SUPPLEMENT TO THE
VARIABLE INSURANCE PRODUCTS FUNDS:
INITIAL CLASS
MONEY MARKET, INVESTMENT GRADE BOND, HIGH INCOME,
ASSET MANAGER, ASSET MANAGER: GROWTH, BALANCED, EQUITY-INCOME, INDEX
500, GROWTH & INCOME, GROWTH OPPORTUNITIES, CONTRAFUND, GROWTH, MID
CAP, AND OVERSEAS PORTFOLIOS
APRIL 30, 1999 PROSPECTUS
The following information replaces similar information found
under the heading "Average Annual Returns" in the "Performance"
section on page 22.
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
HIGH INCOME PORTFOLIO - -4.33% 8.80% 11.08%
INITIAL CLASS
Merrill Lynch High Yield 3.66% 9.01% 11.08%
Master Index
Merrill Lynch High Yield 2.95% 9.12% 11.18%
Master II Index
Lipper High Current Yield -0.44% 7.37% 9.34%
Funds Average
The following information supplements the information found under the
heading "Average Annual Returns" in the "Performance" section on page
24.
Going forward, High Income Portfolio's performance will be compared to
the Merrill Lynch High Yield Master II Index rather than the Merrill
Lynch High Yield Master Index because the Merrill Lynch High Yield
Master II Index contains deferred interest bonds and payment-in-kind
securities and is therefore a better representation of the high yield
bond universe.
Merrill Lynch High Yield Master II Index is a market value-weighted
index of all domestic and yankee high-yield bonds, including deferred
interest bonds and payment-in-kind securities. 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.
The following information replaces the fifth paragraph found in the
"Fund Management" section on page 44.
BT serves as sub-adviser and custodian for Index 500. BT chooses
the fund's investments and places orders to buy and sell the fund's
investments.
The following information replaces the eighth paragraph found
in the "Fund Management" section on page 44. (Index 500 Portfolio)
Effective June 4, 1999, Bankers Trust Corporation and all of its
subsidiaries, including BT, merged with and into a subsidiary of
Deutsche Bank AG. At a meeting held on March 18, 1999, the fund's
Board of Trustees approved a new sub-advisory agreement among the
fund, FMR and BT or its successor by merger that became effective
June 4, 1999. At a meeting held on September 15, 1999, shareholders
approved this agreement.
Effective August 2, 1999, the following information replaces the
second to the last paragraph found in the "Fund Management"
section on page 45.
David Felman is Vice President and manager of Mid Cap Portfolio. He
also manages other Fidelity funds. Mr. Felman joined Fidelity as an
analyst in 1993.
The following information replaces the second full paragraph found
in the "Fund Management" section on page 48.
Index 500 pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fund's annual management
fee rate is 0.24% of its average net assets. FMR pays BT for providing
investment management and custodial services.
Prior to October 1, 1999, Index 500 paid 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) to BT.
The following information replaces footnote A to the Total Annual
Class Operating Expenses table found in the "Fund Management" section
on page 49.
A EFFECTIVE AUGUST 27, 1992, FMR HAS VOLUNTARILY AGREED TO
REIMBURSE INITIAL CLASS OF INDEX 500 TO THE EXTENT THAT TOTAL
OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, SECURITIES LENDING
COSTS, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES), AS A
PERCENTAGE OF ITS AVERAGE NET ASSETS, EXCEED 0.28%. THIS ARRANGEMENT
CAN BE DISCONTINUED BY FMR AT ANY TIME.
SUPPLEMENT TO THE
VARIABLE INSURANCE PRODUCTS FUNDS:
INITIAL CLASS
MONEY MARKET, INVESTMENT GRADE BOND, HIGH INCOME,
ASSET MANAGER, ASSET MANAGER: GROWTH, BALANCED, EQUITY-INCOME, INDEX
500,
GROWTH & INCOME, GROWTH OPPORTUNITIES, CONTRAFUND, GROWTH, MID CAP,
AND OVERSEAS PORTFOLIOS
APRIL 30, 1999 PROSPECTUS
The following information replaces similar information found
under the heading "Average Annual Returns" in the "Performance"
section on page 15.
