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 15.44%
(QUARTER ENDING DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER
WAS -17.20% (QUARTER ENDING SEPTEMBER 30, 1990).

GROWTH & INCOME PORTFOLIO -
INITIAL CLASS

Calendar Year 1997 1998

30.09% 29.59%

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF GROWTH &
INCOME PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 20.97% (QUARTER
ENDING DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -8.37% (QUARTER ENDING SEPTEMBER 30, 1998).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET MANAGER PORTFOLIO -
INITIAL CLASS

Calendar Year 1990 1991 1992 1993 1994 1995 1996 1997 1998

6.72% 22.56% 11.71% 21.23% -6.09% 16.96% 14.60% 20.65% 15.05%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 6.72
Row: 3, Col: 1, Value: 22.56
Row: 4, Col: 1, Value: 11.71
Row: 5, Col: 1, Value: 21.23
Row: 6, Col: 1, Value: -6.09
Row: 7, Col: 1, Value: 16.9
Row: 8, Col: 1, Value: 14.6
Row: 9, Col: 1, Value: 20.65
Row: 10, Col: 1, Value: 15.0

ASSET MANAGER: GROWTH
PORTFOLIO - INITIAL CLASS

Calendar Year 1995 1996 1997 1998

23.02% 20.04% 25.07% 17.57%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE BOND
PORTFOLIO - INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

10.26% 6.21% 16.38% 6.65% 10.96% -3.76% 17.32% 3.19% 9.06% 8.85%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH INCOME PORTFOLIO -
INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

-4.17% -2.23% 35.08% 23.17% 20.40% -1.64% 20.72% 14.03% 17.67% -4.33%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: -4.0
Row: 2, Col: 1, Value: -2.2
Row: 3, Col: 1, Value: 35.08
Row: 4, Col: 1, Value: 23.17
Row: 5, Col: 1, Value: 20.4
Row: 6, Col: 1, Value: -1.6
Row: 7, Col: 1, Value: 20.72
Row: 8, Col: 1, Value: 14.0
Row: 9, Col: 1, Value: 17.67
Row: 10, Col: 1, Value: -4.33

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF HIGH INCOME
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 12.69% (QUARTER ENDING
MARCH 31, 1992) AND THE LOWEST RETURN FOR A QUARTER WAS -12.75%
(QUARTER ENDING SEPTEMBER 30, 1998).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO -
INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

9.12% 8.04% 6.09% 3.90% 3.23% 4.25% 5.87% 5.41% 5.51% 5.46%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 9.0
Row: 2, Col: 1, Value: 8.0
Row: 3, Col: 1, Value: 6.0
Row: 4, Col: 1, Value: 3.9
Row: 5, Col: 1, Value: 3.23
Row: 6, Col: 1, Value: 4.25
Row: 7, Col: 1, Value: 5.87
Row: 8, Col: 1, Value: 5.4
Row: 9, Col: 1, Value: 5.5
Row: 10, Col: 1, Value: 5.46

DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF MONEY
MARKET PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 1.96% (QUARTER
ENDING MARCH 31, 1990) AND THE LOWEST RETURN FOR A QUARTER WAS 0.78%
(QUARTER ENDING SEPTEMBER 30, 1993).

AVERAGE ANNUAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROWTH AND GROWTH & INCOME
FUNDS

For the periods ended Past 1 year Past 5 years Past 10 years/ Life of class*
December 31, 1998

Index 500 Portfolio - Initial 28.31% 23.72% 21.27%A
Class

S&P 500 28.58% 24.06% 21.61%A

Lipper S&P 500 Index 28.05% 23.56% 21.12%A
Objective Funds Average

Growth Opportunities 24.61% n/a 26.26%B
Portfolio - Initial Class

S&P 500 28.58% n/a 30.55%B

Lipper Growth Funds Average 22.86% n/a n/a

Contrafund Portfolio - 29.98% n/a 28.62%B
Initial Class

S&P 500 28.58% n/a 30.55%B

Lipper Growth Funds Average 22.86% n/a n/a

Growth Portfolio - Initial 39.49% 21.74% 19.41%
Class

Russell 3000 Growth Index 35.02% 24.21% 19.77%

Lipper Capital Appreciation 19.96% 14.96% 14.09%
Funds Average

S&P 500 28.58% 24.06% 19.21%

Overseas Portfolio - Initial 12.81% 9.71% 10.09%
Class

Morgan Stanley Capital 20.27% 9.29% 5.59%
International Europe,
Australasia, Far East Index

Lipper International Funds 13.02% 7.69% 8.98%
Average

Balanced Portfolio - Initial 17.64% n/a 15.86%B
Class

S&P 500 28.58% n/a 30.55%B

Lipper Balanced Funds Average 13.48% n/a n/a

Fidelity Balanced Composite 20.98% n/a 22.25%B
Index

Equity-Income Portfolio - 11.63% 18.77% 15.62%
Initial Class

Russell 3000 Value Index 13.50% 20.11% 17.08%

Lipper Equity Income Funds 10.89% 16.60% 14.47%
Average

S&P 500 28.58% 24.06% 19.21%

Growth & Income Portfolio - 29.59% n/a 29.84%C
Initial Class

S&P 500 28.58% n/a 30.95%C

Lipper Growth and Income 15.61% n/a 20.81%C
Funds Average

</TABLE>

* EXCEPT AS INDICATED, BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR
FOLLOWING THE CLASS'S COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1993.

B FROM JANUARY 3, 1995 (CLASS'S COMMENCEMENT OF OPERATIONS).

C FROM JANUARY 1, 1997.

ASSET ALLOCATION FUNDS

For the periods ended Past 1 year Past 5 years Life of class*
December 31, 1998

Asset Manager Portfolio - 15.05% 11.81% 13.38%A
Initial Class

S&P 500 28.58% 24.06% 17.90%A

Fidelity Asset Allocation 18.61% 14.42% 12.14%A
Composite Index

Asset Manager: Growth 17.57% n/a 21.42%B
Portfolio - Initial Class

S&P 500 28.58% n/a 30.55%B

Fidelity Aggressive Asset 22.74% n/a n/a
Allocation Composite Index

* EXCEPT AS INDICATED, BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR
FOLLOWING THE CLASS'S COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1990.

B FROM JANUARY 3, 1995 (CLASS'S COMMENCEMENT OF OPERATIONS).

INCOME FUNDS

For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998

Investment Grade Bond 8.85% 6.70% 8.36%
Portfolio - Initial Class

Lehman Brothers Aggregate 8.69% 7.27% 9.26%
Bond Index

Lipper Intermediate 7.25% 6.35% 8.28%
Investment Grade Debt Funds
Average

High Income Portfolio - -4.33% 8.80% 11.08%
Initial Class

Merrill Lynch High Yield 3.66% 9.01% 11.08%
Master Index

Lipper High Current Yield -.44% 7.37% 9.34%
Funds Average

MONEY MARKET FUND

For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998

Money Market Portfolio - 5.46% 5.30% 5.67%
Initial Class

If FMR had not reimbursed certain class expenses during these periods,
Index 500's, Growth Opportunities', Overseas', Balanced's, Growth &
Income's, Asset Manager's, Asset Manager: Growth's, Investment Grade
Bond's, High Income's, and Money Market's returns would have been
lower.

Fidelity Balanced Composite Index is a hypothetical representation of
the performance of Balanced's general investment categories using a
weighting of 60% equity and 40% bond. The following indexes are used
to calculate the Composite Index: equity - the Standard & Poor's 500
Index (S&P 500(registered trademark)), and bond - the Lehman Brothers
Aggregate Bond Index. The index weightings of the Composite Index are
rebalanced monthly.

Fidelity Asset Allocation Composite Index is a hypothetical
representation of the performance of Asset Manager's three asset
classes according to their respective weightings in the fund's neutral
mix (50% stocks, 40% bonds and 10% short term/money market). The
following indexes are used to calculate the Composite Index: stocks -
the S&P 500, bonds - the Lehman Brothers Aggregate Bond Index, and
short term/money market - the Lehman Brothers 3-Month Treasury Bill
Index. Prior to January 1, 1997, the Lehman Brothers U.S. Treasury
Index was used for the bond class. The index weightings of the
Composite Index are rebalanced monthly.

Fidelity Aggressive Asset Allocation Composite Index is a hypothetical
representation of the performance of Asset Manager: Growth's three
asset classes according to their respective weightings in the fund's
neutral mix (70% stocks, 25% bonds and 5% short term/money market).
The following indexes are used to calculate the Composite Index:
stocks - the S&P 500, bonds - the Lehman Brothers Aggregate Bond
Index, and short term/money market - the Lehman Brothers 3-Month
Treasury Bill Index. Prior to January 1, 1997, the Lehman Brothers
U.S. Treasury Index was used for the bond class. The index weightings
of the Composite Index are rebalanced monthly.

S&P 500 is a market capitalization-weighted index of common stocks.

Standard & Poor's MidCap 400(registered trademark) Index is a market
capitalization-weighted index of 400 medium-capitalization stocks.

Russell 3000(registered trademark) Growth Index is a market
capitalization-weighted index of U.S. domiciled growth oriented
stocks.

Russell 3000(registered trademark) Value Index is a market
capitalization-weighted index of U.S. domiciled value oriented stocks.

Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE) Index is an index that is designed to represent the performance
of developed stock markets outside the United States and Canada. The
index may be compiled in two ways: a market capitalization-weighted
(cap-weighted) and a gross domestic product-weighted (GDP-weighted)
version. As of December 31, 1998, the cap-weighted index included over
1,000 equity securities of companies domiciled in 20 countries, and
the GDP-weighted index included over 1,000 equity securities of
companies domiciled in 20 countries.

The Lehman Brothers U.S. Treasury Index is a market value-weighted
index of public obligations of the U.S. Treasury with maturities of
one year or more.

Merrill Lynch High Yield Master Index is a market value-weighted index
of all domestic and yankee high-yield bonds. Issues included in the
index have maturities of one year or more and have a credit rating
lower than BBB-/Baa3, but are not in default.

Each Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.

FUND BASICS

INVESTMENT DETAILS

THE GROWTH AND GROWTH & INCOME FUNDS

INVESTMENT OBJECTIVE

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

BT normally invests at least 80% of the fund's assets in common stocks
included in the S&P 500. The S&P 500 is a widely recognized, unmanaged
index of common stock prices.

BT may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

MID CAP PORTFOLIO seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR normally invests at least 65% of the fund's total assets in
securities of companies with medium market capitalizations. Medium
market capitalization companies are those whose market capitalization
is similar to the capitalization of companies in the S&P MidCap 400 at
the time of the fund's investment. Companies whose capitalization no
longer meets this definition after purchase continue to be considered
to have a medium market capitalization for purposes of the 65% policy.
As of December 31, 1998, the S&P MidCap 400 included companies with
capitalizations between $141 million and $73 billion. The size of
companies in the S&P MidCap 400 changes with market conditions and the
composition of the index. FMR may also invest the fund's assets in
companies with smaller or larger market capitalizations.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

GROWTH OPPORTUNITIES PORTFOLIO seeks to provide capital growth.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks. FMR
may also invest the fund's assets in other types of securities,
including bonds which may be lower-quality debt securities.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

GROWTH PORTFOLIO seeks to achieve capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR invests the fund's assets in companies FMR believes have
above-average growth potential. Growth may be measured by factors such
as earnings or revenue.

Companies with high growth potential tend to be companies with higher
than average price/earnings (P/E) ratios. Companies with strong growth
potential often have new products, technologies, distribution channels
or other opportunities or have a strong industry or market position.
The stocks of these companies are often called "growth" stocks.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

OVERSEAS PORTFOLIO seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.

FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

BALANCED PORTFOLIO seeks both income and growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR manages the fund to maintain a balance between stocks and bonds.
When FMR's outlook is neutral, it will invest approximately 60% of the
fund's assets in stocks and other equity securities and the remainder
in bonds and other debt securities, including lower-quality debt
securities. FMR may vary from this target if it believes stocks or
bonds offer more favorable opportunities, but will always invest at
least 25% of the fund's total assets in fixed-income senior securities
(including debt securities and preferred stock).

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

With respect to the fund's equity investments, FMR's emphasis on
above-average income-producing equity securities tends to lead to
investments in stocks that have more "value" characteristics than
"growth" characteristics. However, FMR is not constrained by any
particular investment style. In buying and selling securities for the
fund, FMR generally analyzes the issuer of a security using
fundamental factors (e.g., growth potential, earnings estimates and
management) and evaluates each security's current price relative to
its estimated long-term value.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests at least 65% of the fund's total assets in
income-producing equity securities. FMR may also invest the fund's
assets in other types of equity securities and debt securities,
including lower-quality debt securities.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR's emphasis on above-average income-producing equity securities
tends to lead to investments in large cap "value" stocks. However, FMR
is not constrained by any particular investment style. In buying and
selling securities for the fund, FMR relies on fundamental analysis of
each issuer and its potential for success in light of its current
financial condition, its industry position, and economic and market
conditions. Factors considered include growth potential, earnings
estimates and management.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, or other factors that affect security values. If
FMR's strategies do not work as intended, the fund may not achieve its
objective.

INVESTMENT OBJECTIVE

GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests a majority of the fund's assets in common stocks
with a focus on those that pay current dividends and show potential
for capital appreciation. FMR may also invest the fund's assets 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.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

Many factors affect each fund's performance. A fund's share price
changes daily based on changes in market conditions and interest rates
and in response to other economic, political or financial
developments. A fund's reaction to these developments will be affected
by the types of the securities in which the fund invests, the
financial condition, industry and economic sector, and geographic
location of an issuer, and the fund's level of investment in the
securities of that issuer. When you sell your shares of a fund, they
could be worth more or less than what you paid for them.

