N-VPFS

Fidelity Security Life

Insurance Company

FSL Separate Account M

Financial Report

December 31, 2020

Contents


Independent auditor’s report			1-2

Financial statements

Statements of net assets			3-4

Statements of operations			5-6

Statements of changes in net assets			7-10

Notes to financial statements			11-20

LOGO

Independent Auditor’s Report

The Board of Directors

Fidelity Security Life Insurance Company

Report on the Financial Statements

We have audited the accompanying financial statements of Fidelity Security Life Insurance Company FSL Separate Account M (the Separate Account) (composed of the individual subaccounts as indicated in Note 1 to the financial statements), which comprise the statements of net assets as of December 31, 2020, the related statements of operations for the year ended December 31, 2020, the related statements of changes in net assets for the years ended December 31, 2020 and 2019, and the related notes to the financial statements (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

LOGO

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of the subaccounts constituting the Separate Account as of December 31, 2020, the results of their operations for the year then ended, and changes in their net assets for the years ended December 31, 2020 and 2019, in accordance with accounting principles generally accepted in the United States of America.

LOGO

Oklahoma City, Oklahoma

April 26, 2021

Fidelity Security Life Insurance Company FSL Separate Account M

Statements of Net Assets

December 31, 2020


	MFS Investment Management								Deutsche Asset Management				Federated Insurance Series
	VIT Value Series—IC		Research International Series—SC		New Discovery Series		Total Return Series		Equity 500 Index Fund		Small Cap Index Fund		Kaufmann Fund II		Government Money Fund II		U.S. Gov’t Securities Fund II		Quality Bond Fund II
Assets
Investments:
MFS VIT Value Series—IC—17,706 shares (cost $341,704)	$	353,408	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
MFS Research International Series—SC—1 shares (cost $19)		—		25		—		—		—		—		—		—		—		—
MFS New Discovery Series—604 shares (cost $9,091)		—		—		14,262		—		—		—		—		—		—		—
MFS Total Return Series—3,881 shares (cost $80,641)		—		—		—		98,965		—		—		—		—		—		—
Deutsche Equity 500 Index Fund—3,883 shares (cost $69,163)		—		—		—		—		96,966		—		—		—		—		—
Deutsche Small Cap Index Fund—7,100 shares (cost $91,245)		—		—		—		—		—		123,467		—		—		—		—
Federated Kaufmann Fund II—1,496 shares (cost $25,652)		—		—		—		—		—		—		38,088		—		—		—
Federated Government Money Fund II—67,840 shares (cost $67,840)		—		—		—		—		—		—		—		67,840		—		—
Federated U.S. Gov’t Securities Fund II—132 shares (cost $1,447)		—		—		—		—		—		—		—		—		1,469		—
Federated Quality Bond Fund II—510 shares (cost $5,662)		—		—		—		—		—		—		—		—		—		6,033
UIF Global Strategist—896 shares (cost $7,926)		—		—		—		—		—		—		—		—		—		—
UIF Capital Growth—26,810 shares (cost $844,996)		—		—		—		—		—		—		—		—		—		—
UIF US Real Estate—873 shares (cost $12,721)		—		—		—		—		—		—		—		—		—		—
Invesco Van Kampen American Value—1,692 shares (cost $26,794)		—		—		—		—		—		—		—		—		—		—
Invesco Van Kampen Comstock—1,832 shares (cost $26,621)		—		—		—		—		—		—		—		—		—		—
Lord Abbett Growth & Income—17,140 shares (cost $499,443)		—		—		—		—		—		—		—		—		—		—
Janus Aspen Overseas—8,446 shares (cost $287,443)		—		—		—		—		—		—		—		—		—		—

Total assets		353,408		25		14,262		98,965		96,966		123,467		38,088		67,840		1,469		6,033

Liabilities
Accrued mortality and expense risk charge		160		—		11		44		62		84		28		41		1		4

Net assets	$	353,248	$	25	$	14,251	$	98,921	$	96,904	$	123,383	$	38,060	$	67,799	$	1,468	$	6,029

(Continued)

Fidelity Security Life Insurance Company FSL Separate Account M

Statements of Net Assets (Continued)

December 31, 2020


	The Universal Institutional Funds, Inc.						Invesco Van Kampen
	Global										Lord Abbett		Janus Aspen
	Strategist		Growth		U.S. Real		V.I. American		V.I.		Growth &		Overseas
	Portfolio		Portfolio		Estate		Value		Comstock		Income		Portfolio		Total
Assets