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
HIGH INCOME PORTFOLIO - -4.33% 8.80% 11.08%
INITIAL CLASS
Merrill Lynch High Yield 3.66% 9.01% 11.08%
Master Index
Merrill Lynch High Yield 2.95% 9.12% 11.18%
Master II Index
Lipper High Current Yield -0.44% 7.37% 9.34%
Funds Average
The following information supplements the information found under the
heading "Average Annual Returns" in the "Performance" section on page
16.
Going forward, High Income Portfolio's performance will be compared to
the Merrill Lynch High Yield Master II Index rather than the Merrill
Lynch High Yield Master Index because the Merrill Lynch High Yield
Master II Index contains deferred interest bonds and payment-in-kind
securities and is therefore a better representation of the high yield
bond universe.
Merrill Lynch High Yield Master II Index is a market value-weighted
index of all domestic and yankee high yield bonds, including deferred
interest bonds and payment-in-kind securities. 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.
The following information replaces the fifth paragraph found in the
"Fund Management" section on page 27.
BT serves as sub-adviser and custodian for Index 500. BT chooses
the fund's investments and places orders to buy and sell the fund's
investments.
The following information replaces the eighth paragraph found
in the "Fund Management" section on page 27. (Index 500 Portfolio)
Effective June 4, 1999, Bankers Trust Corporation and all of its
subsidiaries, including BT, merged with and into a subsidiary of
Deutsche Bank AG. At a meeting held on March 18, 1999, the fund's
Board of Trustees approved a new sub-advisory agreement among the
fund, FMR and BT or its successor by merger that became effective
June 4, 1999. At a meeting held on September 15, 1999, shareholders
approved this agreement.
Effective August 2, 1999, the following information replaces the
fourth to the last paragraph found in the "Fund Management"
section on page 27.
David Felman is Vice President and manager of Mid Cap Portfolio. He
also manages other Fidelity funds. Mr. Felman joined Fidelity as an
analyst in 1993.
T he following information replaces the last paragraph found in the
"Fund Management" section on page 28.
Index 500 pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fund's annual management
fee rate is 0.24% of its average net assets. FMR pays BT for providing
investment management and custodial services.
Prior to October 1, 1999, Index 500 paid 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) to BT.
The following information replaces footnote A to the Total Annual
Class Operating Expenses table found in the "Fund Management" section
on page 29.
A EFFECTIVE AUGUST 27, 1992, FMR HAS VOLUNTARILY AGREED TO
REIMBURSE INITIAL CLASS OF INDEX 500 TO THE EXTENT THAT TOTAL
OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, SECURITIES LENDING
COSTS, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES), AS A
PERCENTAGE OF ITS AVERAGE NET ASSETS, EXCEED 0.28%. THIS ARRANGEMENT
CAN BE DISCONTINUED BY FMR AT ANY TIME.
SUPPLEMENT TO THE
VARIABLE INSURANCE PRODUCTS FUNDS:
INITIAL CLASS
MONEY MARKET, INVESTMENT GRADE BOND, HIGH INCOME,
ASSET MANAGER, ASSET MANAGER: GROWTH, BALANCED, EQUITY-INCOME, INDEX
500, GROWTH & INCOME, GROWTH OPPORTUNITIES, CONTRAFUND, GROWTH, AND
OVERSEAS PORTFOLIOS
APRIL 30, 1999
(AS SUPPLEMENTED
MAY 5, 1999) PROSPECTUS
The following information replaces similar information found
under the heading "Average Annual Returns" in the "Performance"
section on page 14.
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
HIGH INCOME PORTFOLIO - -4.33% 8.80% 11.08%
INITIAL CLASS
Merrill Lynch High Yield 3.66% 9.01% 11.08%
Master Index
Merrill Lynch High Yield 2.95% 9.12% 11.18%
Master II Index
Lipper High Current Yield -0.44% 7.37% 9.34%
Funds Average
The following information supplements the information found under the
heading "Average Annual Returns" in the "Performance" section on page
15.