The following factors may significantly affect a fund's performance:

FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. For example, many foreign countries are less prepared
than the United States to properly process and calculate information
related to dates from and after January 1, 2000, which could result in
difficulty pricing foreign investments and failure by foreign issuers
to pay timely dividends, interest or principal. All of these factors
can make foreign investments, especially those in emerging markets,
more volatile and potentially less liquid than U.S. investments. In
addition, foreign markets can perform differently than the U.S.
market.

Investing in emerging markets involves risks in addition to and
greater than those generally associated with investing in more
developed foreign markets. The extent of foreign development;
political stability; market depth, infrastructure and capitalization
and regulatory oversight are generally less than in more developed
markets. Emerging market economies can be subject to greater social,
economic, regulatory and political uncertainties. All of these factors
can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.

"GROWTH" INVESTING. "Growth" stocks can react differently to issuer,
political, market and economic developments than the market as a whole
and other types of stocks. "Growth" stocks tend to be more expensive
relative to their earnings or assets compared to other types of
stocks. As a result, "growth" stocks tend to be sensitive to changes
in their earnings and more volatile than other types of stocks.

"VALUE" INVESTING. "Value" stocks can react differently to issuer,
political, market and economic developments than the market as a whole
and other types of stocks. "Value" stocks tend to be inexpensive
relative to their earnings or assets compared to other types of
stocks. However, "value" stocks can continue to be inexpensive for
long periods of time and may not ever realize their full value.

In response to market, economic, political or other conditions, FMR
(BT for Index 500 Portfolio) may temporarily use a different
investment strategy for defensive purposes. If FMR (BT for Index 500
Portfolio) does so, different factors could affect a fund's
performance and the fund may not achieve its investment objective.

THE ASSET ALLOCATION FUNDS

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

Neutral Mix
Stocks 50%
(can range
from 30-70%)

Bonds 40%
(can range
from 20-60%)

Short-Term/
Money Market
10% (can range
from 0-50%)

Row: 1, Col: 1, Value: 10.0
Row: 1, Col: 2, Value: 50.0
Row: 1, Col: 3, Value: 40.0

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

PRINCIPAL INVESTMENT STRATEGIES

Neutral Mix
Stocks 70%
(can range
from 50-100%)

Bonds 25%
(can range
from 0-50%)

Short-Term/
Money Market
5% (can range
from 0-50%)

Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 70.0
Row: 1, Col: 3, Value: 25.0

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

Many factors affect each fund's performance. A fund's share price and
yield change daily based on changes in market conditions and interest
rates and in response to other economic, political or financial
developments. A fund's reaction to these developments will be affected
by the types and maturities of the securities in which the fund
invests, the financial condition, industry and economic sector, and
geographic location of an issuer, and the fund's level of investment
in the securities of that issuer. When you sell your shares of a fund,
they could be worth more or less than what you paid for them.

The following factors may significantly affect a fund's performance:

In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance and the fund may not achieve its investment objective.

THE INCOME FUNDS

INVESTMENT OBJECTIVE

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets in U.S. dollar-denominated
investment-grade bonds.

INVESTMENT OBJECTIVE

HIGH INCOME PORTFOLIO seeks a high level of current income while also
considering growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests at least 65% of the fund's total assets in
income-producing debt securities, preferred stocks and convertible
securities, with an emphasis on lower-quality debt securities. Many
lower-quality debt securities are subject to legal or contractual
restrictions limiting FMR's ability to resell the securities to the
general public. FMR may also invest the fund's assets in non-income
producing securities, including defaulted securities and common
stocks. FMR currently intends to limit common stocks to 10% of the
fund's total assets. FMR may invest in companies whose financial
condition is troubled or uncertain and that may be involved in
bankruptcy proceedings, reorganizations or financial restructurings.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include a
security's structural features and current price compared to its
long-term value, and the earnings potential, credit standing and
management of the security's issuer.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

Many factors affect each fund's performance. A fund's yield and share
price change daily based on changes in interest rates and market
conditions and in response to other economic, political or financial
developments. A fund's reaction to these developments will be affected
by the types and maturities of the securities in which the fund
invests, the financial condition, industry and economic sector, and
geographic location of an issuer, and the fund's level of investment
in the securities of that issuer. When you sell your shares of a fund,
they could be worth more or less than what you paid for them.

The following factors may significantly affect a fund's performance:

Lower-quality debt securities involve greater risk of default or price
changes due to changes in the credit quality of the issuer. The value
of lower-quality debt securities often fluctuates in response to
company, political or economic developments and can decline
significantly over short periods of time or during periods of general
or regional economic difficulty. Lower-quality debt securities can be
thinly traded or have restrictions on resale, making them difficult to
sell at an acceptable price. The default rate for lower-quality debt
securities is likely to be higher during economic recessions or
periods of high interest rates.

In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance and the fund may not achieve its investment objective.

THE MONEY MARKET FUND

INVESTMENT OBJECTIVE

MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and liquidity.

PRINCIPAL INVESTMENT STRATEGIES

FMR invests the fund's assets in U.S. dollar-denominated money market
securities of domestic and foreign issuers, including U.S. Government
securities and repurchase agreements. FMR also may enter into reverse
repurchase agreements for the fund.

FMR will invest more than 25% of the fund's total assets in the
financial services industry.

In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

Many factors affect the fund's performance. The fund's yield will
change daily based on changes in interest rates and other market
conditions. Although the fund is managed to maintain a stable $1.00
share price, there is no guarantee that the fund will be able to do
so. For example, a major increase in interest rates or a decrease in
the credit quality of the issuer of one of the fund's investments
could cause the fund's share price to decrease. While the fund will be
charged premiums by a mutual insurance company for coverage of
specified types of losses related to default or bankruptcy on certain
securities, the fund may incur losses regardless of the insurance.

The following factors may significantly affect the fund's performance:

INTEREST RATE CHANGES. Money market securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
money market security can fall when interest rates rise and can rise
when interest rates fall. Securities with longer maturities and the
securities of issuers in the financial services sector can be more
sensitive to interest rate changes. Short-term securities tend to
react to changes in short-term interest rates.

FOREIGN EXPOSURE. Issuers located in foreign countries and entities
located in foreign countries that provide credit support or a
maturity-shortening structure can involve increased risks. Extensive
public information about the issuer or provider may not be available
and unfavorable political, economic or governmental developments could
affect the value of the security.

FINANCIAL SERVICES EXPOSURE. Financial services companies are highly
dependent on the supply of short-term financing. The value of
securities of issuers in the financial services sector can be
sensitive to changes in government regulation and interest rates and
to economic downturns in the United States and abroad.

ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can affect the credit quality or value of an
issuer's securities. Entities providing credit support or a
maturity-shortening structure also can be affected by these types of
changes. If the structure of a security fails to function as intended,
the security could decline in value.

FUNDAMENTAL INVESTMENT POLICIES

The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

MID CAP PORTFOLIO seeks long-term growth of capital.

GROWTH OPPORTUNITIES PORTFOLIO seeks to provide capital growth by
investing primarily in common stocks and securities convertible into
common stocks.

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

GROWTH PORTFOLIO seeks to achieve capital appreciation.

OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through
investments in foreign securities.

BALANCED PORTFOLIO seeks both income and growth of capital by
investing in a diversified portfolio of equity and fixed-income
securities with income, growth of income, and capital appreciation
potential.

EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities,
the fund will also consider the potential for capital appreciation.
The fund's goal is to achieve a yield which exceeds the composite
yield on the securities comprising the S&P 500.

GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

HIGH INCOME PORTFOLIO seeks a high level of current income by
investing primarily in high yielding, fixed-income securities, while
also considering growth of capital.

MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and liquidity by investing in
money market instruments.

VALUING SHARES

Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.

A class's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates Initial
Class's NAV as of the close of business of the NYSE, normally 4:00
p.m. Eastern time. However, NAV may be calculated earlier if trading
on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). Each fund's assets are valued as of this
time for the purpose of computing Initial Class's NAV.

To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.

Money Market's assets are valued on the basis of amortized cost.

Each fund's (except Money Market's) assets are valued primarily on the
basis of market quotations or on the basis of information furnished by
a pricing service. Certain short-term securities are valued on the
basis of amortized cost. If market quotations or information furnished
by a pricing service is not readily available for a security or if a
security's value has been materially affected by events occurring
after the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market), that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. A security's valuation may
differ depending on the method used for determining value.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Only "separate accounts" of insurance companies that have executed
certain agreements with the funds can buy or sell shares of the funds.
A separate account is a segregated asset account. Separate accounts
fund variable annuity contracts and variable life insurance policies.
Please refer to your insurance company's separate account prospectus
for investing information.

Each insurance company separate account places a single order to buy
or sell shares of each fund each business day. The insurance company
calculates the amount of the order based on the aggregate instructions
to the insurer from owners of the insurer's variable annuity contracts
and variable life insurance policies. Instructions received from
owners before the close of the NYSE on a given day usually result in
fund share purchases and redemptions at the NAV calculated as of the
close of the NYSE that day. In some cases, the applicable NAV is the
next NAV calculated after the order is received by the fund.

A fund will normally send the proceeds from redemption orders to the
insurance company one business day after the fund receives the
redemption order. A fund must send the proceeds within 7 days after
the fund receives the redemption order.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

Agreements executed with insurance companies obligate a fund to sell
and redeem fund shares each day that the NYSE is open for business.
Notwithstanding anything else in the agreements, the Board may refuse
to sell shares of any fund to any separate account, or suspend or
terminate the offering of shares of any fund if such action is
required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in
light of its fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such
fund.

Each fund sells its shares to separate accounts of insurance companies
that are affiliated with FMR and to separate accounts of insurance
companies that are unaffiliated with FMR. Each fund currently does not
foresee any disadvantages to policyowners arising out of the fact that
each fund offers its shares to separate accounts of various insurance
companies to serve as the investment medium for their variable
products. Nevertheless, the Board of Trustees intends to monitor
events in order to identify any material irreconcilable conflicts
which may possibly arise, and to determine what action, if any, should
be taken in response to such conflicts. If such a conflict were to
arise, one or more insurance companies' separate accounts might be
required to withdraw its investments in one or more funds and shares
of another fund may be substituted. This might force a fund to sell
securities at disadvantageous prices.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

Each fund earns dividends, interest and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund may also realize capital gains
from its investments, and distribute these gains (less any losses), if
any, to shareholders as capital gains distributions.

Money Market Portfolio normally declares dividends daily and pays them
monthly. Index 500, Mid Cap, Growth Opportunities, Contrafund, Growth,
Overseas, Balanced, Equity-Income, Growth & Income, Asset Manager,
Asset Manager: Growth, Investment Grade Bond, and High Income
Portfolios will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for a
fund.

Dividends and capital gains distributions from a fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

It is expected that shares of the funds will be held by insurance
company separate accounts under the terms of variable annuity and
variable life insurance contracts. Under current tax law, dividends or
capital gains distributions from a fund are not currently taxable to
holders of variable annuity and variable life insurance contracts when
left to accumulate within a variable contract. Depending on the
variable contract, withdrawals from the contract may be subject to
ordinary income tax and, in addition, to a 10% penalty tax on
withdrawals before age 59.

FUND SERVICES

FUND MANAGEMENT

Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.

FMR is each fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing investments for the
funds (except Index 500) and handling the funds' business affairs.

BT serves as sub-adviser and custodian for Index 500. BT chooses the
fund's investments and places orders to buy, sell and lend the fund's
investments.

As of December 31, 1998, BT had approximately $319.4 billion in
discretionary assets under management.

BT's principal offices are at 130 Liberty Street, New York, New York
10006.

BT is a wholly owned subsidiary of Bankers Trust Corporation. On
November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust
Corporation and all of its subsidiaries would merge with and into a
subsidiary of Deutsche Bank AG. The merger is contingent upon various
regulatory approvals. Index 500's Board of Trustees will consider
approval of a new subadvisory agreement among the fund, FMR and BT or
its successor by merger that would be effective at the time of the
merger and would be presented to the fund's shareholders for approval.

As a result of the plea, absent an order from the SEC, BT would not be
able to continue to provide investment advisory services to Index 500.
The SEC has granted a temporary order to permit BT and its affiliates
to continue to provide investment advisory services to registered
investment companies. There is no assurance that the SEC will grant a
permanent order.

Affiliates assist FMR with foreign investments:

(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for Mid Cap, Growth
Opportunities, Contrafund, Overseas, Balanced, Growth & Income, Asset
Manager, Asset Manager: Growth, and High Income. FMR U.K. was
organized in 1986 to provide investment research and advice to FMR.
Currently, FMR U.K. provides investment research and advice on issuers
based outside the United States and may also provide investment
advisory services for each fund.

(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for Mid Cap,
Growth Opportunities, Contrafund, Overseas, Balanced, Growth & Income,
Asset Manager, Asset Manager: Growth, and High Income. FMR Far East
was organized in 1986 to provide investment research and advice to
FMR. Currently, FMR Far East provides investment research and advice
on issuers based outside the United States and may also provide
investment advisory services for each fund.

(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for Overseas. As
of September 28, 1998, FIIA had approximately $1 billion in
discretionary assets under management. Currently, FIIA provides
investment research and advice on issuers based outside the United
States and may also provide investment advisory services for Overseas.

(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L), in London, England, serves as a sub-adviser for
Overseas. As of September 28, 1998, FIIA(U.K.)L had approximately $2.3
billion in discretionary assets under management. Currently,
FIIA(U.K.)L provides investment research and advice on issuers based
outside the United States and may also provide investment advisory
services for Overseas.