Investments:
MFS VIT Value Series—IC—17,706 shares (cost $341,704)	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	353,408
MFS Research International Series—SC—1 shares (cost $19)		—		—		—		—		—		—		—		25
MFS New Discovery Series—604 shares (cost $9,091)		—		—		—		—		—		—		—		14,262
MFS Total Return Series—3,881 shares (cost $80,641)		—		—		—		—		—		—		—		98,965
Deutsche Equity 500 Index Fund—3,883 shares (cost $69,163)		—		—		—		—		—		—		—		96,966
Deutsche Small Cap Index Fund—7,100 shares (cost $91,245)		—		—		—		—		—		—		—		123,467
Federated Kaufmann Fund II—1,496 shares (cost $25,652)		—		—		—		—		—		—		—		38,088
Federated Government Money Fund II—67,840 shares (cost $67,840)		—		—		—		—		—		—		—		67,840
Federated U.S. Gov’t Securities Fund II—132 shares (cost $1,447)		—		—		—		—		—		—		—		1,469
Federated Quality Bond Fund II—510 shares (cost $5,662)		—		—		—		—		—		—		—		6,033
UIF Global Strategist—896 shares (cost $7,926)		9,846		—		—		—		—		—		—		9,846
UIF Capital Growth—26,810 shares (cost $844,996)		—		1,882,836		—		—		—		—		—		1,882,836
UIF US Real Estate—873 shares (cost $12,721)		—		—		14,951		—		—		—		—		14,951
Invesco Van Kampen American Value—1,692 shares (cost $26,794)		—		—		—		26,743		—		—		—		26,743
Invesco Van Kampen Comstock—1,832 shares (cost $26,621)		—		—		—		—		29,555		—		—		29,555
Lord Abbett Growth & Income—17,140 shares (cost $499,443)		—		—		—		—		—		598,875		—		598,875
Janus Aspen Overseas—8,446 shares (cost $287,443)		—		—		—		—		—		—		322,713		322,713

Total assets		9,846		1,882,836		14,951		26,743		29,555		598,875		322,713		3,686,042

Liabilities

Accrued mortality and expense risk charge		6		1,211		9		20		22		414		200		2,317

Net assets	$	9,840	$	1,881,625	$	14,942	$	26,723	$	29,533	$	598,461	$	322,513	$	3,683,725

See notes to financial statements.

Fidelity Security Life Insurance Company FSL Separate Account M

Statements of Operations

Year Ended December 31, 2020


	MFS Investment Management											Deutsche Asset Management						Federated Insurance Series
	VIT			Research		New			Total												Government			U.S. Gov’t			Quality
	Value			International		Discovery			Return			Equity 500			Small Cap			Kaufmann			Money			Securities			Bond
	Series—IC			Series—SC		Series			Series			Index Fund			Index Fund			Fund II			Fund II			Fund II			Fund II
Investment income (loss):
Investment income distributions from underlying mutual funds	$	4,292		$	—	$	—		$	1,874		$	1,379		$	1,047		$	2,932		$	156		$	35		$	174
Mortality and expense charges and administrative charges		(2,869	)		—		(161	)		(818	)		(1,073	)		(1,245	)		(496	)		(942	)		(13	)		(78	)

Net investment income (loss)		1,423			—		(161	)		1,056			306			(198	)		2,436			(786	)		22			96

Realized gains (losses) on investments:
Capital gain distributions		14,424			1		1,147			2,441			4,839			9,685			—			—			—			—
Realized gain (loss) on sale of fund shares		(640	)		—		47			96			279			147			172			—			—			—

Net realized gains (losses) on investments		13,784			1		1,194			2,537			5,118			9,832			172			—			—			—

Net change in unrealized appreciation (depreciation) on investments		(8,211	)		2		3,283			4,169			8,649			9,792			5,448			—			55			281

Increase (decrease) in net assets from operations	$	6,996		$	3	$	4,316		$	7,762		$	14,073		$	19,426		$	8,056		$	(786	)	$	77		$	377

(Continued)

Fidelity Security Life Insurance Company FSL Separate Account M

Statements of Operations (Continued)

Year Ended December 31, 2020


	The Universal Institutional Funds, Inc.									Invesco Van Kampen
	Global															Lord Abbett			Janus Aspen
	Strategist			Growth			U.S. Real			V.I. American			V.I.			Growth &			Overseas
	Portfolio			Portfolio			Estate			Value			Comstock			Income			Portfolio			Total
Investment income (loss):
Investment income distributions from underlying mutual funds	$	127		$	20,962		$	394		$	435		$	634		$	9,296		$	3,707		$	47,444
Mortality and expense charges and administrative charges		(110	)		(19,635	)		(149	)		(322	)		(368	)		(7,199	)		(3,472	)		(38,950	)

Net investment income (loss)		17			1,327			245			113			266			2,097			235			8,494

Realized gains (losses) on investments:
Capital gain distributions		642			123,892			391			—			696			—			—			158,158
Realized gain (loss) on sale of fund shares		26			102,510			65			49			47			6,876			(10,181	)		99,493

Net realized gains (losses) on investments		668			226,402			456			49			743			6,876			(10,181	)		257,651

Change in unrealized appreciation (depreciation) on investments		158			838,732			(3,926	)		(242	)		(1,707	)		(1,555	)		52,122			907,050

Increase (decrease) in net assets from operations	$	843		$	1,066,461		$	(3,225	)	$	(80	)	$	(698	)	$	7,418		$	42,176		$	1,173,195

See notes to financial statements.

