FIDELITY DESTINY PORTFOLIOS
CROSS REFERENCE SHEET
Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2a The Funds' Expenses
b,c *
3a The Funds' Financial Histories
b *
c The Funds' Performance
4a(i) Destiny Funds and the Fidelity Organization;
a(ii) The Funds' Investment Objective;
Investment Policies, Risks and Limitations
b,c Investment Policies, Risks and Limitations
5a,b(i) Destiny Funds and the Fidelity Organization
b(ii,iii), c,d,e Management and Service Fees; Destiny
Funds and the Fidelity Organization, The
Funds' Financial Histories
f Investment Policies, Risks and Limitations;
6a(i) Destiny Funds and the Fidelity Organization
a(ii,iii), b,c,d *
e Cover Page; Shareholder Services
f Shareholder Services
g A Few Words About Distributions and Taxes
7a Destiny Funds and the Fidelity Organization
b(i,ii) How to Buy Shares
b(iii) The Funds' Expenses
b(iv,v) *
c Shareholder Services
d How to Buy Shares
e,f *
8a How to Redeem Shares
b,c,d *
9 *
Form N-1A Item Number
Part B Statement of Additional Information
10,11 Cover Page
12 Description of the Fund
13a,b,c Investment Policies and Limitations
d *
14a,b Trustees and Officers
c *
15a,b *
c Trustees and Officers
16a(i) FMR
a(ii) Trustees and Officers
a(iii),b Management Contracts
c *
d Contracts with Companies Affiliated with
FMR
e,f,g *
h Description of the Fund
i Contracts with Companies Affiliated with
FMR
17a,b,c,d Portfolio Transactions
e *
18a Description of the Fund
b *
19a *
b Valuation of Fund Securities; Additional
Purchase and Redemption Information
c *
20 Distributions and Taxes
21a Contracts with Companies Affiliated with
FMR
b,c *
22 Performance
23 Financial Statements for the Funds' fiscal
year ended September 30, 1994 will be filed
by subsequent amendment.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 57 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No.
Fidelity Destiny Portfolios
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number (617) 570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b) of Rule 485
( ) On ( ) pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
(X) On (November 29, 1994) pursuant to paragraph (a) of Rule 485
Registrant intends to file a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and the notice required by such Rule on or
about November 29, 1994.
FIDELITY DESTINY
PORTFOLIOS:
DESTINY I AND
DESTINY II
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS
PROSPECTUS
November 29, 1994
Fidelity Destiny Portfolios: Destiny I and Destiny II (the Fund or the
Funds) is an open-end management investment company made up of two separate
diversified portfolios. Each Fund seeks to achieve capital growth. Income
generally will not be considered when securities are purchased by the
Funds, although many securities may indeed be income-producing.
Please read this Prospectus before investing. It is designed to provide
you with information and to help you decide if either of the Fund's goals
match your own. YOU SHOULD RETAIN THIS DOCUMENT FOR FUTURE REFERENCE.
Shares of each Fund may be purchased only through Fidelity Systematic
Investment Plans: Destiny Plans I and Destiny Plans II (the Plans or a
Plan), a unit investment trust. Details of the Plans, including the
Creation and Sales Charges, as well as Custodian Fees , are discussed
in the Prospectus for the Plans. The charges for the first year of a Plan
may amount to as much as 50% of the amounts paid under a Plan. Prospective
investors should read this Prospectus in conjunction with the Plans'
Prospectus.
A Statement of Additional Information (SAI) dated November 29, 1994
for the Funds has been filed with the Securities and Exchange Commission
(SEC) and is incorporated herein by reference. This free SAI is available
upon request from Fidelity Distributors Corporation (Distributors).
FIDELITY DISTRIBUTORS CORPORATION
FIDELITY INVESTMENTS INSTITUTIONAL SERVICES COMPANY, INC., BROKER/DEALER
SERVICES DIVISION
NATIONWIDE (TOLL FREE) 1-800-752-2347
IN ALASKA OR OVERSEAS (CALL COLLECT) 617-439-0547
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY,
AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
LIKE ALL MUTUAL FUNDS, T HESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE PAGE
The Funds' Expenses F-2 The Funds' Financial Histories F-3
The Funds' Investment Objective F-4
The Funds' Investment Policies, Risks
and Limitations F-4
Portfolio Transactions F-6
A Few Words About Distributions and Taxes F-6
Destiny Funds and the Fidelity Organization F-7
Management and Service Fees F-7
The Funds' Performance F-9
How to Buy Shares F-10
Shareholder Services F-10
How to Redeem Shares F-12
Appendix F-13
Financial Statements F-16
THE FUNDS' EXPENSES
The expense summary format below was developed for use by all mutual funds
to help you make your investment decisions. Of course, you should consider
this expense information along with other important information, including
the Fund s' investment objectives and their past performance and the
fees and expenses associated with investment through the Plans.
A. SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on Purchases See Note A
Sales Load on Reinvested Di stributions See Note A
Deferred Sales Load Imposed on Redemptions None
Redemption Fees None
Exchange Fees None
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
DESTINY I DESTINY II
Management Fees % %
Other Expenses % %
Total Operating Expenses % %
C. EXAMPLE
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each period:
1 YR 3 YRS 5 YRS 10 YRS
Destiny I $ $ $ $
Destiny II $ $ $ $
EXPLANATION OF TABLE
A. SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or
sell shares of a Fund. Neither Fund will offer its shares publicly except
through the Plans, which impose separate Creation and Sales Charges.
Applicable Creation and Sales Charges vary according to the monthly
investment size and duration of each Plan. Please refer to the Destiny
Plans' Prospectus for details. If you exchange shares of the Funds, other
charges may apply. (See "Exchange Privilege" on page for information.)
B. ANNUAL FUND OPERATING EXPENSES are based on the Funds' historical
expenses. Management fees are paid by each Fund to Fidelity Management &
Research Company (FMR) for managing its investments and business affairs
and will vary based on performance. A portion of the brokerage commissions
that the Funds paid were used to reduce fund expenses.
With this reduction, the total fund operating expenses would have been
___%. Each Fund incurs other expenses for maintaining shareholder
records, furnishing shareholder statements and reports, and for other
services. Management fees and other expenses are reflected in each Fund's
share price and are not charged directly to individual shareholder
accounts. For accounts maintained within the Plans, separate Custodian fees
and an annual service fee are charged directly to Planholders. Please refer
to the section "Management and Service Fees," beginning on page and the
Destiny Plans' Prospectus for further information.
C. The hypothetical EXAMPLE illustrates the expenses associated with a
$1,000 investment over periods of 1, 3, 5 and 10 years, based on the
expenses in the table above and an assumed annual return of 5%. THE RETURN
OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED INDICATIONS OF ACTUAL OR
EXPECTED FUND PERFORMANCE OR EXPENSES, BOTH OF WHICH WILL VARY. Please
refer to page for the Funds' past performance. As stated above, Creation
and Sales Charges vary for each Plan. Generally, however, these charges are
structured to decrease as a percentage of the monthly investment as the
Plan progresses. Consequently, the major portion of the total Creation and
Sales Charges incurred during the life of a Plan are assessed within its
first year. For a detailed explanation of applicable rate structure, please
refer to the Destiny Plans' Prospectus.
THE FUNDS' FINANCIAL HISTORIES
FINANCIAL HIGHLIGHTS
The tables that follow are included in the Fund's Annual Report and
have been audited by ____________________, independent accountants. Their
report on the financial statements and financial highlights is included in
the Annual Report. The financial statements and financial highlights are
incorporated by reference into the Funds' SAI.
The tables that follow are included in the Fund's Annual Report and
have been audited by ____________________, independent accountants. Their
report on the financial statements and financial highlights is included in
the Annual Report. The financial statements and financial highlights are a
part of this Prospectus.
A LOOK AT DESTINY I'S HISTORY
TO BE FILED BY SUBSEQUENT AMENDMENT
A LOOK AT DESTINY II'S HISTORY
TO BE FILED BY SUBSEQUENT AMENDMENT
THE FUNDS' INVESTMENT OBJECTIVE
Each Fund seeks to achieve capital growth.
Income generally will not be considered when securities are purchased
by the Funds, although many of such securities may indeed be
income-producing. Each Fund may not always achieve its objective, but each
will always follow the investment style described in the following
paragraphs.
THE FUNDS' INVESTMENT POLICIES, RISKS AND LIMITATIONS
FMR normally invests each Fund's assets according to its investment
strategy. Each Fund also reserves the right to invest without limitation
in preferred stock and investment-grade debt instruments for temporary,
defensive purposes.
The Funds may purchase all types of securities, such as:
(medium solid bullet) common and preferred stocks;
(medium solid bullet) bonds, debentures, notes and other debt
securities; or
(medium solid bullet) warrants and rights to purchase securities.
Each of the Fund's assets will tend to be invested fully in common stocks
or securities convertible into common stocks. Each Fund also has the
ability to purchase preferred stocks or bonds that may produce capital
growth.
Each Fund may invest in lower-quality, high-yielding securities (sometimes
referred to as "junk bonds"), although each Fund intends to limit its
investments in these securities to 10% of its assets. Each Fund may
purchase restricted securities, illiquid investments, enter into repurchase
agreements, and may invest in indexed securities. Each Fund may also invest
in loans and other direct debt instruments, foreign securities, options and
futures contracts, real estate-related investments, and swap
agreements. See the "Appendix" beginning on page F-13 for more
information.
MATCHING THE FUNDS TO YOUR INVESTMENT NEEDS
Shares of each Fund may be acquired only through the purchase of an
interest in Fidelity Systematic Investment Plans: Destiny Plans I or
Destiny Plans II. The Funds are designed for you if you are seeking
accumulation of capital through regular, systematic investing over a period
of 10 years or more. Investments in the Funds are based on the concept of
"dollar-cost averaging." This involves consistently buying uniform dollar
amounts of a security regardless of the price, at regular intervals. When
prices are low, more shares are bought than when prices are high. Because
the value of the securities in each Fund fluctuates with market conditions,
if you liquidate your Plan investment when the market value of your shares
is less than their original cost, including the initial Plan's Creation and
Sales Charges, you will incur a loss. Investments in a systematic
investment plan do not eliminate market risk. While FMR will seek to
realize capital growth over the lifetime of a Plan, the policies FMR
follows may not be appropriate if you are unable to complete your Plan. You
should also consider your ability to continue to invest during periods of
varying economic and market conditions.