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for Investment Grade Bond and Money
Market. FIMM is primarily responsible for choosing investments for
Investment Grade Bond and Money Market. FIMM also serves as a
sub-adviser for Balanced, Asset Manager, and Asset Manager: Growth.
FIMM is responsible for choosing certain types of investments for
Balanced, Asset Manager, and Asset Manager: Growth.

FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.

A fund could be adversely affected if the computer systems used by
FMR, BT and other service providers do not properly process and
calculate date-related information from and after January 1, 2000. FMR
and BT have advised each fund that they are actively working on
necessary changes to their computer systems and expect that their
systems, and those of other major service providers, will be modified
prior to January 1, 2000. However, there can be no assurance that
there will be no adverse impact on a fund.

Katherine Collins is Vice President and manager of Mid Cap Portfolio,
which she has managed since December 1998. She also manages another
Fidelity fund. Since joining Fidelity in 1990, Ms. Collins has worked
as an analyst and manager.

George Vanderheiden is Vice President and manager of Growth
Opportunities Portfolio, which he has managed since January 1995. He
also manages other Fidelity funds. Mr. Vanderheiden is a member of the
Board of Directors for FMR Corp. He joined Fidelity in 1971.

Charles Mangum will provide assistance in managing Growth
Opportunities Portfolio from time to time. He also manages another
Fidelity fund. Since joining Fidelity in 1990, Mr. Mangum has worked
as an analyst and manager.

Jennifer Uhrig is Vice President and manager of Growth Portfolio,
which she has managed since January 1997. She also manages another
Fidelity fund. Since joining Fidelity in 1987, Ms. Uhrig has worked as
an analyst and manager.

Richard Mace is Vice President and manager of Overseas Portfolio,
which he has managed since March 1996. He also manages several other
Fidelity funds. Since joining Fidelity in 1987, Mr. Mace has worked as
an analyst and manager.

John Avery is manager of Balanced Portfolio, which he has managed
since January 1998; he had been associate manager of the fund since
September 1997. He also manages another Fidelity fund. Mr. Avery
joined Fidelity as an analyst in 1995. Previously, he was an analyst
for Putnam Investments from 1993 to 1994.

Stephen Petersen is Vice President and manager of Equity-Income
Portfolio, which he has managed since January 1997. He also manages
another Fidelity fund. Since joining Fidelity in 1980, Mr. Petersen
has worked as an analyst and manager.

Louis Salemy is manager of Growth & Income Portfolio, which he has
managed since September 1998. Previously, he was associate manager of
Growth & Income Portfolio and managed other Fidelity funds. Since
joining Fidelity in 1992, Mr. Salemy has worked as an analyst,
manager, and portfolio assistant.

Dick Habermann is Vice President and lead manager of Asset Manager
Portfolio and Asset Manager: Growth Portfolio, both of which he has
managed since March 1996. Other Fidelity investment professionals
assist Mr. Habermann in selecting investments within each asset class
for the funds. He also manages several other Fidelity funds. Mr
Habermann is a Senior Vice President of FMR Co. He joined Fidelity in
1968.

Kevin Grant is Vice President and manager of Investment Grade Bond
Portfolio, which he has managed since February 1997. He also is Vice
President of Balanced Portfolio and manager of its fixed-income
investments since March 1996. He also manages several other Fidelity
funds. Mr. Grant joined Fidelity as a portfolio manager in 1993.

Barry Coffman is Vice President and manager of High Income Portfolio,
which he has managed since August 1990. He also co-manages other
Fidelity funds. Mr. Coffman joined Fidelity as an analyst in 1986.

Each fund has an investment objective similar to that of an existing
Fidelity fund. Index 500 Portfolio is most similar to Spartan Market
Index Fund; Mid Cap Portfolio is most similar to Fidelity Advisor Mid
Cap Fund; Growth Opportunities Portfolio is most similar to Fidelity
Advisor Growth Opportunities Fund; Contrafund Portfolio is most
similar to Fidelity Contrafund; Growth Portfolio is most similar to
Fidelity Growth Company Fund; Overseas Portfolio is most similar to
Fidelity Overseas Fund; Balanced Portfolio is most similar to Fidelity
Advisor Balanced Fund; Equity-Income Portfolio is most similar to
Fidelity Equity-Income Fund; Growth & Income Portfolio is most similar
to Fidelity Growth & Income Portfolio; Asset Manager Portfolio is most
similar to Fidelity Asset Manager; Asset Manager: Growth Portfolio is
most similar to Fidelity Asset Manager: Growth; Investment Grade Bond
Portfolio is most similar to Fidelity Investment Grade Bond Fund; High
Income Portfolio is most similar to Fidelity High Income Fund; and
Money Market Portfolio is most similar to Fidelity Cash Reserves.

The performance of a fund is not expected to be the same as the
performance of the existing Fidelity fund to which it is most similar
due to differences in investments, economies of scale, and other
factors. Various insurance-related costs at the insurance company's
separate account level will also affect performance.

Fidelity and BT investment personnel may invest in securities for
their own investment accounts pursuant to codes of ethics that
establish procedures for personal investing and restrict certain
transactions.

Mid Cap, Growth Opportunities, Contrafund, Growth, Overseas, Balanced,
Equity-Income, Growth & Income, Asset Manager, Asset Manager: Growth,
Investment Grade Bond, High Income, and Money Market each pays a
management fee to FMR. The management fee is calculated and paid to
FMR every month. The fee for each fund (except Money Market) is
calculated by adding a group fee rate to an individual fund fee rate,
dividing by twelve, and multiplying the result by the fund's average
net assets throughout the month.

The fee for Money Market is calculated by adding a group fee rate to
an individual fund fee rate, dividing by twelve and multiplying the
result by the fund's average net assets throughout the month, and then
adding an income-based fee. The income-based fee is 6% of the fund's
monthly gross income in excess of an annualized 5% yield, but it
cannot rise above an annual rate of 0.24% of the fund's average net
assets throughout that month.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for Mid
Cap, Growth Opportunities, Contrafund, Growth, Overseas, Balanced,
Equity-Income, Growth & Income, Asset Manager, and Asset Manager:
Growth, or 0.37% for Investment Grade Bond, High Income, and Money
Market, and it drops as total assets under management increase.

For December 1998, the group fee rate was 0.13% for Investment Grade
Bond, High Income, and Money Market, and the group fee rate was 0.29%
for Mid Cap, Growth Opportunities, Contrafund, Growth, Overseas,
Balanced, Equity-Income, Growth & Income, Asset Manager, and Asset
Manager: Growth. The individual fund fee rate is 0.03% for Money
Market. The individual fund fee rate is 0.15% for Balanced. The
individual fund fee rate is 0.20% for Equity-Income and Growth &
Income. The individual fund fee rate is 0.25% for Asset Manager. The
individual fund fee rate is 0.30% for Mid Cap, Growth Opportunities,
Contrafund, Growth, Asset Manager: Growth, and Investment Grade Bond.
The individual fund fee rate is 0.45% for Overseas and High Income.

Index 500 pays management and sub-advisory fees to FMR and BT,
respectively. These fees are calculated and paid every month. The fund
pays a management fee at an annual rate of 0.24% of its average net
assets to FMR, and a sub-advisory fee (representing 40% of net income
from securities lending) of less than 0.01% to BT. FMR, independently
of the fund, also compensates BT for investment management, securities
lending and custodial services.

The following table states the total management (and, for Index 500,
sub-advisory) fee, as a percentage of each fund's average net assets,
for each fund (except Mid Cap) for the fiscal year ended December 31,
1998:

Total Management Fee

Index 500 Portfolio 0.24%

Growth Opportunities Portfolio 0.59%

Contrafund Portfolio 0.59%

Growth Portfolio 0.59%

Overseas Portfolio 0.74%

Balanced Portfolio 0.44%

Equity-Income Portfolio 0.49%

Growth & Income Portfolio 0.49%

Asset Manager Portfolio 0.54%

Asset Manager: Growth Portfolio 0.59%

Investment Grade Bond Portfolio 0.43%

High Income Portfolio 0.58%

Money Market Portfolio 0.20%

The following table states the total annual Initial Class operating
expenses, as a percentage of each class's average net assets, for each
fund (except Mid Cap) for the fiscal year ended December 31, 1998. The
total annual class operating expenses do not reflect the effect of any
expense reimbursements or reduction of certain expenses during the
period.

Total Annual Class Operating
Expenses

Index 500 Portfolio 0.35%A

Growth Opportunities Portfolio 0.71%B

Contrafund Portfolio 0.70%B

Growth Portfolio 0.68%B

Overseas Portfolio 0.91%B

Balanced Portfolio 0.59%B

Equity-Income Portfolio 0.58%B

Growth & Income Portfolio 0.61%B

Asset Manager Portfolio 0.64%B

Asset Manager: Growth Portfolio 0.73%B

Investment Grade Bond Portfolio 0.57%B

High Income Portfolio 0.70%B

Money Market Portfolio 0.30%

A EFFECTIVE AUGUST 27, 1992, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
INITIAL CLASS OF INDEX 500 TO THE EXTENT THAT TOTAL OPERATING EXPENSES
(WITH THE EXCEPTIONS NOTED BELOW) EXCEED 0.28% OF ITS AVERAGE NET
ASSETS. EXPENSES ELIGIBLE FOR REIMBURSEMENT DO NOT INCLUDE INTEREST,
TAXES, BROKERAGE COMMISSIONS OR EXTRAORDINARY EXPENSES. IN ADDITION,
SUB-ADVISORY FEES PAID BY INDEX 500 ASSOCIATED WITH SECURITIES LENDING
ARE NOT ELIGIBLE FOR REIMBURSEMENT. THIS ARRANGEMENT CAN BE TERMINATED
BY FMR AT ANY TIME.

B FMR HAS VOLUNTARILY AGREED TO REIMBURSE INITIAL CLASS OF CERTAIN
FUNDS TO THE EXTENT THAT TOTAL OPERATING EXPENSES (EXCLUDING INTEREST,
TAXES, SECURITIES LENDING FEES, BROKERAGE COMMISSIONS AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF THEIR RESPECTIVE AVERAGE
NET ASSETS, EXCEED THE FOLLOWING RATES:

Initial Class Effective Date

Mid Cap Portfolio 1.00% 12/28/98

Growth Opportunities Portfolio 1.50% 1/3/95

Contrafund Portfolio 1.00% 1/3/95

Growth Portfolio 1.50% 10/9/86

Overseas Portfolio 1.50% 1/28/87

Balanced Portfolio 1.50% 1/3/95

Equity-Income Portfolio 1.50% 10/9/86

Growth & Income Portfolio 1.00% 12/31/96

Asset Manager Portfolio 1.25% 1/1/90

Asset Manager: Growth Portfolio 1.00% 1/3/95

Investment Grade Bond Portfolio 0.80% 12/5/88

High Income Portfolio 1.00% 9/19/85

THESE ARRANGEMENTS CAN BE TERMINATED BY FMR AT ANY TIME.

A portion of the brokerage commissions that certain funds paid was
used to reduce each of those fund's expenses. In addition, certain
funds, or FMR on behalf of Index 500, entered into arrangements with
their custodian whereby credits realized as a result of uninvested
cash balances were used to reduce custodian expenses. Including these
reductions, the total annual Initial Class operating expenses, after
reimbursement for Index 500, stated in the table would have been:

Initial Class

Index 500 Portfolio 0.28%

Growth Opportunities Portfolio 0.70%

Contrafund Portfolio 0.66%

Growth Portfolio 0.66%

Overseas Portfolio 0.89%

Balanced Portfolio 0.58%

Equity-Income Portfolio 0.57%

Growth & Income Portfolio 0.60%

Asset Manager Portfolio 0.63%

Asset Manager: Growth Portfolio 0.72%

FMR pays FIMM, FMR U.K., FMR Far East, and FIIA for providing
assistance with investment advisory services, and FIIA in turn pays
FIIA(U.K.)L.

As of December 31, 1998, approximately 31% of Index 500's, 100% of Mid
Cap's, 27% of Growth Opportunities', 26% of Contrafund's, 38% of
Balanced's, 56% of Growth & Income's, 68% of Asset Manager: Growth's,
40% of Investment Grade Bond's, and 53% of Money Market's total
outstanding shares were held by FMR or an FMR affiliate.

FUND DISTRIBUTION

Each fund (except Index 500, Investment Grade Bond and Money Market)
is composed of multiple classes of shares. All classes of a fund have
a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

Initial Class of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 that
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with providing services intended
to result in the sale of Initial Class shares and/or shareholder
support services. FMR, directly or through FDC, may pay
intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees of each fund has authorized such payments for Initial
Class.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Variable Insurance Product funds,
provided that a fund receives brokerage services and commission rates
comparable to those of other broker-dealers.

BT may allocate brokerage transactions in a manner that takes into
account the sale of shares of Index 500, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.

No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell shares of the
funds to or to buy shares of the funds from any person to whom it is
unlawful to make such offer.