Fidelity Security Life Insurance Company FSL Separate Account M

Statements of Changes in Net Assets

Year Ended December 31, 2020


	MFS Investment Management										Deutsche Asset Management					Federated Insurance Series
	VIT Value Series—IC			Research International Series—SC		New Discovery Series			Total Return Series		Equity 500 Index Fund		Small Cap Index Fund			Kaufmann Fund II		Government Money Fund II			U.S. Gov’t Securities Fund II		Quality Bond Fund II
Operations:
Net investment income (loss)	$	1,423		$	—	$	(161	)	$	1,056	$	306	$	(198	)	$	2,436	$	(786	)	$	22	$	96
Net realized gains (losses) on investments		13,784			1		1,194			2,537		5,118		9,832			172		—			—		—
Net change in unrealized appreciation (depreciation) on investments		(8,211	)		2		3,283			4,169		8,649		9,792			5,448		—			55		281

Net increase in net assets from operations		6,996			3		4,316			7,762		14,073		19,426			8,056		(786	)		77		377

Contract transactions:
Premium transfers in		—			—		—			—		151		850			74		300			—		—
Transfers out from contract-related transactions		(8,316	)		—		—			—		—		—			—		(3,511	)		—		—
Transfers between separate accounts and general account		—			—		—			—		—		—			—		(4,341	)		—		—
Policy loan transfers		—			—		—			—		—		1,520			—		—			—		—

Payments and withdrawals		(8,316	)		—		—			—		151		2,370			74		(7,552	)		—		—

Increase (decrease) in net assets		(1,320	)		3		4,316			7,762		14,224		21,796			8,130		(8,338	)		77		377
Beginning of year net assets		354,568			22		9,935			91,159		82,680		101,587			29,930		76,137			1,391		5,652

End of year net assets	$	353,248		$	25	$	14,251		$	98,921	$	96,904	$	123,383		$	38,060	$	67,799		$	1,468	$	6,029

(Continued)

Fidelity Security Life Insurance Company FSL Separate Account M

Statements of Changes in Net Assets (Continued)

Year Ended December 31, 2020


	The Universal Institutional Funds, Inc.								Invesco Van Kampen
	Global														Lord Abbett			Janus Aspen
	Strategist		Growth			U.S. Real			V.I. American			V.I.			Growth &			Overseas
	Portfolio		Portfolio			Estate			Value			Comstock			Income			Portfolio			Total
Operations:
Net investment income (loss)	$	17	$	1,327		$	245		$	113		$	266		$	2,097		$	235		$	8,494
Net realized gains (losses) on investments		668		226,402			456			49			743			6,876			(10,181	)		257,651
Net change in unrealized appreciation (depreciation) on investments		158		838,732			(3,926	)		(242	)		(1,707	)		(1,555	)		52,122			907,050

Net increase in net assets from operations		843		1,066,461			(3,225	)		(80	)		(698	)		7,418			42,176			1,173,195

Contract transactions:
Premium transfers in		—		3,825			—			76			—			6,675			450			12,401
Transfers out from contract-related transactions		—		(96,194	)		—			—			—			(11,794	)		(9,416	)		(129,231	)
Transfers between separate accounts and general account		—		(46,252	)		—			—			—			—			(8,725	)		(59,318	)
Policy loan transfers		—		2,253			—			—			—			1,519			—			5,292

Payments and withdrawals		—		(136,368	)		—			76			—			(3,600	)		(17,691	)		(170,856	)

Increase (decrease) in net assets		843		930,093			(3,225	)		(4	)		(698	)		3,818			24,485			1,002,339
Beginning of year net assets		8,997		951,532			18,167			26,727			30,231			594,643			298,028			2,681,386

End of year net assets	$	9,840	$	1,881,625		$	14,942		$	26,723		$	29,533		$	598,461		$	322,513		$	3,683,725

See notes to financial statements.

Fidelity Security Life Insurance Company FSL Separate Account M

Statement of Changes in Net Assets

Year Ended December 31, 2019


	MFS Investment Management											Deutsche Asset Management					Federated Insurance Series
	VIT Value Series—IC			Research International Series—SC		New Discovery Series			Total Return Series			Equity 500 Index Fund		Small Cap Index Fund			Kaufmann Fund II			Government Money Fund II			U.S. Gov’t Securities Fund II			Quality Bond Fund II
Operations:
Net investment income (loss)	$	3,093		$	—	$	(142	)	$	1,053		$	425	$	(319	)	$	(429	)	$	308		$	—		$	88
Net realized gains (losses) on investments		15,200			1		1,804			3,242			3,802		8,385			3,031			—			(1	)		(1	)
Net change in unrealized appreciation (depreciation) on investments		61,013			4		1,136			10,943			14,519		11,142			4,698			—			48			346

Net increase in net assets from operations		79,306			5		2,798			15,238			18,746		19,208			7,300			308			47			433

Contract transactions:
Premium transfers in		—			—		—			—			650		1,408			325			325			—			—
Transfers out from contract-related transactions		(7,411	)		—		—			(4,249	)		—		—			(1,115	)		(14,018	)		(18	)		(203	)