Going forward, High Income Portfolio's performance will be compared to
the Merrill Lynch High Yield Master II Index rather than the Merrill
Lynch High Yield Master Index because the Merrill Lynch High Yield
Master II Index contains deferred interest bonds and payment-in-kind
securities and is therefore a better representation of the high yield
bond universe.
Merrill Lynch High Yield Master II Index is a market value-weighted
index of all domestic and yankee high-yield bonds, including deferred
interest bonds and payment-in-kind securities. 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.
The following information replaces the fifth paragraph found in the
"Fund Management" section on page 26.
BT serves as sub-adviser and custodian for Index 500. BT chooses
the fund's investments and places orders to buy and sell the fund's
investments.
The following information replaces the eighth paragraph found
in the "Fund Management" section on page 26. (Index 500 Portfolio)
Effective June 4, 1999, Bankers Trust Corporation and all of its
subsidiaries, including BT, merged with and into a subsidiary of
Deutsche Bank AG. At a meeting held on March 18, 1999, the fund's
Board of Trustees approved a new sub-advisory agreement among the
fund, FMR and BT or its successor by merger that became effective
June 4, 1999. At a meeting held on September 15, 1999, shareholders
approved this agreement.
The following information replaces the last paragraph found in the
"Fund Management" section on page 27.
Index 500 pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fund's annual management
fee rate is 0.24% of its average net assets. FMR pays BT for providing
investment management and custodial services.
Prior to October 1, 1999, Index 500 paid 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) to BT.
The following information replaces footnote A to the Total Annual
Class Operating Expenses table found in the "Fund Management" section
on page 28.
A EFFECTIVE AUGUST 27, 1992, FMR HAS VOLUNTARILY AGREED TO
REIMBURSE INITIAL CLASS OF INDEX 500 TO THE EXTENT THAT TOTAL
OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, SECURITIES LENDING
COSTS, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES), AS A
PERCENTAGE OF ITS AVERAGE NET ASSETS, EXCEED 0.28%. THIS ARRANGEMENT
CAN BE DISCONTINUED BY FMR AT ANY TIME.
SUPPLEMENT TO THE
VARIABLE INSURANCE PRODUCTS FUND:
MONEY MARKET PORTFOLIO, HIGH INCOME PORTFOLIO,
EQUITY-INCOME PORTFOLIO,
GROWTH PORTFOLIO, AND OVERSEAS PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II:
INVESTMENT GRADE BOND PORTFOLIO, ASSET MANAGER PORTFOLIO,
ASSET MANAGER: GROWTH PORTFOLIO, INDEX 500 PORTFOLIO,
AND CONTRAFUND PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND III:
BALANCED PORTFOLIO, GROWTH & INCOME PORTFOLIO,
GROWTH OPPORTUNITIES PORTFOLIO, AND MID CAP PORTFOLIO
INITIAL CLASS AND SERVICE CLASS
APRIL 30, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER THE
HEADING "INVESTMENT LIMITATIONS OF MONEY MARKET PORTFOLIO"IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money up to 15% of
the fund's net assets to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (The limitation does not apply to
purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER THE
HEADING "INVESTMENT LIMITATIONS OF HIGH INCOME, EQUITY-INCOME, GROWTH,
OVERSEAS, GROWTH & INCOME, BALANCED, GROWTH OPPORTUNITIES, INVESTMENT
GRADE BOND, ASSET MANAGER, INDEX 500, CONTRAFUND, ASSET MANAGER:
GROWTH, AND MID CAP PORTFOLIOS'" IN THE "INVESTMENT POLICIES AND
LIMITATIONS" SECTION ON PAGE 4.
(iii) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(v) Each fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money up to 15% of
the fund's net assets to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOR HIGH INCOME
PORTFOLIO FOUND UNDER THE HEADING "INVESTMENT LIMITATIONS OF HIGH
INCOME, EQUITY-INCOME, GROWTH, OVERSEAS, GROWTH & INCOME, BALANCED,
GROWTH OPPORTUNITIES, INVESTMENT GRADE BOND, ASSET MANAGER, INDEX 500,
CONTRAFUND, ASSET MANAGER: GROWTH, AND MID CAP PORTFOLIOS" IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 4.