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand each
class's financial history. Initial Class of Index 500, Growth,
Overseas, Equity-Income, Asset Manager, Investment Grade Bond, High
Income, and Money Market has financial history for the past 5 years.
Initial Class of Mid Cap, Growth Opportunities, Contrafund, Balanced,
Growth & Income, and Asset Manager: Growth has under 5 years of
financial history, beginning with its respective commencement of
operations date. Certain information reflects financial results for a
single class share. Total returns for each period include the
reinvestment of all dividends and distributions. This information has
been audited by PricewaterhouseCoopers LLP, independent accountants,
whose report, along with each fund's financial highlights and
financial statements, are included in each fund's Annual Report. A
free copy of each Annual Report is available upon request.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INDEX 500 PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 114.40 $ 89.05 $ 75.71 $ 56.22 $ 55.74
period

Income from Investment
Operations

Net investment income 1.65C 1.80C 1.04 .85 1.14

Net realized and unrealized 29.70 26.67 15.55 19.72 (.56)
gain (loss)

Total from investment 31.35 28.47 16.59 20.57 .58
operations

Less Distributions

From net investment income (1.36) (1.03) (.91) (.95) --

From net realized gain (3.15) (2.09) (2.34) (.11) (.10)

In excess of net realized -- -- -- (.02) --
gain

Total distributions (4.51) (3.12) (3.25) (1.08) (.10)

Net asset value, end of period $ 141.24 $ 114.40 $ 89.05 $ 75.71 $ 56.22

Total returnA,B 28.31% 32.83% 22.71% 37.19% 1.04%

Net assets, end of period $ 3,772,068 $ 2,098,042 $ 823,243 $ 245,700 $ 51,301
(000 omitted)

Ratio of expenses to average .28%D .28%D .28%D .28%D .28%D
net assets

Ratio of net investment 1.33% 1.74% 2.26% 2.70% 2.81%
income to average net assets

Portfolio turnover 4% 9% 14% 16% 2%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.

MID CAP PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Year ended December 31 1998C

Net asset value, beginning of $ 10.00
period

Income from Investment
Operations

Net realized and unrealized .31
gain (loss)

Total from investment .31
operations

Net asset value, end of period $ 10.31

Total returnB,E 3.10%

Net assets, end of period $ 516
(000 omitted)

Ratio of expenses to average 1.00%A,D
net assets

Ratio of net investment (.27)%A
income (loss) to average net
assets

Portfolio turnover 125%A

A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C FOR THE PERIOD DECEMBER 28, 1998 (COMMENCEMENT OF OPERATIONS OF
INITIAL CLASS SHARES) TO DECEMBER 31, 1998.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURN SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GROWTH OPPORTUNITIES PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995C

Net asset value, beginning of $ 19.27 $ 15.40 $ 13.07 $ 10.00
period

Income from Investment
Operations

Net investment income .26B .29B .26 .11

Net realized and unrealized 4.29 4.18 2.12 3.14
gain (loss)

Total from investment 4.55 4.47 2.38 3.25
operations

Less Distributions

From net investment income (.21) (.25) -- (.11)

From net realized gain (.73) (.35) (.05) (.07)

Total distributions (.94) (.60) (.05) (.18)

Net asset value, end of period $ 22.88 $ 19.27 $ 15.40 $ 13.07

Total returnA,F 24.61% 29.95% 18.27% 32.52%

Net assets, end of period $ 1,570,011 $ 1,025,766 $ 383,085 $ 164,303
(000 omitted)

Ratio of expenses to average .71% .74% .77% .85%D
net assets

Ratio of expenses to average .70%E .73%E .76%E .83%E
net assets after expense
reductions

Ratio of net investment 1.27% 1.68% 2.29% 2.49%
income to average net assets

Portfolio turnover 29% 26% 28% 38%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONTRAFUND PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995D

Net asset value, beginning of $ 19.94 $ 16.56 $ 13.79 $ 10.00
period

Income from Investment
Operations

Net investment income .13C .16C .14 .06

Net realized and unrealized 5.54 3.73 2.76 3.91
gain (loss)

Total from investment 5.67 3.89 2.90 3.97
operations

Less Distributions

From net investment income (.14) (.14) -- (.06)

From net realized gain (1.03) (.37) (.13) (.12)

Total distributions (1.17) (.51) (.13) (.18)

Net asset value, end of period $ 24.44 $ 19.94 $ 16.56 $ 13.79

Total returnA,B 29.98% 24.14% 21.22% 39.72%

Net assets, end of period $ 6,388,592 $ 4,107,868 $ 2,394,103 $ 877,000
(000 omitted)

Ratio of expenses to average .70% .71% .74% .72%
net assets

Ratio of expenses to average .66%E .68%E .71%E .72%
net assets after expense
reductions

Ratio of net investment .62% .90% 1.33% 1.07%
income to average net assets

Portfolio turnover 201% 142% 178% 132%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROWTH PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 37.10 $ 31.14 $ 29.20 $ 21.69 $ 23.08
period

Income from Investment
Operations

Net investment income .08C .20C .22 .08 .12

Net realized and unrealized 12.85 6.91 3.82 7.55 (.12)
gain (loss)

Total from investment 12.93 7.11 4.04 7.63 --
operations

Less Distributions

From net investment income (.19) (.21) (.08) (.12) (.12)

From net realized gain (4.97) (.94) (2.02) -- (1.27)

Total distributions (5.16) (1.15) (2.10) (.12) (1.39)

Net asset value, end of period $ 44.87 $ 37.10 $ 31.14 $ 29.20 $ 21.69

Total returnA,B 39.49% 23.48% 14.71% 35.36% (.02)%

Net assets, end of period $ 11,243,824 $ 7,727,132 $ 6,086,424 $ 4,162,702 $ 2,141,869
(000 omitted)

Ratio of expenses to average .68% .69% .69% .70% .70%
net assets

Ratio of expenses to average .66%D .67%D .67%D .70% .69%D
net assets after expense
reductions

Ratio of net investment .21% .58% .81% .37% .69%
income to average net assets

Portfolio turnover 123% 113% 81% 108% 122%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OVERSEAS PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 19.20 $ 18.84 $ 17.06 $ 15.67 $ 15.48
period

Income from Investment
Operations

Net investment income .23D .30D .32C,D .17 .19

Net realized and unrealized 2.13 1.70 1.88 1.34 .08
gain (loss)

Total from investment 2.36 2.00 2.20 1.51 .27
operations

Less Distributions

From net investment income (.38) (.33) (.20) (.06) (.08)

From net realized gain (1.12) (1.31) (.22) (.02) --

In excess of net realized -- -- -- (.04) --
gain

Total distributions (1.50) (1.64) (.42) (.12) (.08)

Net asset value, end of period $ 20.06 $ 19.20 $ 18.84 $ 17.06 $ 15.67

Total returnA,B 12.81% 11.56% 13.15% 9.74% 1.72%

Net assets, end of period $ 2,074,843 $ 1,926,322 $ 1,667,601 $ 1,343,134 $ 1,297,701
(000 omitted)

Ratio of expenses to average .91% .92% .93% .91% .92%
net assets

Ratio of expenses to average .89%E .90%E .92%E .91% .92%
net assets after expense
reductions

Ratio of net investment 1.19% 1.55% 1.84% 1.88% 1.28%
income to average net assets

Portfolio turnover 84% 67% 92% 50% 42%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.

BALANCED PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995G

Net asset value, beginning of $ 14.58 $ 12.23 $ 11.17 $ 10.00
period

Income from Investment
Operations

Net investment income .44C .44C .33 .14

Net realized and unrealized 2.00 2.22 .78 1.25
gain (loss)

Total from investment 2.44 2.66 1.11 1.39
operations

Less Distributions

From net investment income (.36) (.31) (.01)D (.14)

From net realized gain (.55) -- (.04)D (.08)

Total distributions (.91) (.31) (.05) (.22)

Net asset value, end of period $ 16.11 $ 14.58 $ 12.23 $ 11.17

Total returnA,B 17.64% 22.18% 9.98% 13.92%

Net assets, end of period $ 307,681 $ 214,538 $ 103,110 $ 43,155
(000 omitted)

Ratio of expenses to average .59% .61% .72% 1.42%E
net assets

Ratio of expenses to average .58%F .60%F .71%F 1.42%
net assets after expense
reductions

Ratio of net investment 2.94% 3.28% 3.63% 3.56%
income to average net assets

Portfolio turnover 94% 98% 163% 248%

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS OF
INITIAL CLASS SHARES) TO DECEMBER 31, 1995.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
EQUITY-INCOME PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 24.28 $ 21.03 $ 19.27 $ 15.35 $ 15.44
period

Income from Investment
Operations

Net investment income .38B .36B .35 .41 .41

Net realized and unrealized 2.31 5.06 2.30 4.69 .64
gain (loss)

Total from investment 2.69 5.42 2.65 5.10 1.05
operations

Less Distributions

From net investment income (.34) (.36) (.03) (.40) (.37)

From net realized gain (1.21) (1.81) (.86) (.78) (.77)

Total distributions (1.55) (2.17) (.89) (1.18) (1.14)

Net asset value, end of period $ 25.42 $ 24.28 $ 21.03 $ 19.27 $ 15.35

Total returnA,D 11.63% 28.11% 14.28% 35.09% 7.07%

Net assets, end of period $ 11,409,912 $ 10,106,742 $ 6,961,090 $ 4,879,435 $ 2,284,412
(000 omitted)

Ratio of expenses to average .58% .58% .58% .61% .60%
net assets

Ratio of expenses to average .57%C .57%C .56%C .61% .58%C
net assets after expense
reductions

Ratio of net investment 1.58% 1.65% 1.97% 2.56% 2.83%
income to average net assets

Portfolio turnover 28% 44% 186% 87% 134%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
D TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.

GROWTH & INCOME PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996G

Net asset value, beginning of $ 12.53 $ 9.90 $ 10.00
period

Income from Investment
Operations

Net investment income .15D .13D .00

Net realized and unrealized 3.54 2.84 (.10)
gain (loss)

Total from investment 3.69 2.97 (.10)
operations

Less Distributions

From net investment income -- (.08) --

From net realized gain (.07) (.26) --

Total distributions (.07) (.34) --

Net asset value, end of period $ 16.15 $ 12.53 $ 9.90

Total returnB,C 29.59% 30.09% (1.00)%

Net assets, end of period $ 1,141,806 $ 345,287 $ 990
(000 omitted)

Ratio of expenses to average .61% .70% 1.00%A,E
net assets

Ratio of expenses to average .60%F .70% 1.00%A
net assets after expense
reductions

Ratio of net investment 1.08% 1.14% 3.89%A
income to average net assets

Portfolio turnover 66% 81% 0%A

A ANNUALIZED
B TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF OPERATIONS OF
INITIAL CLASS SHARES).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET MANAGER PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 18.01 $ 16.93 $ 15.79 $ 13.79 $ 15.42
period

Income from Investment
Operations

Net investment income .59C .57C .63 .30 .45

Net realized and unrealized 1.84 2.58 1.55 1.99 (1.33)
gain (loss)

Total from investment 2.43 3.15 2.18 2.29 (.88)
operations

Less Distributions

From net investment income (.57) (.59) (.57) (.29) (.29)

From net realized gain (1.71) (1.48) (.47) -- (.46)

Total distributions (2.28) (2.07) (1.04) (.29) (.75)

Net asset value, end of period $ 18.16 $ 18.01 $ 16.93 $ 15.79 $ 13.79

Total returnA,B 15.05% 20.65% 14.60% 16.96% (6.09)%

Net assets, end of period $ 4,905,468 $ 4,399,937 $ 3,641,194 $ 3,332,844 $ 3,290,527
(000 omitted)

Ratio of expenses to average .64% .65% .74% .81% .81%
net assets

Ratio of expenses to average .63%D .64%D .73%D .79%D .80%D
net assets after expense
reductions

Ratio of net investment 3.46% 3.43% 3.60% 3.54% 4.07%
income to average net assets

Portfolio turnover 113% 101% 168% 256% 85%

</TABLE>

ASSET MANAGER: GROWTH PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995C

Net asset value, beginning of $ 16.36 $ 13.10 $ 11.77 $ 10.00
period

Income from Investment
Operations

Net investment income .41B .36B .21 .10

Net realized and unrealized 2.19 2.92 2.08 2.20
gain (loss)

Total from investment 2.60 3.28 2.29 2.30
operations

Less Distributions

From net investment income (.34) -- (.21) (.11)

From net realized gain (1.59) (.02) (.75) (.42)

Total distributions (1.93) (.02) (.96) (.53)

Net asset value, end of period $ 17.03 $ 16.36 $ 13.10 $ 11.77

Total returnA,F 17.57% 25.07% 20.04% 23.02%

Net assets, end of period $ 528,874 $ 483,231 $ 253,024 $ 68,247
(000 omitted)

Ratio of expenses to average .73% .77% .87% 1.00%D
net assets

Ratio of expenses to average .72%E .76%E .85%E 1.00%
net assets after expense
reductions

Ratio of net investment 2.60% 2.44% 2.63% 1.69%
income to average net assets

Portfolio turnover 98% 90% 120% 343%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INVESTMENT GRADE BOND PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 12.560 $ 12.240 $ 12.480 $ 11.020 $ 11.480
period

Income from Investment .725B .759B .670 .320 .733
Operations Net investment
income

Net realized and unrealized .335 .291 (.290) 1.530 (1.163)
gain (loss)

Total from investment 1.060 1.050 .380 1.850 (.430)
operations

Less Distributions From net (.590) (.730) (.620) (.390) --
investment income

From net realized gain (.070) -- -- -- (.010)

In excess of net realized -- -- -- -- (.020)
gain

Total distributions (.660) (.730) (.620) (.390) (.030)

Net asset value, end of period $ 12.960 $ 12.560 $ 12.240 $ 12.480 $ 11.020

Total returnA 8.85% 9.06% 3.19% 17.32% (3.76)%

Net assets, end of period $ 674,813 $ 324,525 $ 228,594 $ 181,546 $ 111,381
(000 omitted)

Ratio of expenses to average .57% .58% .58% .59% .67%
net assets

Ratio of net investment 5.85% 6.34% 6.49% 6.53% 6.53%
income to average net assets

Portfolio turnover 239% 191% 81% 182% 143%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HIGH INCOME PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 13.580 $ 12.520 $ 12.050 $ 10.750 $ 11.990
period

Income from Investment
Operations

Net investment income 1.111C 1.124C .927 .856 .770

Net realized and unrealized (1.591) .936 .643 1.224 (.910)
gain (loss)

Total from investment (.480) 2.060 1.570 2.080 (.140)
operations

Less Distributions

From net investment income (.970)D (.890) (.920) (.780) (.730)

From net realized gain (.600)D (.110) (.180) -- (.370)

Total distributions (1.570) (1.000) (1.100) (.780) (1.100)

Net asset value, end of period $ 11.530 $ 13.580 $ 12.520 $ 12.050 $ 10.750

Total returnA,B (4.33)% 17.67% 14.03% 20.72% (1.64)%

Net assets, end of period $ 2,348,954 $ 2,329,516 $ 1,588,822 $ 1,040,000 $ 569,417
(000 omitted)

Ratio of expenses to average .70% .71% .71% .71% .71%
net assets

Ratio of net investment 9.14% 8.88% 9.09% 9.32% 8.75%
income to average net assets

Portfolio turnover 92% 118% 123% 132% 122%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period

Income from Investment .053 .053 .052 .057 .042
Operations Net interest
income

Less Distributions From net (.053) (.053) (.052) (.057) (.042)
interest income

Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

Total returnA 5.46% 5.51% 5.41% 5.87% 4.25%

Net assets, end of period $ 1,507,489 $ 1,020,794 $ 1,126,155 $ 808,874 $ 748,606
(000 omitted)

Ratio of expenses to average .30% .31% .30% .33% .27%
net assets

Ratio of net interest income 5.33% 5.32% 5.28% 5.72% 4.32%
to average net assets

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.