Payments and withdrawals		(7,411	)		—		—			(4,249	)		650		1,408			(790	)		(13,693	)		(18	)		(203	)

Increase (decrease) in net assets		71,895			5		2,798			10,989			19,396		20,616			6,510			(13,385	)		29			230
Beginning of year net assets		282,673			17		7,137			80,170			63,284		80,971			23,420			89,522			1,362			5,422

End of year net assets	$	354,568		$	22	$	9,935		$	91,159		$	82,680	$	101,587		$	29,930		$	76,137		$	1,391		$	5,652

(Continued)

Fidelity Security Life Insurance Company FSL Separate Account M

Statement of Changes in Net Assets (Continued)

Year Ended December 31, 2019


	The Universal Institutional Funds, Inc.								Invesco Van Kampen
	Global Strategist Portfolio		Growth Portfolio			U.S. Real Estate			V.I. American Value			V.I. Comstock			Lord Abbett Growth & Income			Janus Aspen Overseas Portfolio			Total
Operations:
Net investment income (loss)	$	72		$(13,819	)	$	135			$ (197	)	$	131		$	1,400		$	1,458		$	(6,743	)
Net realized gains (losses) on investments		429		144,202			785			2,024			3,912			54,652			(13,520	)		227,947
Net change in unrealized appreciation (depreciation) on investments		811		124,687			1,809			3,201			1,757			48,076			74,815			359,005

Net increase in net assets from operations		1,312		255,070			2,729			5,028			5,800			104,128			62,753			580,209

Contract transactions:
Premium transfers in		—		5,271			—			325			—			8,541			925			17,770
Transfers out from contract-related transactions		—		(185,947	)		(19	)		(221	)		(309	)		(25,169	)		(18,787	)		(257,466	)

Payments and withdrawals		—		(180,676	)		(19	)		104			(309	)		(16,628	)		(17,862	)		(239,696	)

Increase (decrease) in net assets		1,312		74,394			2,710			5,132			5,491			87,500			44,891			340,513
Beginning of year net assets		7,685		877,138			15,457			21,595			24,740			507,143			253,137			2,340,873

End of year net assets	$	8,997	$	951,532		$	18,167		$	26,727		$	30,231		$	594,643		$	298,028		$	2,681,386

See notes to financial statements.

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 1. Organization

The FSL Separate Account M (the Separate Account), marketed as FSL Flexible Premium Variable Annuity (the Contract), is a segregated investment account of Fidelity Security Life Insurance Company (the Company). The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust pursuant to the provisions of the Investment Company Act of 1940. The Separate Account was established by the Company on May 14, 1999, and commenced operations on May 20, 1999. All deposits received by the Separate Account are invested in one or more of the investment options, as listed below, in accordance with the selection made by the contract owner.

The Contract has 18 investment choices, one fixed account and 17 investment options (subaccounts). The fixed account is part of the general assets of the Company and provides an investment rate guaranteed by the Company. The 17 investment options available are portfolios of MFS Investment Management; Lord Abbett Growth & Income; Federated Insurance Series; Deutsche Asset Management; The Universal Institutional Funds, Inc.; Invesco Van Kampen; and Janus Aspen Overseas Portfolio. Collectively, the 17 investment options constitute the assets of the Separate Account. These subaccounts and their objectives are as follows:


Fund		Fund Objective
MFS Investment Management:
MFS VIT Value Series—IC		The fund’s investment objective is to seek capital appreciation.
MFS Research International Series—SC		The fund’s investment objective is to seek capital appreciation.
MFS New Discovery Series		The fund’s investment objective is to seek capital appreciation.
MFS Total Return Series		The fund’s investment objective is to seek total return.
Deutsche Asset Management:
Equity 500 Index Fund		The fund seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Standard & Poor’s 500 Composite Stock Price Index (S&P 500), which emphasizes stocks of large U.S. companies.
Small Cap Index Fund		The fund seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Russell 2000^® Index, which emphasizes stocks of small U.S. companies.
Federated Insurance Series:
Kaufmann Fund II		The fund’s investment objective is capital appreciation.
Government Money Fund II		The fund is a money market fund that seeks to maintain a stable net asset value (NAV) of $1.00 per share. The fund’s investment objective is to provide current income consistent with stability of principal and liquidity.
U.S. Gov’t Securities Fund II		The fund’s investment objective is to provide current income.
Quality Bond Fund II		The fund’s investment objective is to provide current income.
The Universal Institutional Funds, Inc.:
The Universal Institutional Funds Global Strategist Portfolio		The fund seeks total return.
The Universal Institutional Funds Growth Portfolio		The fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of large-capitalization companies.

