Single Premium Deferred Annuity

A TAX-DEFERRED INVESTMENT WITH

A FIXED RATE OF RETURN

Fixed annuities available at Fidelity are issued by third-party insurance companies, which are not affiliated with any Fidelity Investments company. These products are distributed by Fidelity Insurance Agency, Inc., and, for certain products, by Fidelity Brokerage Services LLC, Member NYSE, SIPC. A contract’s financial guarantees are solely the responsibility of and are subject to the claims-paying ability of the issuing insurance company.

What is a Single Premium Deferred Annuity (SPDA)?An SPDA is a contract with an insurance company that guarantees a certain fixed interest rate on a lump-sum investment over a period of several years — generally three to nine years. SPDAs available through Fidelity offer a fixed guaranteed rate for the full period you select. When this period ends, you have several options, including continuing to defer taxes by renewing for a new guaranteed rate and term within the annuity; rolling the proceeds, with a tax-free exchange, into another annuity that meets your then

current needs; or withdrawing the assets and paying taxes on the interest. If withdrawals are taken during the initial guarantee period selected, surrender charges may apply as well as market value adjustments.1 Unlike CDs and bank deposit accounts, SPDAs are not FDIC insured — interest and principal are instead guaranteed by the issuing insurance company, and therefore you should be confident in the company you select.

An SPDA as an alternative to a CDInstead of associating annuities with safety, most investors tend to think of them as risky, expensive, and complex investments. And while there may be some of these types of annuities in the marketplace, the generalization is no longer justified. In fact, Fidelity and other financial services companies are now making annuities available that are competitively priced and easy to understand, while offering a range of options when it comes to investment risk. One of these annuities, the

SPDA, is particularly geared to investors looking for a competitive rate of return without market volatility. In addition, an SPDA can provide investors with unique advantages unavailable from other investments. For this reason, any investor interested in an investment that provides a fixed rate of return with the added benefit of tax deferral and who has an investment horizon of at least three years may want to consider an SPDA.

Major advantages:1. Competitive Interest Rates: The interest rates may be attractive relative to those available from other investments, such as CDs, Treasury bond ladders, money market funds, and deposit accounts.

2. Tax Deferral: All taxes on interest are deferred until funds are withdrawn from the account. In general, the longer the contract and the higher the marginal income-tax rate, the greater the advantage of deferral. Another advantage may occur if you defer taxes in your working years and withdraw assets during retirement, because your income and marginal income-tax rates are often lower than when you invested.

As a result, in many cases, the SPDA may not only defer but also reduce taxes compared with a CD or other investment held in a taxable account.

3. Fixed Rate of Return: Regardless of how interest rates change over the period of the contract, you know in advance exactly what your total return will be (at least in pretax, nominal terms). With some CDs, there is no way to know the rate at which any payments received before maturity will be reinvested, so the total return cannot be known in advance.

4. No IRS Contribution Limits: You have the ability to invest as much as you want.2

1

1 Some SPDAs have a market value adjustment (MVA), which generally applies if a client surrenders the contract or withdraws funds in excess of the free withdrawal amount before the end of the guarantee period. The amount the client receives will be adjusted based on interest rate conditions at that time. Typically, if current interest rates upon surrender or withdrawal are higher than they were at issue, the MVA will result in a lower payment. If current interest rates are lower than they were at issue, the MVA will result in a higher payment. The MVA may apply in addition to surrender charge penalties.

2 The issuing insurance company reserves the right to limit contributions. 3 Unless held in a tax-deferred account, such as a traditional IRA. 4 FDIC insurance coverage limits (usually $250,000) apply; all depository assets of the account holder at the institution that issued the CD will generally be counted toward the aggregate limit (usually $250,000) for each applicable account category. Additional information can be found on the FDIC website.

A Brief Comparison of SPDAs and CDs SPDA CD

Tax Deferred Yes No3

Fixed Rate of Return Yes Yes

FDIC Insured No Yes4

2

Important considerations:• During the rate guarantee period you select, access to

the assets is generally restricted, with limitations and surrender charges on early withdrawal.