ADDITIONAL INFORMATION ABOUT THE STANDARD & POOR'S 500 INDEX

"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Fidelity Distributors Corporation.

You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual and semi-annual
reports include a discussion of the fund's holdings and recent market
conditions and the fund's investment strategies that affected
performance.

For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-888-622-3175, or your insurance company.

The SAI, the funds' annual and semi-annual reports and other
related materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBERS 811-3329, 811-5511,
AND 811-7205.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

The third party marks appearing above are the marks of their
respective owners.

1.701851.101 VIP/VIPII/VIPIII-smpro-0499

Like securities of all mutual funds, these securities
have not been approved or disapproved by the
Securities and Exchange Commission, and the
Securities and Exchange Commission has not
determined if this prospectus is accurate or
complete. Any representation to the contrary is a
criminal offense.

VARIABLE
INSURANCE PRODUCTS
FUNDS
INITIAL CLASS

GROWTH AND GROWTH & INCOME FUNDS:

Index 500 Portfolio
Growth Opportunities Portfolio
Contrafund Portfolio
Growth Portfolio
Overseas Portfolio
Balanced Portfolio
Equity-Income Portfolio
Growth & Income Portfolio

ASSET ALLOCATION FUNDS:

Asset Manager Portfolio
Asset Manager: Growth Portfolio

INCOME FUNDS:

Investment Grade Bond Portfolio
High Income Portfolio

MONEY MARKET FUND:

Money Market Portfolio

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

8 PERFORMANCE

FUND BASICS 17 INVESTMENT DETAILS

23 VALUING SHARES

SHAREHOLDER INFORMATION 23 BUYING AND SELLING SHARES

24 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

24 TAX CONSEQUENCES

FUND SERVICES 24 FUND MANAGEMENT

28 FUND DISTRIBUTION

APPENDIX 29 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

Bankers Trust Company (BT)'s 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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

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.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

GROWTH OPPORTUNITIES PORTFOLIO seeks to provide capital growth.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

GROWTH PORTFOLIO seeks to achieve capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(small solid bullet) Investing primarily in common stocks.

(small solid bullet) Investing in companies that it believes have
above-average growth potential (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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) "GROWTH" INVESTING. "Growth" stocks can perform
differently than the market as a whole and other types of stocks and
can be more volatile than other types of stocks.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

OVERSEAS PORTFOLIO seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 and industry position and market and economic
conditions to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

BALANCED PORTFOLIO seeks both income and growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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) Analyzing a security's issuer using fundamental
factors and evaluating each security's current price relative to
estimated long-term value to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause prices of debt securities to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them

INVESTMENT OBJECTIVE

GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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) 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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of debt securities to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

HIGH INCOME PORTFOLIO seeks a high level of current income while also
considering growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

INVESTMENT OBJECTIVE

MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and liquidity.

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) FINANCIAL SERVICES EXPOSURE. Changes in
government regulation or economic downturns can have a significant
negative affect on issuers in the financial services sector.

PERFORMANCE

A fund's total return and/or yield may be quoted in advertising in
accordance with current law and interpretations thereof.

YEAR-BY-YEAR RETURNS

INDEX 500 PORTFOLIO - INITIAL
CLASS

Calendar Year 1993 1994 1995 1996 1997 1998

9.74% 1.04% 37.19% 22.71% 32.83% 28.31%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES
PORTFOLIO - INITIAL CLASS

Calendar Year 1995 1996 1997 1998

32.52% 18.27% 29.95% 24.61%

</TABLE>

CONTRAFUND PORTFOLIO -
INITIAL CLASS

Calendar Year 1995 1996 1997 1998

39.72% 21.22% 24.14% 29.98%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH PORTFOLIO - INITIAL
CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

31.51% -11.73% 45.51% 9.32% 19.37% -0.02% 35.36% 14.71% 23.48% 39.49%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 31.51
Row: 2, Col: 1, Value: -11.73
Row: 3, Col: 1, Value: 45.51
Row: 4, Col: 1, Value: 9.32
Row: 5, Col: 1, Value: 19.37
Row: 6, Col: 1, Value: -0.02
Row: 7, Col: 1, Value: 35.36
Row: 8, Col: 1, Value: 14.71
Row: 9, Col: 1, Value: 23.48
Row: 10, Col: 1, Value: 39.49

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OVERSEAS PORTFOLIO - INITIAL
CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

26.28% -1.67% 8.00% -10.72% 37.35% 1.72% 9.74% 13.15% 11.56% 12.81%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCED PORTFOLIO - INITIAL
CLASS

Calendar Year 1995 1996 1997 1998

13.92% 9.98% 22.18% 17.64%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: 13.92
Row: 8, Col: 1, Value: 9.98
Row: 9, Col: 1, Value: 22.18
Row: 10, Col: 1, Value: 17.64
DURING THE PERIODS SHOWN IN THE CHART FOR INITIAL CLASS OF BALANCED
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 11.83% (QUARTER ENDING
JUNE 30, 1997) AND THE LOWEST RETURN FOR A QUARTER WAS -5.79% (QUARTER
ENDING SEPTEMBER 30, 1998).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY-INCOME PORTFOLIO -
INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

17.34% -15.29% 31.44% 16.89% 18.29% 7.07% 35.09% 14.28% 28.11% 11.63%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 17.34
Row: 2, Col: 1, Value: -15.29
Row: 3, Col: 1, Value: 31.44
Row: 4, Col: 1, Value: 16.89
Row: 5, Col: 1, Value: 18.29
Row: 6, Col: 1, Value: 7.07
Row: 7, Col: 1, Value: 35.09
Row: 8, Col: 1, Value: 14.28
Row: 9, Col: 1, Value: 28.11
Row: 10, Col: 1, Value: 11.63

GROWTH & INCOME PORTFOLIO -
INITIAL CLASS

Calendar Year 1997 1998

30.09% 29.59%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET MANAGER PORTFOLIO -
INITIAL CLASS

Calendar Year 1990 1991 1992 1993 1994 1995 1996 1997 1998

6.72% 22.56% 11.71% 21.23% -6.09% 16.96% 14.60% 20.65% 15.05%

</TABLE>

ASSET MANAGER: GROWTH
PORTFOLIO - INITIAL CLASS

Calendar Year 1995 1996 1997 1998

23.02% 20.04% 25.07% 17.57%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE BOND
PORTFOLIO - INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

10.26% 6.21% 16.38% 6.65% 10.96% -3.76% 17.32% 3.19% 9.06% 8.85%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH INCOME PORTFOLIO -
INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

-4.17% -2.23% 35.08% 23.17% 20.40% -1.64% 20.72% 14.03% 17.67% -4.33%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: -4.17
Row: 2, Col: 1, Value: -2.23
Row: 3, Col: 1, Value: 35.08
Row: 4, Col: 1, Value: 23.17
Row: 5, Col: 1, Value: 20.4
Row: 6, Col: 1, Value: -1.64
Row: 7, Col: 1, Value: 20.72
Row: 8, Col: 1, Value: 14.03
Row: 9, Col: 1, Value: 17.67
Row: 10, Col: 1, Value: -4.33

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO -
INITIAL CLASS

Calendar Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

9.12% 8.04% 6.09% 3.90% 3.23% 4.25% 5.87% 5.41% 5.51% 5.46%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 9.119999999999999
Row: 2, Col: 1, Value: 8.039999999999999
Row: 3, Col: 1, Value: 6.09
Row: 4, Col: 1, Value: 3.9
Row: 5, Col: 1, Value: 3.23
Row: 6, Col: 1, Value: 4.25
Row: 7, Col: 1, Value: 5.87
Row: 8, Col: 1, Value: 5.41
Row: 9, Col: 1, Value: 5.51
Row: 10, Col: 1, Value: 5.46

AVERAGE ANNUAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROWTH AND GROWTH & INCOME
FUNDS

For the periods ended Past 1 year Past 5 years Past 10 years/ Life of class*
December 31, 1998

INDEX 500 PORTFOLIO - INITIAL 28.31% 23.72% 21.27%A
CLASS

S&P 500 28.58% 24.06% 21.61%A

Lipper S&P 500 Index 28.05% 23.56% 21.12%A
Objective Funds Average

GROWTH OPPORTUNITIES 24.61% n/a 26.26%B
PORTFOLIO - INITIAL CLASS

S&P 500 28.58% n/a 30.55%B

Lipper Growth Funds Average 22.86% n/a n/a

CONTRAFUND PORTFOLIO - 29.98% n/a 28.62%B
INITIAL CLASS

S&P 500 28.58% n/a 30.55%B

Lipper Growth Funds Average 22.86% n/a n/a

GROWTH PORTFOLIO - INITIAL 39.49% 21.74% 19.41%
CLASS

Russell 3000 Growth Index 35.02% 24.21% 19.77%

Lipper Capital Appreciation 19.96% 14.96% 14.09%
Funds Average

S&P 500 28.58% 24.06% 19.21%

OVERSEAS PORTFOLIO - INITIAL 12.81% 9.71% 10.09%
CLASS

Morgan Stanley Capital 20.27% 9.29% 5.59%
International Europe,
Australasia, Far East Index

Lipper International Funds 13.02% 7.69% 8.98%
Average

BALANCED PORTFOLIO - INITIAL 17.64% n/a 15.86%B
CLASS

S&P 500 28.58% n/a 30.55%B

Lipper Balanced Funds Average 13.48% n/a n/a

Fidelity Balanced Composite 20.98% n/a 22.25%B
Index

EQUITY-INCOME PORTFOLIO - 11.63% 18.77% 15.62%
INITIAL CLASS

Russell 3000 Value Index 13.50% 20.11% 17.08%

Lipper Equity Income Funds 10.89% 16.60% 14.47%
Average

S&P 500 28.58% 24.06% 19.21%

GROWTH & INCOME PORTFOLIO - 29.59% n/a 29.84%C
INITIAL CLASS

S&P 500 28.58% n/a 30.95%C

Lipper Growth and Income 15.61% n/a 20.81%C
Funds Average

</TABLE>

* EXCEPT AS INDICATED, BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR
FOLLOWING THE CLASS'S COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1993.

B FROM JANUARY 3, 1995 (CLASS'S COMMENCEMENT OF OPERATIONS).

C FROM JANUARY 1, 1997.

ASSET ALLOCATION FUNDS

For the periods ended Past 1 year Past 5 years Life of class*
December 31, 1998

ASSET MANAGER PORTFOLIO - 15.05% 11.81% 13.38%A
INITIAL CLASS

S&P 500 28.58% 24.06% 17.90%A

Fidelity Asset Allocation 18.61% 14.42% 12.14%A
Composite Index

ASSET MANAGER: GROWTH 17.57% n/a 21.42%B
PORTFOLIO - INITIAL CLASS

S&P 500 28.58% n/a 30.55%B

Fidelity Aggressive Asset 22.74% n/a n/a
Allocation Composite Index

* EXCEPT AS INDICATED, BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR
FOLLOWING THE CLASS'S COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1990.

B FROM JANUARY 3, 1995 (CLASS'S COMMENCEMENT OF OPERATIONS).

INCOME FUNDS

For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998

INVESTMENT GRADE BOND 8.85% 6.70% 8.36%
PORTFOLIO - INITIAL CLASS

Lehman Brothers Aggregate 8.69% 7.27% 9.26%
Bond Index

Lipper Intermediate 7.25% 6.35% 8.28%
Investment Grade Debt Funds
Average

HIGH INCOME PORTFOLIO - -4.33% 8.80% 11.08%
INITIAL CLASS

Merrill Lynch High Yield 3.66% 9.01% 11.08%
Master Index

Lipper High Current Yield -.44% 7.37% 9.34%
Funds Average

MONEY MARKET FUND

For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998

MONEY MARKET PORTFOLIO - 5.46% 5.30% 5.67%
INITIAL CLASS

S&P 500 is a market capitalization-weighted index of common stocks.

Russell 3000(registered trademark) Growth Index is a market
capitalization-weighted index of U.S. domiciled growth oriented
stocks.