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 1. Organization (Continued)


Fund		Fund Objective
The Universal Institutional Funds, Inc. (continued):
The Universal Institutional Funds U.S. Real Estate Portfolio		The fund seeks to provide above-average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts.
Invesco Van Kampen:
Invesco V.I. American Value Fund		The fund’s investment objective is to provide above-average total return over a market cycle of three to five years by investing in common stocks and other equity securities.
Invesco V.I. Comstock Fund		The fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks, and securities convertible into common and preferred stocks.
Lord Abbett Growth & Income		The fund’s investment objective is long-term growth of capital and income without excessive fluctuations in market value.
Janus Aspen Overseas Portfolio		The fund seeks long-term growth of capital.

Note 2. Summary of Significant Accounting Policies

The significant accounting policies of the Separate Account are:

Basis of presentation: The financial statements have been prepared with U.S. generally accepted accounting principles (GAAP). The Separate Account is an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services—Investment Companies.

Investment valuation: Investments in mutual fund shares are stated at fair value, which is the closing net asset value per share of the underlying mutual fund.

Securities transactions and investment income: Securities transactions are recorded on the trade date. Dividend income is recorded on the ex-dividend date. The cost of investments sold and the corresponding capital gains and losses are determined on a specific-identification basis. Interest and dividend income, unrealized gains, and capital gains distributions paid by the funds to the Separate Account are reinvested in additional shares of each respective subaccount, and are allocated to the contracts on each valuation date based on each individual annuity contract’s pro rata share of the net assets of the investment option as of the beginning of the valuation date.

Unit valuations: Investments are tracked using an accumulation unit. Contract owners may elect to own lump-sum units or easy-pay units depending on the payment plan selected (see Note 5). Every business day, the value of the accumulation unit is determined after the New York Stock Exchange closes. The value is determined by computing the change in the published net asset value for the investment option from the previous day to the current business day; subtracting any charges, including the product expense charge and any taxes; and multiplying the previous business day’s accumulation unit value by this result.

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

Federal income tax: The operations of the Separate Account are included in the federal income tax return of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code (IRC). Under the current provisions of the IRC, the Company does not expect to incur federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the contracts. Based on this, no charge is being made currently to the Separate Account for federal income taxes. The Company periodically reviews the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts.

Risks and uncertainties: Certain risks and uncertainties are inherent to the Separate Account’s day-to-day operations and to the process of preparing its financial statements. The more significant of those risks and uncertainties, as well as the Separate Account’s method for mitigating the risks, are presented below and throughout the notes to the financial statements.

Investments: The Separate Account invests in mutual fund shares and, as such, is exposed to the same risks as the underlying mutual funds, such as interest rate and market and credit risks. Due to the level of risk associated with these investments in mutual funds, it is at least reasonably possible that changes in the values of the underlying funds will occur in the near term and that such changes could materially affect policyholders’ account balances and the amounts reported in the statement of net assets.

Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

External factors: On March 11, 2020 the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a global pandemic, which continues to spread throughout the United States and around the world. The Separate Account’s performance has remained stable throughout the pandemic. The Separate Account will continue to evaluate the nature and extent of the impact to the Separate Account, results of operation, financial condition, and liquidity

Statement of cash flows: The Separate Account has elected not to provide a statement of cash flows as permitted by GAAP, as all of the following conditions have been met:

•

During the year, substantially all of the Separate Account’s investments were categorized as Level 1 in the fair value hierarchy;

•

Substantially all of the Separate Account’s investments are carried at fair value;

•

The Separate Account had little or no debt during the year; and

•

The Separate Accounts’ financial statements include a statement of changes in net assets.

Subsequent events: All of the effects of subsequent events that provide additional evidence about conditions that existed at the statement of net assets date, including the estimates inherent in the process of preparing financial statements, are recognized in the financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the statement of net assets date but arose after, but before the financial statements are available to be issued. In some cases, nonrecognized subsequent events are disclosed to keep the financial statements from being misleading.

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

Subsequent events have been evaluated through April 26, 2021, which is the date that the financial statements were available to be issued.

Note 3. Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Separate Account utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability.

Assets and liabilities recorded at fair value are categorized within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

At December 31, 2020, the only assets of each subaccount were investments in shares of open-end mutual funds that are actively traded. Accordingly, as of December 31, 2020, all investments of each subaccount were classified as Level 1 under the fair value hierarchy.

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 4. Purchases and Sales of Investments

The cost of purchases and proceeds from sales of investment options, net of expenses, for the years ended December 31, 2020 and 2019, were as follows:


	2020
	Purchases		Sales
MFS Investment Management:
VIT Value Series—IC	$	—	$	8,316
Research International Series—SC		—		—
New Discovery Series		—		—
Total Return Series		—		—
Deutsche Asset Management:
Equity 500 Index Fund		151		—
Small Cap Index Fund		2,370		—
Federated Insurance Series:
Kaufmann Fund II		74		—
Government Money Fund II		300		7,852
U.S. Gov’t Securities Fund II		—		—
Quality Bond Fund II		—		—
The Universal Institutional Funds, Inc.:
Global Strategist Portfolio		—		—
Growth Portfolio		5,989		142,357
U.S. Real Estate		—		—
Invesco Van Kampen:
Van Kampen V.I. American Value		76		—
Van Kampen V.I. Comstock		—		—
Lord Abbett Growth & Income		8,144		11,744
Janus Aspen Overseas Portfolio		450		18,141