For purposes of investing at least 65% of the fund's total assets in
income-producing debt securities, preferred stocks and convertible
securities, FMR interprets "total assets" to exclude collateral
received for securities lending transactions.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOR
EQUITY-INCOME PORTFOLIO FOUND UNDER THE HEADING "INVESTMENT
LIMITATIONS OF HIGH INCOME, EQUITY-INCOME, GROWTH, OVERSEAS, GROWTH &
INCOME, BALANCED, GROWTH OPPORTUNITIES, INVESTMENT GRADE BOND, ASSET
MANAGER, INDEX 500, CONTRAFUND, ASSET MANAGER: GROWTH, AND MID CAP
PORTFOLIOS" IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION ON
PAGE 4.
For purposes of investing at least 65% of the fund's total assets in
income-producing equity securities, FMR interprets "total assets" to
exclude collateral received for securities lending transactions.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOR OVERSEAS
PORTFOLIO FOUND UNDER THE HEADING "INVESTMENT LIMITATIONS OF HIGH
INCOME, EQUITY-INCOME, GROWTH, OVERSEAS, GROWTH & INCOME, BALANCED,
GROWTH OPPORTUNITIES, INVESTMENT GRADE BOND, ASSET MANAGER, INDEX 500,
CONTRAFUND, ASSET MANAGER: GROWTH, AND MID CAP PORTFOLIOS" IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 4.
For purposes of investing at least 65% of the fund's total assets in
foreign securities, FMR interprets "total assets" to exclude
collateral received for securities lending transactions.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOR BALANCED
PORTFOLIO FOUND UNDER THE HEADING "INVESTMENT LIMITATIONS OF HIGH
INCOME, EQUITY-INCOME, GROWTH, OVERSEAS, GROWTH & INCOME, BALANCED,
GROWTH OPPORTUNITIES, INVESTMENT GRADE BOND, ASSET MANAGER, INDEX 500,
CONTRAFUND, ASSET MANAGER: GROWTH, AND MID CAP PORTFOLIOS" IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 4.
For purposes of investing at least 25% of the fund's total assets in
fixed-income senior securities (including debt securities and
preferred stock), FMR interprets "total assets" to exclude collateral
received for securities lending transactions.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOR MID CAP
PORTFOLIO FOUND UNDER THE HEADING "INVESTMENT LIMITATIONS OF HIGH
INCOME, EQUITY-INCOME, GROWTH, OVERSEAS, GROWTH & INCOME, BALANCED,
GROWTH OPPORTUNITIES, INVESTMENT GRADE BOND, ASSET MANAGER, INDEX 500,
CONTRAFUND, ASSET MANAGER: GROWTH, AND MID CAP PORTFOLIOS" IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 4.
For purposes of investing at least 65% of the fund's total assets in
securities of companies with medium market capitalization, FMR
interprets "total assets" to exclude collateral received for
securities lending transactions.
THE FOLLOWING INFORMATION REPLACES THE PARAGRAPH FOUND UNDER THE
HEADING "SOURCES OF CREDIT OR LIQUIDITY SUPPORT" IN THE"INVESTMENT
POLICIES AND LIMITATIONS" SECTION ON PAGE 15.
SOURCES OF LIQUIDITY OR CREDIT SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of the
liquidity or credit enhancement provider in determining whether to
purchase a security supported by such enhancement. In evaluating the
credit of a foreign bank or other foreign entities, FMR will consider
whether adequate public information about the entity is available and
whether the entity may be subject to unfavorable political or economic
developments, currency controls, or other government restrictions that
might affect its ability to honor its commitment. Changes in the
credit quality of the entity providing the enhancement could affect
the value of the security or a fund's share price.
THE FOLLOWING INFORMATION REPLACES THE TENTH PARAGRAPH FOUND
UNDER THE HEADING "PORTFOLIO TRANSACTIONS" ON PAGE 38.