Russell 3000(registered trademark) Value Index is a market
capitalization-weighted index of U.S. domiciled value oriented stocks.

The Lehman Brothers U.S. Treasury Index is a market value-weighted
index of public obligations of the U.S. Treasury with maturities of
one year or more.

Each Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.

FUND BASICS

INVESTMENT DETAILS

THE GROWTH AND GROWTH & INCOME FUNDS

INVESTMENT OBJECTIVE

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

PRINCIPAL INVESTMENT STRATEGIES

BT normally invests at least 80% of the fund's assets in common stocks
included in the S&P 500. The S&P 500 is a widely recognized, unmanaged
index of common stock prices.

BT may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

GROWTH OPPORTUNITIES PORTFOLIO seeks to provide capital growth.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks. FMR
may also invest the fund's assets in other types of securities,
including bonds which may be lower-quality debt securities.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

GROWTH PORTFOLIO seeks to achieve capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR invests the fund's assets in companies FMR believes have
above-average growth potential. Growth may be measured by factors such
as earnings or revenue.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

OVERSEAS PORTFOLIO seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

BALANCED PORTFOLIO seeks both income and growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

PRINCIPAL INVESTMENT STRATEGIES

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect a fund's performance:

THE ASSET ALLOCATION FUNDS

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

Neutral Mix
STOCKS 50%
(can range from 30-70%)

BONDS 40%
(can range from 20-60%)

SHORT-TERM/MONEY
MARKET 10% (can range
from 0-50%)

Row: 1, Col: 1, Value: 10.0
Row: 1, Col: 2, Value: 50.0
Row: 1, Col: 3, Value: 40.0

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

INVESTMENT OBJECTIVE

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

PRINCIPAL INVESTMENT STRATEGIES

Neutral Mix
STOCKS 70%
(can range from
50-100%)

BONDS 25%
(can range from 0-50%)

SHORT-TERM/MONEY
MARKET 5% (can range
from 0-50%)

Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 70.0
Row: 1, Col: 3, Value: 25.0

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect a fund's performance:

In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance and the fund may not achieve its investment objective.

THE INCOME FUNDS

INVESTMENT OBJECTIVE

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets in U.S. dollar-denominated
investment-grade bonds.

INVESTMENT OBJECTIVE

HIGH INCOME PORTFOLIO seeks a high level of current income while also
considering growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include a
security's structural features and current price compared to its
long-term value, and the earnings potential, credit standing and
management of the security's issuer.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect a fund's performance:

In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance and the fund may not achieve its investment objective.

THE MONEY MARKET FUND

INVESTMENT OBJECTIVE

MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and liquidity.

PRINCIPAL INVESTMENT STRATEGIES

FMR will invest more than 25% of the fund's total assets in the
financial services industry.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect the fund's performance:

FUNDAMENTAL INVESTMENT POLICIES

The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.

INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.

GROWTH OPPORTUNITIES PORTFOLIO seeks to provide capital growth by
investing primarily in common stocks and securities convertible into
common stocks.

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

GROWTH PORTFOLIO seeks to achieve capital appreciation.

OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through
investments in foreign securities.

GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and
other investments.

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current
income as is consistent with the preservation of capital.

HIGH INCOME PORTFOLIO seeks a high level of current income by
investing primarily in high yielding, fixed-income securities, while
also considering growth of capital.

MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and liquidity by investing in
money market instruments.

VALUING SHARES

Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.

A class's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates Initial
Class's NAV as of the close of business of the NYSE, normally 4:00
p.m. Eastern time. However, NAV may be calculated earlier if trading
on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). Each fund's assets are valued as of this
time for the purpose of computing Initial Class's NAV.

Money Market's assets are valued on the basis of amortized cost.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Initial Class is the class's NAV.

The price to sell one share of Initial Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

Money Market Portfolio normally declares dividends daily and pays them
monthly. Index 500, Growth Opportunities, Contrafund, Growth,
Overseas, Balanced, Equity-Income, Growth & Income, Asset Manager,
Asset Manager: Growth, Investment Grade Bond, and High Income
Portfolios will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for a
fund.

Dividends and capital gains distributions from a fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.

FMR is each fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing investments for the
funds (except Index 500) and handling the funds' business affairs.

BT serves as sub-adviser and custodian for Index 500. BT chooses the
fund's investments and places orders to buy, sell and lend the fund's
investments.

As of December 31, 1998, BT had approximately $319.4 billion in
discretionary assets under management.

BT's principal offices are at 130 Liberty Street, New York, New York
10006.

BT is a wholly owned subsidiary of Bankers Trust Corporation. On
November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust
Corporation and all of its subsidiaries would merge with and into a
subsidiary of Deutsche Bank AG. The merger is contingent upon various
regulatory approvals. Index 500's Board of Trustees will consider
approval of a new subadvisory agreement among the fund, FMR and BT or
its successor by merger that would be effective at the time of the
merger and would be presented to the fund's shareholders for approval.

Affiliates assist FMR with foreign investments:

(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for Growth
Opportunities, Contrafund, Overseas, Balanced, Growth & Income, Asset
Manager, Asset Manager: Growth, and High Income. FMR U.K. was
organized in 1986 to provide investment research and advice to FMR.
Currently, FMR U.K. provides investment research and advice on issuers
based outside the United States and may also provide investment
advisory services for each fund.

(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for Growth
Opportunities, Contrafund, Overseas, Balanced, Growth & Income, Asset
Manager, Asset Manager: Growth, and High Income. FMR Far East was
organized in 1986 to provide investment research and advice to FMR.
Currently, FMR Far East provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services for each fund.

FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.

Each fund has an investment objective similar to that of an existing
Fidelity fund. Index 500 Portfolio is most similar to Spartan Market
Index Fund; Growth Opportunities Portfolio is most similar to Fidelity
Advisor Growth Opportunities Fund; Contrafund Portfolio is most
similar to Fidelity Contrafund; Growth Portfolio is most similar to
Fidelity Growth Company Fund; Overseas Portfolio is most similar to
Fidelity Overseas Fund; Balanced Portfolio is most similar to Fidelity
Advisor Balanced Fund; Equity-Income Portfolio is most similar to
Fidelity Equity-Income Fund; Growth & Income Portfolio is most similar
to Fidelity Growth & Income Portfolio; Asset Manager Portfolio is most
similar to Fidelity Asset Manager; Asset Manager: Growth Portfolio is
most similar to Fidelity Asset Manager: Growth; Investment Grade Bond
Portfolio is most similar to Fidelity Investment Grade Bond Fund; High
Income Portfolio is most similar to Fidelity High Income Fund; and
Money Market Portfolio is most similar to Fidelity Cash Reserves.

Growth Opportunities, Contrafund, Growth, Overseas, Balanced,
Equity-Income, Growth & Income, Asset Manager, Asset Manager: Growth,
Investment Grade Bond, High Income, and Money Market each pays a
management fee to FMR. The management fee is calculated and paid to
FMR every month. The fee for each fund (except Money Market) is
calculated by adding a group fee rate to an individual fund fee rate,
dividing by twelve, and multiplying the result by the fund's average
net assets throughout the month.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
Growth Opportunities, Contrafund, Growth, Overseas, Balanced,
Equity-Income, Growth & Income, Asset Manager, and Asset Manager:
Growth, or 0.37% for Investment Grade Bond, High Income, and Money
Market, and it drops as total assets under management increase.

For December 1998, the group fee rate was 0.13% for Investment Grade
Bond, High Income, and Money Market, and the group fee rate was 0.29%
for Growth Opportunities, Contrafund, Growth, Overseas, Balanced,
Equity-Income, Growth & Income, Asset Manager, and Asset Manager:
Growth. The individual fund fee rate is 0.03% for Money Market. The
individual fund fee rate is 0.15% for Balanced. The individual fund
fee rate is 0.20% for Equity-Income and Growth & Income. The
individual fund fee rate is 0.25% for Asset Manager. The individual
fund fee rate is 0.30% for Growth Opportunities, Contrafund, Growth,
Asset Manager: Growth, and Investment Grade Bond. The individual fund
fee rate is 0.45% for Overseas and High Income.

The following table states the total management (and, for Index 500,
sub-advisory) fee, as a percentage of each fund's average net assets,
for each fund for the fiscal year ended December 31, 1998:

Total Management Fee

Index 500 Portfolio 0.24%

Growth Opportunities Portfolio 0.59%

Contrafund Portfolio 0.59%

Growth Portfolio 0.59%

Overseas Portfolio 0.74%

Balanced Portfolio 0.44%

Equity-Income Portfolio 0.49%

Growth & Income Portfolio 0.49%

Asset Manager Portfolio 0.54%

Asset Manager: Growth Portfolio 0.59%

Investment Grade Bond Portfolio 0.43%

High Income Portfolio 0.58%

Money Market Portfolio 0.20%

The following table states the total annual Initial Class operating
expenses, as a percentage of each class's average net assets, for each
fund for the fiscal year ended December 31, 1998. The total annual
class operating expenses do not reflect the effect of any expense
reimbursements or reduction of certain expenses during the period.

Total Annual Class Operating
Expenses

Index 500 Portfolio 0.35%A

Growth Opportunities Portfolio 0.71%B

Contrafund Portfolio 0.70%B

Growth Portfolio 0.68%B

Overseas Portfolio 0.91%B

Balanced Portfolio 0.59%B

Equity-Income Portfolio 0.58%B

Growth & Income Portfolio 0.61%B

Asset Manager Portfolio 0.64%B

Asset Manager: Growth Portfolio 0.73%B

Investment Grade Bond Portfolio 0.57%B

High Income Portfolio 0.70%B

Money Market Portfolio 0.30%

Initial Class Effective Date

Growth Opportunities Portfolio 1.50% 1/3/95

Contrafund Portfolio 1.00% 1/3/95

Growth Portfolio 1.50% 10/9/86

Overseas Portfolio 1.50% 1/28/87

Balanced Portfolio 1.50% 1/3/95

Equity-Income Portfolio 1.50% 10/9/86

Growth & Income Portfolio 1.00% 12/31/96

Asset Manager Portfolio 1.25% 1/1/90

Asset Manager: Growth Portfolio 1.00% 1/3/95

Investment Grade Bond Portfolio 0.80% 12/5/88

High Income Portfolio 1.00% 9/19/85

THESE ARRANGEMENTS CAN BE TERMINATED BY FMR AT ANY TIME.

Initial Class

Index 500 Portfolio 0.28%

Growth Opportunities Portfolio 0.70%

Contrafund Portfolio 0.66%

Growth Portfolio 0.66%

Overseas Portfolio 0.89%

Balanced Portfolio 0.58%

Equity-Income Portfolio 0.57%

Growth & Income Portfolio 0.60%

Asset Manager Portfolio 0.63%

Asset Manager: Growth Portfolio 0.72%

FMR pays FIMM, FMR U.K., FMR Far East, and FIIA for providing
assistance with investment advisory services, and FIIA in turn pays
FIIA(U.K.)L.

As of December 31, 1998, approximately 31% of Index 500's, 27% of
Growth Opportunities', 26% of Contrafund's, 38% of Balanced's, 56% of
Growth & Income's, 68% of Asset Manager: Growth's, 40% of Investment
Grade Bond's, and 53% of Money Market's total outstanding shares were
held by an FMR affiliate.

FUND DISTRIBUTION

Each fund (except Index 500, Investment Grade Bond and Money Market)
is composed of multiple classes of shares. All classes of a fund have
a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Initial
Class's shares.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell shares of the
funds to or to buy shares of the funds from any person to whom it is
unlawful to make such offer.