	$	17,554	$	188,410

Note 5. Expenses and Related-Party Transactions

Each day the Company makes a deduction from the Separate Account for a mortality and expense risk charge. This charge is for all of the insurance benefits (that is, guarantee of annuity rates, the death benefit) and for assuming the risk that current charges will be insufficient in the future to cover the cost of administering the Separate Account. The product expense charge is assessed based on the daily unit values of the contract holder’s portion of the assets in the Separate Account. The assessments are as follows:

•

Easy-pay payments—0.90%, on an annual basis, for contracts that have reached a value of $100,000 or more, or 1.50%, on an annual basis, for contracts that have a value of less than $100,000

•

Lump-sum payments—0.90%, on an annual basis

This charge cannot be increased but could be reduced if sales of the Contract are made to individuals or to a group of individuals in such a manner that results in a reduction of the Company’s administrative costs or other savings.

The Company also assesses a transfer charge for each transfer during the accumulation phase in excess of 12 transfers during a contract year.

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 6. Change in Units Outstanding

The changes in units outstanding for the years ended December 31, 2020 and 2019, were as follows:


	2020								2019
	Units		Units			Net Increase			Units		Units			Net Increase
	Issued		Redeemed			(Decrease)			Issued		Redeemed			(Decrease)
MFS Investment Management:
VIT Value Series—IC	$	—	$	(316	)	$	(316	)	$	—	$	(281	)	$	(281	)
Research International Series—SC		—		—			—			—		—			—
New Discovery Series		—		—			—			—		—			—
Total Return Series		—		—			—			—		(221	)		(221	)
Deutsche Asset Management:
Equity 500 Index Fund		5		—			5			26		—			26
Small Cap Index Fund		163		—			163			77		—			77
Federated Insurance Series:
Kaufmann Fund II		2		—			2			12		(38	)		(27	)
Government Money Fund II		32		(760	)		(728	)		34		(1,444	)		(1,410	)
U.S. Gov’t Securities Fund II		—		—			—			—		(1	)		(1	)
Quality Bond Fund II		—		—			—			—		(14	)		(14	)
The Universal Institutional Funds, Inc.:
Global Strategist Portfolio		—		—			—			—		—			—
Growth Portfolio		105		(1,587	)		(1,482	)		119		(4,060	)		(3,941	)
U.S. Real Estate		—		—			—			—		(1	)		(1	)
Invesco Van Kampen:
Van Kampen V.I. American Value		4		—			4			16		(11	)		5
Van Kampen V.I. Comstock		—		—			—			—		(12	)		(12	)
Lord Abbett Growth & Income		479		(655	)		(176	)		456		(1,314	)		(859	)
Janus Aspen Overseas Portfolio		14		(489	)		(475	)		33		(593	)		(559	)

	$	804	$	(3,807	)	$	(3,003	)	$	773	$	(7,990	)	$	(7,217	)

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 7. Financial Highlights

A summary of unit values for variable annuity contracts and the expense ratios, excluding expenses for the underlying fund, for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, follows:


	December 31						Investment		Year Ended December 31
			Unit Fair Value,		Net		Income		Expense Ratio (b),	Total Return (c),
	Units		Lowest to Highest		Assets		Ratio (a)		Lowest to Highest	Lowest to Highest
MFS Investment Management:
VIT Value Series—IC:
2020		11,901		27.03 to 29.75	$	353,248		1.35	0.90% to 1.50%	1.68% to 2.29%
2019		12,217		26.58 to 29.09		354,568		1.92	0.90% to 1.50%	27.58% to 28.35%
2018		12,498		20.84 to 22.66		282,723		1.32	0.90% to 1.50%	(11.70)% to (11.16)%
2017		12,796		23.60 to 25.51		325,813		1.47	0.90% to 1.50%	15.61% to 16.30%
2016		6,288		20.41 to 21.94		137,625		3.25	0.90% to 1.50%	12.08% to 12.76%
Research International Series—SC:
2020		1		20.16 to 20.87		25		0.00	0.90% to 1.50%	11.03% to 11.70%
2019		1		18.16 to 18.16		22		0.00	0.90% to 1.50%	25.77% to 26.53%
2018		1		14.44 to 14.77		17		1.53	0.90% to 1.50%	(15.60)% to (15.09)%
2017		1		17.11 to 17.40		20		1.66	0.90% to 1.50%	26.00% to 26.76%
2016		1		13.58 to 13.73		16		1.35	0.90% to 1.50%	(2.39)% to (1.80)%
New Discovery Series:
2020		293		48.57 to 53.47		14,251		0.00	0.90% to 1.50%	43.41% to 44.27%
2019		293		33.87 to 37.07		9,935		0.00	0.90% to 1.50%	39.17% to 40.01%
2018		293		24.34 to 26.47		7,137		0.00	0.90% to 1.50%	(3.19)% to (2.60)%
2017		293		25.14 to 27.18		7,371		0.00	0.90% to 1.50%	24.46% to 25.20%
2016		293		20.20 to 21.71		5,922		0.00	0.90% to 1.50%	7.18% to 7.82%
Total Return Series:
2020		4,743		17.01 to 20.93		98,921		2.10	0.90% to 1.50%	7.88% to 8.53%
2019		4,743		17.63 to 19.29		91,159		2.16	0.90% to 1.50%	18.33% to 19.04%
2018		4,964		14.90 to 16.21		80,170		2.02	0.90% to 1.50%	(7.28)% to (6.72)%
2017		5,251		16.07 to 17.37		95,170		2.21	0.90% to 1.50%	10.36% to 11.02%
2016		5,499		14.56 to 15.65		85,805		2.73	0.90% to 1.50%	7.20% to 7.84%
Deutsche Asset Management:
Equity 500 Index Fund:
2020		2,869		32.68 to 35.97		96,904		1.66	0.90% to 1.50%	16.33% to 17.04%
2019		2,864		28.09 to 30.74		82,680		1.94	0.90% to 1.50%	29.23% to 30.01%
2018		2,838		21.74 to 23.65		63,284		1.67	0.90% to 1.50%	(5.75)% to (5.18)%
2017		2,812		23.07 to 24.94		66,651		1.63	0.90% to 1.50%	19.73% to 20.45%
2016		2,068		19.27 to 20.71		40,260		2.02	0.90% to 1.50%	9.95% to 10.61%
Small Cap Index Fund:
2020		5,158		23.35 to 25.35		123,383		1.10	0.90% to 1.50%	17.65% to 18.36%
2019		4,996		19.84 to 21.43		101,587		1.05	0.90% to 1.50%	23.36% to 24.10%
2018		4,919		16.08 to 17.27		80,971		0.95	0.90% to 1.50%	(12.56)% to (12.03)%
2017		4,867		18.40 to 19.63		91,440		0.97	0.90% to 1.50%	12.63% to 13.31%
2016		5,104		16.34 to 17.32		84,961		1.07	0.90% to 1.50%	19.22% to 19.94%

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 7. Financial Highlights (Continued)


	December 31						Investment		Year Ended December 31
			Unit Fair Value,		Net		Income		Expense Ratio (b),	Total Return (c),
	Units		Lowest to Highest		Assets		Ratio (a)		Lowest to Highest	Lowest to Highest
Federated Insurance Series:
Kaufmann Fund II:
2020		987		38.54 to 41.12	$	38,060		9.01	0.90% to 1.50%	26.87% to 27.64%
2019		984		30.38 to 32.22		29,930		—	0.90% to 1.50%	31.19% to 31.98%
2018		1,011		23.16 to 24.41		23,420		—	0.90% to 1.50%	2.78% to 3.41%
2017		999		22.53 to 23.61		22,510		—	0.90% to 1.50%	26.42% to 27.18%
2016		1,466		17.82 to 18.56		26,133		—	0.90% to 1.50%	2.12% to 2.73%
Government Money Fund II:
2020		6,974		9.42 to 10.36		67,799		0.21	0.90% to 1.50%	(1.29)% to (0.70)%
2019		7,702		9.55 to 10.44		76,137		1.64	0.90% to 1.50%	.11% to .72%
2018		9,112		9.54 to 10.37		89,522		1.25	0.90% to 1.50%	(0.26)% to 0.35%
2017		9,310		9.56 to 10.33		91,554		0.31	0.90% to 1.50%	(1.18)% to (0.58)%
2016		10,695		9.68 to 10.39		105,617		—	0.90% to 1.50%	(1.49)% to (0.90)%
U.S. Gov’t Securities Fund II:
2020		100		13.38 to 14.72		1,468		2.37	0.90% to 1.50%	3.64% to 4.27%
2019		100		12.91 to 14.12		1,391		2.43	0.90% to 1.50%	4.32% to 4.95%
2018		101		12.38 to 13.46		1,362		2.42	0.90% to 1.50%	(0.66)% to (0.07)%
2017		107		12.46 to 13.47		1,448		2.36	0.90% to 1.50%	0.41% to 1.01%
2016		112		12.41 to 13.33		1,486		2.48	0.90% to 1.50%	0.10% to 0.69%
Quality Bond Fund II:
2020		371		15.80 to 17.39		6,029		2.99	0.90% to 1.50%	6.51% to 7.15%
2019		371		14.84 to 16.23		5,652		2.92	0.90% to 1.50%	7.82% to 8.46%
2018		384		13.76 to 14.97		5,422		3.09	0.90% to 1.50%	(2.08)% to (1.49)%
2017		416		14.06 to 15.19		5,977		4.20	0.90% to 1.50%	2.49% to 3.10%
2016		1,032		13.71 to 14.73		14,252		3.56	0.90% to 1.50%	2.28% to 2.89%
The Universal Institutional Funds, Inc.:
Global Strategist Portfolio:
2020		538		17.68 to 19.46		9,840		1.47	0.90% to 1.50%	9.26% to 9.92%
2019		538		16.19 to 17.71		8,997		2.21	0.90% to 1.50%	16.02% to 16.71%
2018		538		13.95 to 15.17		7,685		0.94	0.90% to 1.50%	(7.90)% to (7.35)%
2017		615		15.15 to 16.38		9,548		1.15	0.90% to 1.50%	14.39% to 15.07%
2016		615		13.24 to 14.23		8,327		—	0.90% to 1.50%	4.00% to 4.63%
Growth Portfolio:
2020		18,017		101.74 to 112.00		1,881,625		1.52	0.90% to 1.50%	114.06% to 115.36%
2019		19,499		47.53 to 52.01		951,532		0.00	0.90% to 1.50%	29.84% to 30.63%
2018		23,441		36.61 to 39.81		877,138		—	0.90% to 1.50%	5.93% to 6.57%
2017		24,143		34.56 to 37.36		851,890		—	0.90% to 1.50%	41.02% to 41.87%
2016		26,745		24.50 to 26.33		667,316		—	0.90% to 1.50%	(3.10% to (2.52)%