• Any taxable withdrawals from a deferred annuity account before you reach the age of 59½ are typically subject to a 10% tax penalty in addition to ordinary income taxes.

• While SPDAs are guaranteed, return of principal and interest is subject to the claims-paying ability of the insurance company offering the contract — so you will want to research the creditworthiness of the insurer before investing.

Who might benefit most from an SPDA?Given the advantages and considerations, the SPDA is often best suited to investors who are interested in a tax-deferred fixed rate of return, and who also meet one or more of the following criteria:

• In or nearing retirement (especially those for whom the 59½ age minimum is relatively close)

• Subject to high federal, state, and/or local marginal income-tax rates

• Plan to use the assets during retirement (assuming their income and thus possibly their marginal income- tax rates are expected to be lower at that time)

5 Note that under 2015 federal law, married filing jointly investors who earn from $74,901 to $151,200 (after all deductions) while working, but less than $74,901 during retirement, would see their federal marginal income-tax rate start at 25% and then drop to 15%. While most investors see a drop in their taxable income during retirement, this is not always the case. Some investors do not see any drop, and some even see an increase, as a result of some pensions or other income sources. In addition, a drop in income may or may not cause an investor to see a decrease in his or her marginal income-tax rate. In the example above, if the couple’s income dropped from $130,000 to $80,000 after retirement, the marginal federal income-tax rate would remain at 25%. Finally, changes in federal and/or state and local tax law could affect marginal rates, reducing or even eliminating the decline in the marginal income-tax rate caused by the decline in taxable income.

The Possibility of Tax Reduction in Addition to Tax DeferralMany investors underestimate the

advantages of investing in an SPDA

when considering their options. The

hypothetical analysis at the right shows

the advantage of an SPDA yielding a

constant 2% as compared with CDs in a

taxable account with the same term and

yield. The investor is assumed to be at

least age 59½ at the time of withdrawals.

If the investor is any younger, taxable with-

drawals from the SPDA would be subject

to an additional 10% tax penalty not

reflected in this example.

0%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2010753

After-Tax Interest Rate Comparison: CD vs. SPDA2% Pretax Interest Rate; 25% Marginal Income-Tax Rate

Investment Horizon in Years

n CD n SPDA n SPDA with 15% Marginal Tax Rate on Withdrawal

For illustrative purposes only.

Effe

ctiv

e A

fter

-Tax

Inte

rest

Rat

e

The gray bars show the after-tax yield on the taxable CD investment. Because there is no tax deferral, the after-tax yield is always 1.5%. The light-green bars show the after-tax yield for an investor in an SPDA whose marginal income-tax rate is 25%. The advantage of tax deferral is quite small over a horizon of three years (0.01%). If the investor earned 2% for 20 years, the advantage would be 0.07%. However, the dark-green bars show the advantage for an investor whose marginal income-tax rate starts at 25% but drops to 15% when he or she retires at the end of the investment horizon. In this case, the advantage is larger, 0.20%, with a three-year investment horizon, and reaches 0.24% at 20 years.5

Changes in tax rates and tax treatment of investment earnings may affect the comparative results. Consider your current and anticipated investment horizon and income-tax bracket when making an investment decision.State and local taxes were not taken into account; if they were, the after-tax yields for both accounts would be lower.

Hypothetical Example

521856.8.0FILI-SPDA-1116

1.897235.105

Before investing, consider the investment objectives, risks, charges, and expenses of the annuity and its investment options. Contact Fidelity for a prospectus and, if available, a summary prospectus containing this information. Read it carefully.Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially affect investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Fidelity makes available fixed deferred annuities that are issued by third-party insurance carriers that are not affiliated with any Fidelity Investments company; the annuities are distributed by Fidelity Brokerage Services LLC, Member NYSE, SIPC, and, for certain products, Fidelity Insurance Agency, Inc. The contract’s financial guarantees are solely the responsibility of the issuing insurance company.

Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. If sold prior to maturity, CDs may be sold on the secondary market subject to market conditions.

An investment in a money market 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 per share, it is possible to lose money by investing in the fund.

© 2016 FMR LLC. All rights reserved.

Want more information? Go to Fidelity.com/annuities or call 800.544.2442.