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand each
class's financial history. Initial Class of Index 500, Growth,
Overseas, Equity-Income, Asset Manager, Investment Grade Bond, High
Income, and Money Market has financial history for the past 5 years.
Initial Class of Growth Opportunities, Contrafund, Balanced, Growth &
Income, and Asset Manager: Growth has under 5 years of financial
history, beginning with its respective commencement of operations
date. Certain information reflects financial results for a single
class share. Total returns for each period include the reinvestment of
all dividends and distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with each fund's financial highlights and financial statements,
are included in each fund's Annual Report. A free copy of each Annual
Report is available upon request.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INDEX 500 PORTFOLIO - INITIAL CLASS

Selected Per-Share Data and
Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning $ 114.40 $ 89.05 $ 75.71 $ 56.22 $ 55.74
of period

Income from Investment
Operations

Net investment income 1.65C 1.80C 1.04 .85 1.14

Net realized and 29.70 26.67 15.55 19.72 (.56)
unrealized gain (loss)

Total from investment 31.35 28.47 16.59 20.57 .58
operations

Less Distributions

From net investment income (1.36) (1.03) (.91) (.95) --

From net realized gain (3.15) (2.09) (2.34) (.11) (.10)

In excess of net realized -- -- -- (.02) --
gain

Total distributions (4.51) (3.12) (3.25) (1.08) (.10)

Net asset value, end of $ 141.24 $ 114.40 $ 89.05 $ 75.71 $ 56.22
period

Total returnA,B 28.31% 32.83% 22.71% 37.19% 1.04%

Net assets, end of period $ 3,772,068 $ 2,098,042 $ 823,243 $ 245,700 $ 51,301
(000 omitted)

Ratio of expenses to .28%D .28%D .28%D .28%D .28%D
average net assets

Ratio of net investment 1.33% 1.74% 2.26% 2.70% 2.81%
income to average net assets

Portfolio turnover 4% 9% 14% 16% 2%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GROWTH OPPORTUNITIES PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995C

Net asset value, beginning $ 19.27 $ 15.40 $ 13.07 $ 10.00
of period

Income from Investment
Operations

Net investment income .26B .29B .26 .11

Net realized and 4.29 4.18 2.12 3.14
unrealized gain (loss)

Total from investment 4.55 4.47 2.38 3.25
operations

Less Distributions

From net investment income (.21) (.25) -- (.11)

From net realized gain (.73) (.35) (.05) (.07)

Total distributions (.94) (.60) (.05) (.18)

Net asset value, end of $ 22.88 $ 19.27 $ 15.40 $ 13.07
period

Total returnA,F 24.61% 29.95% 18.27% 32.52%

Net assets, end of period $ 1,570,011 $ 1,025,766 $ 383,085 $ 164,303
(000 omitted)

Ratio of expenses to .71% .74% .77% .85%D
average net assets

Ratio of expenses to .70%E .73%E .76%E .83%E
average net assets after
expense reductions

Ratio of net investment 1.27% 1.68% 2.29% 2.49%
income to average net assets

Portfolio turnover 29% 26% 28% 38%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONTRAFUND PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995D

Net asset value, beginning $ 19.94 $ 16.56 $ 13.79 $ 10.00
of period

Income from Investment
Operations

Net investment income .13C .16C .14 .06

Net realized and 5.54 3.73 2.76 3.91
unrealized gain (loss)

Total from investment 5.67 3.89 2.90 3.97
operations

Less Distributions

From net investment income (.14) (.14) -- (.06)

From net realized gain (1.03) (.37) (.13) (.12)

Total distributions (1.17) (.51) (.13) (.18)

Net asset value, end of $ 24.44 $ 19.94 $ 16.56 $ 13.79
period

Total returnA,B 29.98% 24.14% 21.22% 39.72%

Net assets, end of period $ 6,388,592 $ 4,107,868 $ 2,394,103 $ 877,000
(000 omitted)

Ratio of expenses to .70% .71% .74% .72%
average net assets

Ratio of expenses to .66%E .68%E .71%E .72%
average net assets after
expense reductions

Ratio of net investment .62% .90% 1.33% 1.07%
income to average net assets

Portfolio turnover 201% 142% 178% 132%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROWTH PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning $ 37.10 $ 31.14 $ 29.20 $ 21.69 $ 23.08
of period

Income from Investment
Operations

Net investment income .08C .20C .22 .08 .12

Net realized and 12.85 6.91 3.82 7.55 (.12)
unrealized gain (loss)

Total from investment 12.93 7.11 4.04 7.63 --
operations

Less Distributions

From net investment income (.19) (.21) (.08) (.12) (.12)

From net realized gain (4.97) (.94) (2.02) -- (1.27)

Total distributions (5.16) (1.15) (2.10) (.12) (1.39)

Net asset value, end of $ 44.87 $ 37.10 $ 31.14 $ 29.20 $ 21.69
period

Total returnA,B 39.49% 23.48% 14.71% 35.36% (.02)%

Net assets, end of period $ 11,243,824 $ 7,727,132 $ 6,086,424 $ 4,162,702 $ 2,141,869
(000 omitted)

Ratio of expenses to .68% .69% .69% .70% .70%
average net assets

Ratio of expenses to .66%D .67%D .67%D .70% .69%D
average net assets after
expense reductions

Ratio of net investment .21% .58% .81% .37% .69%
income to average net assets

Portfolio turnover 123% 113% 81% 108% 122%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OVERSEAS PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, beginning $ 19.20 $ 18.84 $ 17.06 $ 15.67 $ 15.48
of period

Income from Investment
Operations

Net investment income .23D .30D .32C,D .17 .19

Net realized and 2.13 1.70 1.88 1.34 .08
unrealized gain (loss)

Total from investment 2.36 2.00 2.20 1.51 .27
operations

Less Distributions

From net investment income (.38) (.33) (.20) (.06) (.08)

From net realized gain (1.12) (1.31) (.22) (.02) --

In excess of net realized -- -- -- (.04) --
gain

Total distributions (1.50) (1.64) (.42) (.12) (.08)

Net asset value, end of $ 20.06 $ 19.20 $ 18.84 $ 17.06 $ 15.67
period

Total returnA,B 12.81% 11.56% 13.15% 9.74% 1.72%

Net assets, end of period $ 2,074,843 $ 1,926,322 $ 1,667,601 $ 1,343,134 $ 1,297,701
(000 omitted)

Ratio of expenses to .91% .92% .93% .91% .92%
average net assets

Ratio of expenses to .89%E .90%E .92%E .91% .92%
average net assets after
expense reductions

Ratio of net investment 1.19% 1.55% 1.84% 1.88% 1.28%
income to average net assets

Portfolio turnover 84% 67% 92% 50% 42%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.

BALANCED PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995G

Net asset value, beginning $ 14.58 $ 12.23 $ 11.17 $ 10.00
of period

Income from Investment
Operations

Net investment income .44C .44C .33 .14

Net realized and 2.00 2.22 .78 1.25
unrealized gain (loss)

Total from investment 2.44 2.66 1.11 1.39
operations

Less Distributions

From net investment (.36) (.31) (.01)D (.14)
income

From net realized gain (.55) -- (.04)D (.08)

Total distributions (.91) (.31) (.05) (.22)

Net asset value, end of $ 16.11 $ 14.58 $ 12.23 $ 11.17
period

Total returnA,B 17.64% 22.18% 9.98% 13.92%

Net assets, end of period $ 307,681 $ 214,538 $ 103,110 $ 43,155
(000 omitted)

Ratio of expenses to .59% .61% .72% 1.42%E
average net assets

Ratio of expenses to .58%F .60%F .71%F 1.42%
average net assets after
expense reductions

Ratio of net investment 2.94% 3.28% 3.63% 3.56%
income to average net assets

Portfolio turnover 94% 98% 163% 248%

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS OF
INITIAL CLASS SHARES) TO DECEMBER 31, 1995.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
EQUITY-INCOME PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, $ 24.28 $ 21.03 $ 19.27 $ 15.35 $ 15.44
beginning of period

Income from Investment
Operations

Net investment income .38B .36B .35 .41 .41

Net realized and 2.31 5.06 2.30 4.69 .64
unrealized gain (loss)

Total from investment 2.69 5.42 2.65 5.10 1.05
operations

Less Distributions

From net investment (.34) (.36) (.03) (.40) (.37)
income

From net realized gain (1.21) (1.81) (.86) (.78) (.77)

Total distributions (1.55) (2.17) (.89) (1.18) (1.14)

Net asset value, end of $ 25.42 $ 24.28 $ 21.03 $ 19.27 $ 15.35
period

Total returnA,D 11.63% 28.11% 14.28% 35.09% 7.07%

Net assets, end of period $ 11,409,912 $ 10,106,742 $ 6,961,090 $ 4,879,435 $ 2,284,412
(000 omitted)

Ratio of expenses to .58% .58% .58% .61% .60%
average net assets

Ratio of expenses to .57%C .57%C .56%C .61% .58%C
average net assets after
expense reductions

Ratio of net investment 1.58% 1.65% 1.97% 2.56% 2.83%
income to average net assets

Portfolio turnover 28% 44% 186% 87% 134%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
D TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.

GROWTH & INCOME PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996G

Net asset value, $ 12.53 $ 9.90 $ 10.00
beginning of period

Income from Investment
Operations

Net investment income .15D .13D .00

Net realized and 3.54 2.84 (.10)
unrealized gain (loss)

Total from investment 3.69 2.97 (.10)
operations

Less Distributions

From net investment -- (.08) --
income

From net realized gain (.07) (.26) --

Total distributions (.07) (.34) --

Net asset value, end of $ 16.15 $ 12.53 $ 9.90
period

Total returnB,C 29.59% 30.09% (1.00)%

Net assets, end of period $ 1,141,806 $ 345,287 $ 990
(000 omitted)

Ratio of expenses to .61% .70% 1.00%A,E
average net assets

Ratio of expenses to .60%F .70% 1.00%A
average net assets after
expense reductions

Ratio of net investment 1.08% 1.14% 3.89%A
income to average net assets

Portfolio turnover 66% 81% 0%A

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET MANAGER PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, $ 18.01 $ 16.93 $ 15.79 $ 13.79 $ 15.42
beginning of period

Income from Investment
Operations

Net investment income .59C .57C .63 .30 .45

Net realized and 1.84 2.58 1.55 1.99 (1.33)
unrealized gain (loss)

Total from investment 2.43 3.15 2.18 2.29 (.88)
operations

Less Distributions

From net investment (.57) (.59) (.57) (.29) (.29)
income

From net realized gain (1.71) (1.48) (.47) -- (.46)

Total distributions (2.28) (2.07) (1.04) (.29) (.75)

Net asset value, end of $ 18.16 $ 18.01 $ 16.93 $ 15.79 $ 13.79
period

Total returnA,B 15.05% 20.65% 14.60% 16.96% (6.09)%

Net assets, end of period $ 4,905,468 $ 4,399,937 $ 3,641,194 $ 3,332,844 $ 3,290,527
(000 omitted)

Ratio of expenses to .64% .65% .74% .81% .81%
average net assets

Ratio of expenses to .63%D .64%D .73%D .79%D .80%D
average net assets after
expense reductions

Ratio of net investment 3.46% 3.43% 3.60% 3.54% 4.07%
income to average net assets

Portfolio turnover 113% 101% 168% 256% 85%

</TABLE>

ASSET MANAGER: GROWTH PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995C

Net asset value, $ 16.36 $ 13.10 $ 11.77 $ 10.00
beginning of period

Income from Investment
Operations

Net investment income .41B .36B .21 .10

Net realized and 2.19 2.92 2.08 2.20
unrealized gain (loss)

Total from investment 2.60 3.28 2.29 2.30
operations

Less Distributions

From net investment (.34) -- (.21) (.11)
income

From net realized gain (1.59) (.02) (.75) (.42)

Total distributions (1.93) (.02) (.96) (.53)

Net asset value, end of $ 17.03 $ 16.36 $ 13.10 $ 11.77
period

Total returnA,F 17.57% 25.07% 20.04% 23.02%

Net assets, end of period $ 528,874 $ 483,231 $ 253,024 $ 68,247
(000 omitted)

Ratio of expenses to .73% .77% .87% 1.00%D
average net assets

Ratio of expenses to .72%E .76%E .85%E 1.00%
average net assets after
expense reductions

Ratio of net investment 2.60% 2.44% 2.63% 1.69%
income to average net assets

Portfolio turnover 98% 90% 120% 343%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INVESTMENT GRADE BOND PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, $ 12.560 $ 12.240 $ 12.480 $ 11.020 $ 11.480
beginning of period

Income from Investment .725B .759B .670 .320 .733
Operations Net investment
income

Net realized and .335 .291 (.290) 1.530 (1.163)
unrealized gain (loss)

Total from investment 1.060 1.050 .380 1.850 (.430)
operations

Less Distributions From (.590) (.730) (.620) (.390) --
net investment income

From net realized gain (.070) -- -- -- (.010)

In excess of net -- -- -- -- (.020)
realized gain

Total distributions (.660) (.730) (.620) (.390) (.030)

Net asset value, end of $ 12.960 $ 12.560 $ 12.240 $ 12.480 $ 11.020
period

Total returnA 8.85% 9.06% 3.19% 17.32% (3.76)%

Net assets, end of period $ 674,813 $ 324,525 $ 228,594 $ 181,546 $ 111,381
(000 omitted)

Ratio of expenses to .57% .58% .58% .59% .67%
average net assets

Ratio of net investment 5.85% 6.34% 6.49% 6.53% 6.53%
income to average net assets

Portfolio turnover 239% 191% 81% 182% 143%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HIGH INCOME PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, $ 13.580 $ 12.520 $ 12.050 $ 10.750 $ 11.990
beginning of period

Income from Investment
Operations

Net investment income 1.111C 1.124C .927 .856 .770

Net realized and (1.591) .936 .643 1.224 (.910)
unrealized gain (loss)

Total from investment (.480) 2.060 1.570 2.080 (.140)
operations

Less Distributions

From net investment (.970)D (.890) (.920) (.780) (.730)
income

From net realized gain (.600)D (.110) (.180) -- (.370)

Total distributions (1.570) (1.000) (1.100) (.780) (1.100)

Net asset value, end of $ 11.530 $ 13.580 $ 12.520 $ 12.050 $ 10.750
period

Total returnA,B (4.33)% 17.67% 14.03% 20.72% (1.64)%

Net assets, end of period $ 2,348,954 $ 2,329,516 $ 1,588,822 $ 1,040,000 $ 569,417
(000 omitted)

Ratio of expenses to .70% .71% .71% .71% .71%
average net assets

Ratio of net investment 9.14% 8.88% 9.09% 9.32% 8.75%
income to average net assets

Portfolio turnover 92% 118% 123% 132% 122%

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO - INITIAL CLASS

Selected Per-Share Data
and Ratios

Years ended December 31 1998 1997 1996 1995 1994

Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period

Income from Investment .053 .053 .052 .057 .042
Operations Net interest
income

Less Distributions From (.053) (.053) (.052) (.057) (.042)
net interest income

Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period

Total returnA 5.46% 5.51% 5.41% 5.87% 4.25%

Net assets, end of period $ 1,507,489 $ 1,020,794 $ 1,126,155 $ 808,874 $ 748,606
(000 omitted)

Ratio of expenses to .30% .31% .30% .33% .27%
average net assets

Ratio of net interest 5.33% 5.32% 5.28% 5.72% 4.32%
income to average net assets

</TABLE>

A TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN.

For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-888-622-3175, or your insurance company.

The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBERS 811-3329, 811-5511, AND
811-7205.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

The third party marks appearing above are the marks of their
respective owners.