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 7. Financial Highlights (Continued)


	December 31						Investment		Year Ended December 31
			Unit Fair Value,		Net		Income		Expense Ratio (b),	Total Return (c),
	Units		Lowest to Highest		Assets		Ratio (a)		Lowest to Highest	Lowest to Highest
The Universal Institutional Funds, Inc. (continued):
U.S. Real Estate:
2020		768		18.21 to 20.04	$	14,942		2.77	0.90% to 1.50%	(18.09)% to (17.60)%
2019		768		22.24 to 24.33		18,167		1.88	0.90% to 1.50%	17.17% to 17.87%
2018		769		18.98 to 20.64		15,457		2.75	0.90% to 1.50%	(9.10)% to (8.55)%
2017		778		20.88 to 22.57		17,113		1.64	0.90% to 1.50%	1.58% to 2.19%
2016		984		20.55 to 22.09		21,023		1.32	0.90% to 1.50%	5.22% to 5.85%
Invesco Van Kampen:
V.I. American Value:
2020		1,215		21.89 to 23.33		26,723		1.91	0.90% to 1.50%	(0.39)% to 0.21%
2019		1,211		21.98 to 23.28		26,727		0.72	0.90% to 1.50%	23.16% to 23.90%
2018		1,205		17.84 to 18.79		21,595		0.50	0.90% to 1.50%	(13.95)% to (13.44)%
2017		1,202		20.74 to 21.71		25,013		0.75	0.90% to 1.50%	8.33% to 8.98%
2016		1,407		19.14 to 19.92		27,002		0.37	0.90% to 1.50%	13.77% to 14.46%
V.I. Comstock:
2020		1,192		24.70 to 26.33		29,533		2.49	0.90% to 1.50%	(2.33)% to (1.74)%
2019		1,192		25.30 to 26.80		30,231		2.03	0.90% to 1.50%	23.44% to 24.18%
2018		1,204		20.50 to 21.58		24,740		1.77	0.90% to 1.50%	(13.48)% to (12.95)%
2017		1,238		23.69 to 24.79		29,360		2.24	0.90% to 1.50%	16.10% to 16.80%
2016		1,246		20.40 to 21.23		25,492		1.60	0.90% to 1.50%	15.55% to 16.25%
Lord Abbett Growth & Income:
2020		28,583		20.57 to 22.58		598,461		1.76	0.90% to 1.50%	1.16% to 1.77%
2019		28,758		20.34 to 22.20		594,643		1.69	0.90% to 1.50%	21.39% to 22.82%
2018		29,619		16.85 to 18.28		507,143		1.36	0.90% to 1.50%	(9.52)% to (8.97)%
2017		31,674		18.63 to 20.09		598,921		1.32	0.90% to 1.50%	11.70% to 12.37%
2016		35,088		16.68 to 17.88		594,189		1.51	0.90% to 1.50%	15.37% to 16.06%

Fidelity Security Life Insurance Company FSL Separate Account M

Notes to Financial Statements

Note 7. Financial Highlights (Continued)


	December 31						Investment		Year Ended December 31
			Unit Fair Value,		Net		Income		Expense Ratio (b),	Total Return (c),
	Units		Lowest to Highest		Assets		Ratio (a)		Lowest to Highest	Lowest to Highest
Janus Aspen Overseas Portfolio:
2020		8,040		38.60 to 42.95	$	322,513		1.35	0.90% to 1.50%	14.56% to 15.25%
2019		8,515		33.70 to 37.27		298,028		1.90	0.90% to 1.50%	25.13% to 25.88%
2018		9,076		26.93 to 29.61		253,137		1.79	0.90% to 1.50%	(16.21)% to (15.71)%
2017		9,963		32.15 to 35.13		330,465		1.69	0.90% to 1.50%	29.17% to 29.95%
2016		10,946		24.89 to 27.03		280,122		5.04	0.90% to 1.50%	(7.84)% to (7.29)%

(a)

These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average monthly net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts, either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.

(b)

These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded.

(c)

These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period.