To the extent permitted by applicable law, FMR (BT for Index 500) is
authorized to allocate portfolio transactions in a manner that takes
into account assistance received in the distribution of shares of the
funds or other Fidelity funds (Index 500) and to use the research
services of brokerage and other firms that have provided such
assistance. FMR (BT for Index 500) may use research services provided
by and place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services Japan LLC (FBSJ),
indirect subsidiaries of FMR Corp. (and, for Index 500, BT Brokerage
Corporation and BT Futures Corp., indirect subsidiaries of Deutsche
Bank AG), if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. Prior to December 9, 1997, FMR used research
services provided by and placed agency transactions with Fidelity
Brokerage Services (FBS), an indirect subsidiary of FMR Corp.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER
"PERFORMANCE COMPARISONS" IN THE "PERFORMANCE" SECTION ON PAGE 61.
High Income Portfolio may compare its performance to that of the
Merrill Lynch High Yield Master II Index, a market value-weighted
index of all domestic and yankee high-yield bonds, including deferred
interest bonds and payment-in-kind securities. 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. Issues must have an
outstanding par value of at least $50 million to be included in the
index.
THE FOLLOWING INFORMATION REPLACES THE LAST PARAGRAPH FOUND UNDER THE
HEADING "CONTROL OF INVESTMENT ADVISERS" ON PAGE 69.
BT, a New York banking corporation with principal offices at 130
Liberty Street, New York, New York 10006, is a wholly owned subsidiary
of Deutsche Bank AG, whose principal offices are at Taunusanlage 12,
D-60325 Frankfurt am Main, Federal Republic of Germany. Deutsche Bank
AG is a major global banking institution that is engaged in a wide
range of financial services, including investment management, mutual
funds, retail and commercial banking, investment banking and
insurance.
THE FOLLOWING INFORMATION REPLACES THE THIRD PARAGRAPH FOUND UNDER
THE HEADING "MANAGEMENT AND SUB-ADVISORY SERVICES (INDEX 500
PORTFOLIO)" IN THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 70.
BT is the sub-adviser of the fund and acts as the fund's custodian.
Under its management contract with the fund, FMR acts as investment
adviser. Under the sub-advisory agreement, and subject to the
supervision of the Board of Trustees, BT directs the investments of
the fund in accordance with its investment objective, policies and
limitations, and provides custodial services to the fund.
THE FOLLOWING INFORMATION REPLACES THE PARAGRAPH FOUND UNDER THE
HEADING "MANAGEMENT-RELATED EXPENSES" IN THE "MANAGEMENT CONTRACTS"
SECTION ON PAGE 70.
MANAGEMENT-RELATED EXPENSES. In addition to the management
fee payable to FMR; the fees payable to FSC and FIIOC; and, for Index
500, the costs associated with securities lending, each fund or each
class thereof, as applicable, pays all of its expenses that are not
assumed by those parties. Each fund pays for typesetting, printing,
and mailing proxy materials to shareholders, legal expenses, and the
fees of the custodian (except Index 500), auditor, and non-interested
Trustees. Each fund's management contract further provides that the
fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices, and reports to
shareholders; however, under the terms of each fund's transfer agent
agreement, FIIOC bears the costs of providing these services to
existing shareholders of the applicable classes. Other expenses paid
by each fund include interest, taxes, brokerage commissions, the
fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under
federal securities laws and making necessary filings under state
securities laws. Each fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation. Each fund also pays
the costs related to the solicitation of fund proxies from contract
holders.
THE FOLLOWING INFORMATION REPLACES THE PARAGRAPH FOUND UNDER THE
HEADING "MANAGEMENT AND SUB-ADVISORY FEES (INDEX 500 PORTFOLIO)" IN
THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 70.
MANAGEMENT FEE (INDEX 500 PORTFOLIO). For the services of
FMR under the management contract, Index 500 pays FMR a monthly
management fee at the annual rate of 0.24% of the fund's average net
assets throughout the month.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 74.
For Index 500, FMR may, from time to time, voluntarily reimburse
all or a portion of the fund's operating expenses (exclusive of
interest, taxes, securities lending costs, brokerage commissions, and
extraordinary expenses), which is subject to revision or termination.