1.717515.101 VIP/VIPII/VIPIIILNMC-pro-0499

VARIABLE
INSURANCE PRODUCTS
FUND II
SERVICE CLASS

ASSET MANAGER PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 3 INVESTMENT DETAILS

4 VALUING SHARES

SHAREHOLDER INFORMATION 5 BUYING AND SELLING SHARES

5 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

5 TAX CONSEQUENCES

FUND SERVICES 5 FUND MANAGEMENT

6 FUND DISTRIBUTION

APPENDIX 6 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(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 to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return and/or yield may be quoted in advertising in
accordance with current law and interpretations thereof.

The following information illustrates the fund's performance over the
past year and compares the fund's performance to the performance of a
market index and a combination of market indexes over various periods
of time. Returns are based on past results and are not an indication
of future performance.

YEAR-BY-YEAR RETURNS

ASSET MANAGER PORTFOLIO -
SERVICE CLASS

Calendar Year 1998

14.82%

DURING THE PERIOD SHOWN IN THE CHART FOR SERVICE CLASS OF ASSET
MANAGER PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 12.77%
(QUARTER ENDING DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER
WAS -6.69% (QUARTER ENDING SEPTEMBER 30, 1998).

AVERAGE ANNUAL RETURNS

For the periods ended Past 1 year Life of class*
December 31, 1998

ASSET MANAGER PORTFOLIO - 14.82% 14.82%A
SERVICE CLASS

S&P 500 28.58% 28.58%A

Fidelity Asset Allocation 18.61% 18.61%A
Composite Index

* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE CLASS'S
COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1998.

Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.

The Lehman Brothers 3-Month Treasury Bill Index represents the average
of Treasury Bill rates for each of the prior three months, adjusted to
bond equivalent yield basis (short-term and money market instruments).

The Lehman Brothers U.S. Treasury Index is a market value-weighted
index of public obligations of the U.S. Treasury with maturities of
one year or more.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

PRINCIPAL INVESTMENT STRATEGIES

Neutral Mix

STOCKS 50%
(can range from 30-70%)

BONDS 40%
(can range from 20-60%)

SHORT-TERM/MONEY
MARKET 10% (can range
from 0-50%)

Row: 1, Col: 1, Value: 10.0
Row: 1, Col: 2, Value: 50.0
Row: 1, Col: 3, Value: 40.0

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect the fund's performance:

FUNDAMENTAL INVESTMENT POLICIES

The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.

ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced
risk over the long term by allocating its assets among stocks, bonds,
and short-term instruments.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

A class's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates Service
Class's NAV as of the close of business of the NYSE, normally 4:00
p.m. Eastern time. However, NAV may be calculated earlier if trading
on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). The fund's assets are valued as of this
time for the purpose of computing Service Class's NAV.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Service Class is the class's NAV.

The price to sell one share of Service Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Asset Manager Portfolio is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.

Affiliates assist FMR with foreign investments:

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is responsible for
choosing certain types of investments for the fund.

FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.

The fund has an investment objective similar to that of an existing
Fidelity fund. Asset Manager Portfolio is most similar to Fidelity
Asset Manager.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.

For December 1998, the group fee rate was 0.29%. The individual fund
fee rate is 0.25%.

The total management fee for the fiscal year ended December 31, 1998,
was 0.54% of the fund's average net assets.

The total annual Service Class operating expenses for the fiscal year
ended December 31, 1998, were 0.78% of the class's average net assets.
The total annual class operating expenses do not reflect the effect of
any reduction of certain expenses during the period.

A portion of the brokerage commissions that the fund paid was used to
reduce the fund's expenses. In addition, the fund entered into an
arrangement with its custodian whereby credits realized as a result of
uninvested cash balances were used to reduce custodian expenses.
Including these reductions, the total annual Service Class operating
expenses would have been 0.77% for the fiscal year ended December 31,
1998.

FMR pays FIMM, FMR U.K., and FMR Far East for providing assistance
with investment advisory services.

Effective November 3, 1997, FMR has voluntarily agreed to reimburse
Service Class of the fund to the extent that total operating expenses
(excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses), as a percentage of its
average net assets, exceed 1.35%. This arrangement can be terminated
by FMR at any time.

FUND DISTRIBUTION

The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Service
Class's shares.

Service Class of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Service Class of the fund is authorized to pay FDC (for
remittance quarterly to an insurance company) a 12b-1 fee as
compensation for providing services intended to result in the sale of
Service Class shares and/or shareholder support services. Depending on
an insurance company's corporate structure and applicable state law,
FDC may remit payments to the insurance company's affiliated
broker-dealer or other affiliated company, rather than to the
insurance company itself. Service Class of the fund may pay FDC a
12b-1 fee at an annual rate of 0.25% of its average net assets, or
such lesser amount as the Trustees may determine from time to time.
Service Class of the fund currently pays FDC a 12b-1 fee at an annual
rate of 0.10% of its average net assets throughout the month. Service
Class's 12b-1 fee rate for the fund may be increased only when the
Trustees believe that it is in the best interests of Variable Product
owners to do so. (For purposes of this discussion, "Variable Product"
refers to a variable annuity contract or variable life insurance
policy for which shares of the fund are available as an underlying
investment option.)

Up to the full amount of the Service Class 12b-1 fee may be reallowed
to insurance companies as compensation for providing services intended
to result in the sale of Service Class shares and/or support services
to Variable Product owners, based upon the level of such services
provided. These services may include, without limitation: answering
questions about the fund from Variable Product owners; receiving and
answering correspondence from Variable Product owners (including
requests for prospectuses and statements of additional information for
the fund); performing sub-accounting with respect to Variable Product
values allocated to the fund; preparing, printing and distributing
reports of values to Variable Product owners who have values allocated
to the fund; printing and distributing prospectuses, statements of
additional information, any supplements thereto, and shareholder
reports; preparing, printing and distributing marketing materials for
Variable Products; assisting customers in completing applications for
Variable Products and selecting underlying mutual fund investment
options; preparing, printing and distributing sub-account performance
figures for sub-accounts investing in fund shares; and providing other
reasonable assistance in connection with the distribution of fund
shares to insurers.

In addition, the Service Class plan specifically recognizes that FMR
may make payments from its management fee revenue, past profits, or
other resources to FDC for expenses incurred in connection with
providing services intended to result in the sale of Service Class
shares and/or shareholder support services, including payments made to
insurance companies and others that provide those services. Currently,
the Board of Trustees of the fund has authorized such payments for
Service Class.

Because 12b-1 fees are paid out of Service Class's assets on an
ongoing basis, they will increase the cost of your investment and may
cost you more than paying other types of sales charges.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the fund or by FDC to sell shares of the
fund to or to buy shares of the fund from any person to whom it is
unlawful to make such offer.

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand
Service Class's financial history for the past 2 years. Certain
information reflects financial results for a single class share. Total
returns for each period include the reinvestment of all dividends and
distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the fund's financial highlights and financial statements,
are included in the fund's Annual Report. A free copy of the Annual
Report is available upon request.

SELECTED PER-SHARE DATA

Years ended December 31 1998 1997E

Net asset value, beginning $ 17.99 $ 17.60
of period

Income from Investment
Operations

Net investment incomeD .57 .10

Net realized and 1.82 .29
unrealized gain (loss)

Total from investment 2.39 .39
operations

Less Distributions

From net investment income (.57) --

From net realized gain (1.71) --

Total distributions (2.28) --

Net asset value, end of $ 18.10 $ 17.99
period

Total returnB,C 14.82% 2.22%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 5,801 $ 10
(000 omitted)

Ratio of expenses to .78% .75%A
average net assets

Ratio of expenses to .77%F .75%A
average net assets after
expense reductions

Ratio of net investment 3.49% 3.52%A
income to average net assets

Portfolio turnover 113% 101%

A ANNUALIZED
B TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF SERVICE
CLASS SHARES) TO DECEMBER 31, 1997.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.718000.100 VIPII-AMSC-pro-0499

VARIABLE
INSURANCE PRODUCTS
FUND II
SERVICE CLASS

CONTRAFUND PORTFOLIO

PROSPECTUS
APRIL 30, 1999

(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

2 PERFORMANCE

FUND BASICS 3 INVESTMENT DETAILS

4 VALUING SHARES

SHAREHOLDER INFORMATION 4 BUYING AND SELLING SHARES

4 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

4 TAX CONSEQUENCES

FUND SERVICES 5 FUND MANAGEMENT

5 FUND DISTRIBUTION

APPENDIX 6 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(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.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The fund's total return may be quoted in advertising in accordance
with current law and interpretations thereof.

The following information illustrates the fund's performance over the
past year and compares the fund's performance to the performance of a
market index and an average of the performance of similar funds over
various periods of time. Returns are based on past results and are not
an indication of future performance.

YEAR-BY-YEAR RETURNS

CONTRAFUND PORTFOLIO -
SERVICE CLASS

Calendar Year 1998

29.94%

DURING THE PERIOD SHOWN IN THE CHART FOR SERVICE CLASS OF CONTRAFUND
PORTFOLIO, THE HIGHEST RETURN FOR A QUARTER WAS 23.52% (QUARTER ENDING
DECEMBER 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -9.93%
(QUARTER ENDING SEPTEMBER 30, 1998).

AVERAGE ANNUAL RETURNS

For the periods ended Past 1 year Life of class*
December 31, 1998

CONTRAFUND PORTFOLIO - 29.94% 29.94%A
SERVICE CLASS

S&P 500 28.58% 28.58%A

Lipper Growth Funds Average 22.86% 22.86%A

* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE CLASS'S
COMMENCEMENT OF OPERATIONS.

A FROM JANUARY 1, 1998.

Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.

Lipper Growth Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

CONTRAFUND seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets primarily in common stocks.

FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.

FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.

DESCRIPTION OF PRINCIPAL SECURITY TYPES

PRINCIPAL INVESTMENT RISKS

The following factors may significantly affect the fund's performance:

FUNDAMENTAL INVESTMENT POLICIES

The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.

CONTRAFUND PORTFOLIO seeks long-term capital appreciation.

VALUING SHARES

The fund is open for business each day the New York Stock Exchange
(NYSE) is open.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

The price to buy one share of Service Class is the class's NAV.

The price to sell one share of Service Class is the class's NAV.

Redemptions may be suspended or payment dates postponed when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The fund will distribute any dividends at least annually. Normally,
net realized capital gains, if any, are distributed each year for the
fund.

Dividends and capital gains distributions from the fund will be
automatically reinvested in additional shares of the same class of the
fund.

TAX CONSEQUENCES

FUND SERVICES

FUND MANAGEMENT

Contrafund Portfolio is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.

FMR is the fund's manager.

As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.

Affiliates assist FMR with foreign investments:

The fund has an investment objective similar to that of an existing
Fidelity fund. Contrafund Portfolio is most similar to Fidelity
Contrafund.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.

For December 1998, the group fee rate was 0.29%. The individual fund
fee rate is 0.30%.

The total management fee for the fiscal year ended December 31, 1998,
was 0.59% of the fund's average net assets.

The total annual Service Class operating expenses for the fiscal year
ended December 31, 1998, were 0.80% of the class's average net assets.
The total annual class operating expenses do not reflect the effect of
any reduction of certain expenses during the period.

A portion of the brokerage commissions that the fund paid was used to
reduce the fund's expenses. In addition, the fund entered into an
arrangement with its custodian whereby credits realized as a result of
uninvested cash balances were used to reduce custodian expenses.
Including these reductions, the total annual Service Class operating
expenses would have been 0.75% for the fiscal year ended December 31,
1998.

FMR pays FMR U.K. and FMR Far East for providing assistance with
investment advisory services.

Effective November 3, 1997, FMR has voluntarily agreed to reimburse
Service Class of the fund to the extent that total operating expenses
(excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses), as a percentage of its
average net assets, exceed 1.10%. This arrangement can be terminated
by FMR at any time.

As of December 31, 1998, approximately 26% of the fund's total
outstanding shares were held by an FMR affiliate.

FUND DISTRIBUTION

The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.

Fidelity Distributors Corporation, Inc. (FDC) distributes Service
Class's shares.

Because 12b-1 fees are paid out of Service Class's assets on an
ongoing basis, they will increase the cost of your investment and may
cost you more than paying other types of sales charges.

To receive payments made pursuant to a Distribution and Service Plan
or record keeping fees, intermediaries must sign the appropriate
agreement with FDC in advance.

APPENDIX

FINANCIAL HIGHLIGHTS

SELECTED PER-SHARE DATA

Years ended December 31 1998 1997E

Net asset value, beginning $ 19.93 $ 19.99
of period

Income from Investment
Operations

Net investment incomeD .11 .03

Net realized and 5.55 (.09)
unrealized gain (loss)

Total from investment 5.66 (.06)
operations

Less Distributions

From net investment income (.14) --

From net realized gain (1.03) --

Total distributions (1.17) --

Net asset value, end of $ 24.42 $ 19.93
period

Total returnB,C 29.94% (.30)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 152,553 $ 3,722
(000 omitted)

Ratio of expenses to .80% .81%A
average net assets

Ratio of expenses to .75%F .78%A,F
average net assets after
expense reductions

Ratio of net investment .53% 1.14%A
income to average net assets

Portfolio turnover 201% 142%

A ANNUALIZED
B TOTAL RETURNS DO NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE
THE TOTAL RETURNS SHOWN. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF SERVICE
CLASS SHARES) TO DECEMBER 31, 1997.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.

For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175, or your insurance company.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-5511.

Fidelity Investments & (Pyramid) Design and Fidelity are registered
trademarks of FMR Corp.

1.718001.100 VIPII-CTRASC-pro-0499