FIDELITY INVESTMENTS PLANS to soon start offering a type of variable annuity that provides income immediately, according to insurance industry executives.

The move by the Boston-based mutual funds giant is sure to boost the popularity of the product and inspire other companies to embrace it, said R. H. " Rick" Carey, publisher of the Variable Annuities Research Data Service Report.

A variable annuity is an insurance product that invests in underlying mutual funds and is tax-deferred until tapped.

An immediate variable annuity - the type that Fidelity is said to be launching - starts making payments to the investor right away and continues for the time selected, usually for life. The product is aimed its people who an nearing retirement.

As more people retire, sales of immediate variable annuities should rise rapidly, said Mr. Carey at a conference held last week by the National Association for Variable Annuities. "The demographics suggest that the payout side is going to grow," said Richard P. Austin, president of Templeton Funds Annuity Co.

A Fidelity spokeswoman confirmed that the company will be introducing a variable annuity, but she declined to provide further details. One source said the product may be introduced as soon as Oct. 15.

Fortis Financial Group added variable annuities on Oct. 1 to the products offered under its Privileged Account Service.

Up to now, investors have selected an allocation of stock, bond, and money market mutual funds. Fortis maintains the original allocation by periodically rebalancing the mix.

"We've been pleased with the response to Privileged Account Service in our mutual fund business and are eager to expand it to our variable annuities," said Kyle Selberg, second vice president for marketing and sales at Fortis.

Starting with a minimum investment of $10,000, clients designate an asset allocation by percentage to stock, bond, and money market accounts.

Funds are rebalanced once, twice, or three times a year, depending on the client's preference. When funds are rebalanced, the portfolio is adjusted to its original asset allocation by buying or selling units.

Using this approach, variable annuity units can be sold when prices are high and purchased when they are low.

"By periodically rebalancing a portfolio, investors can significantly improve their rate of return and value, in comparison to a buy and hold' strategy," Mr. Selberg said.

Fortis Financial, based in St. Paul, manages more than $3 billion in assets.

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