FMR retains the ability to be repaid for these expense reimbursements
in the amount that expenses fall below the limit prior to the end of
the fiscal year.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 74.
MANAGEMENT-RELATED SERVICES (INDEX 500 PORTFOLIO). Index 500
has also entered into a securities lending agreement with BT. Under
the terms of the agreement, BT retains up to 30% of aggregate annual
lending revenues for providing securities lending services.
THE FOLLOWING INFORMATION REPLACES THE SECOND AND THIRD PARAGRAPHS
FOUND UNDER THE HEADING "SUB-ADVISERS" IN THE "MANAGEMENT CONTRACTS"
SECTION ON PAGE 74.
Under the sub-advisory agreement, for providing investment
management and custodial services to Index 500 Portfolio, FMR pays BT
fees at an annual rate of 0.006% of the average net assets of the
fund.
For the fiscal years ended December 31, 1998, 1997, and 1996, Index
500 Portfolio paid FMR management fees of $6,919,949, $4,102,533, and
$1,346,765, respectively, and for the fiscal years ended December 31,
1998 and 1997, the fund paid BT sub-advisory fees of $42,017 and $54,
respectively. Prior to October 1, 1999, the fund paid 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) to BT.
THE FOLLOWING INFORMATION SUPPLEMENTS THE SIMILAR INFORMATION FOUND
UNDER THE HEADING "SUB-ADVISERS" IN THE "MANAGEMENT CONTRACTS" SECTION
ON PAGE 74.
For the fiscal year ended December 31, 1998, FMR paid BT fees of
$149,981.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 75.
On behalf of High Income, Balanced, Growth & Income, Growth
Opportunities, Asset Manager, Contrafund, Asset Manager: Growth, and
Mid Cap Portfolios, for providing discretionary investment management
and executing portfolio transactions, the sub-advisers are compensated
as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East, a fee equal
to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"MANAGEMENT CONTRACTS" SECTION ON PAGE 75.
On behalf of Overseas Portfolio, for providing discretionary
investment management and executing portfolio transactions, the
sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East, a fee equal
to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
(small solid bullet) FMR pays FIIA a fee equal to 57% of its monthly
management fee with respect to the fund's average net assets managed
by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "SUB-ADVISERS" IN THE "MANAGEMENT CONTRACTS" SECTION ON
PAGE 76.
For discretionary investment management and execution of portfolio
transactions, no fees were paid to FMR U.K., FMR Far East or FIIA on
behalf of High Income, Balanced, Growth & Income, Growth
Opportunities, Asset Manager, Contrafund, Asset Manager: Growth, Mid
Cap, and Overseas Portfolios for the past three fiscal years.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "DESCRIPTION OF THE TRUSTS" SECTION BEGINNING ON PAGE 79.
AUDITORS. PricewaterhouseCoopers LLP, One Post Office Square, Boston,
Massachusetts serves as independent accountant for Equity-Income
Portfolio, Growth Portfolio, High Income Portfolio, Money Market
Portfolio, and Overseas Portfolio. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services. PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts serves as independent accountant for Mid Cap Portfolio.
The auditor examines financial statements for the fund and provides
other audit, tax, and related services. PricewaterhouseCoopers LLP,
160 Federal Street, Boston, Massachusetts served as independent
accountant for Asset Manager Portfolio, Asset Manager: Growth
Portfolio, Contrafund Portfolio, Index 500 Portfolio, Investment Grade
Bond Portfolio, Balanced Portfolio, Growth & Income Portfolio, and
Growth Opportunities Portfolio for the most recent fiscal period. The
auditor examined financial statements for the funds and provided other
audit, tax, and related services. Effective February 18, 1999,
Deloitte & Touche LLP, 200 Berkeley Street, Boston, Massachusetts
serves as independent accountant for Asset Manager Portfolio, Asset
Manager: Growth Portfolio, Contrafund Portfolio, Index 500 Portfolio,
Investment Grade Bond Portfolio, Balanced Portfolio, Growth & Income
Portfolio, and Growth Opportunities Portfolio for the next fiscal
period. The auditor examines financial statements for the funds and
provides other audit, tax, and related services.