Receipt by each Fund of investments on a systematic basis tends to provide
a more consistent level of Fund assets than might be the case for those
funds whose shares are sold directly and may allow each Fund to plan for
the gradual accumulation of various individual security positions. One
example of how each Fund could employ this concept is through the program
of dollar-cost averaging as described above. Such a program could be
hampered by increased net redemptions or the failure of Plan investors to
purchase shares.
FMR is also the investment adviser to certain other investment companies
not sold through systematic investment plans, which also have objectives of
capital growth. The investment policies employed by each of these funds
vary, as do the sales charges assessed to fund share purchases and the
investment results each has attained.
LIMITING INVESTMENT RISKS
Each Fund has adopted the following investment limitations designed
to reduce investment risk. The policies and limitations discussed below, in
the section "The Funds' Investment Policies, Risks and Limitations" on page
F-4, and in the "Appendix" beginning on page F-13, are considered at the
time of purchase. With the exception of each Fund's borrowing policy, the
sale of portfolio securities is not required in the event of a subsequent
change in circumstances.
DIVERSIFICATION: Limitations (a) and (b) are fundamental. These limitations
do not apply to U.S. government securities.
(medium solid bullet) Each Fund may not (except that up to 25% of the
Fund's total assets may be invested without regard to these limitations)
purchase a security if, as a result, (a) more than 5% of its total assets
would be invested in the securities of any issuer or (b) it would hold more
than 10% of the outstanding voting securities of any issuer.
(medium solid bullet) As a fundamental policy, each Fund may not purchase
the securities of any issuer if, as a result, more than 25% of the Fund's
total assets would be invested in the securities of companies having their
principal business activities in the same industry.
BORROWING: The following limitations are no n- fundamental.
(medium solid bullet) Each Fund may borrow money for temporary or emergency
purposes, in an amount not exceeding 33% of the value of its total assets;
(a) may borrow money from a bank or from a mutual fund advised by FMR or an
affiliate; and (b) may engage in reverse repurchase agreements.
As a non-fundamental policy, each Fund may not purchase any security while
borrowings representing more than 5% of its total assets are outstanding.
LENDING: Percentage limita tions are fundamental.
(medium solid bullet) Each Fund (a) may lend portfolio securities to a
broker-dealer or institution when the loan is fully collateralized; and (b)
may lend money to a mutual fund advised by FMR or an affiliate. Each Fund
will limit loans in the aggregate to 33% of its total assets.
(medium solid bullet) Each Fund may acquire loans, loan participations and
other forms of direct debt instruments.
Each Fund has received permission from the SEC to lend money to and
borrow money from other mutual funds advised by FMR or its affiliates,
subject to certain restrictions (see the "Appendix" on page F-13). If a
Fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is paid off. To this extent, purchasing securities when
borrowings are outstanding involves an element of leverage.
As a non-fundamental policy, each Fund may not purchase a security, if,
as a result, more than 10% of its net assets would be invested in illiquid
investments.
Each Fund's investment objective is fundamental and may only be changed by
the affirmative vote of the outstanding shares of that Fund. Each Fund's
policies and limitations, except as noted, are non-fundamental and may be
changed without shareholder approval.
PORTFOLIO TRANSACTIONS
FMR chooses broker-dealers by judging professional ability and quality of
service. FMR uses various brokerage firms to carry out its portfolio
transactions. Since FMR places a large number of transactions, including
those of Fidelity's other funds, each Fund pays commissions lower than
those generally paid by individual investors. Also, each Fund incurs lower
costs than those generally incurred by individuals when purchasing debt
securities.
Each Fund has authorized FMR to allocate transactions to some
broker-dealers who help distribute each Fund's shares or shares of
Fidelity's other funds, and on an agency basis to Fidelity Brokerage
Services, Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL),
affiliates of FMR. FMR will make such allocations if commissions are
comparable to those charged by non-affiliated, qualified broker-dealers for
similar services.
FMR also may allocate brokerage transactions to the Funds' custodian,
acting as broker-dealer, or to other broker-dealers, so long as transaction
quality and commission rates are comparable to those of other
broker-dealers, where the broker-dealers will allocate a portion of the
commissions paid toward payment of the Funds' expenses. These expenses
currently include transfer agent and custodian fees.
Higher commissions may be paid to those firms that provide research
services, to the extent permitted by law. FMR also is authorized to
allocate brokerage transactions to FBSI in order to secure from FBSI
research services produced by third-party, independent entities. FMR may
use this research information in managing the Funds' assets, as well as
assets of other clients.
The frequency of portfolio transactions - the Funds' turnover rates - will
vary from year to year depending on market conditions. For the fiscal
year ended September 30, 1994, t he annualized turnover rates for
Destiny I and Destiny II were ___ % and ___ %, respectively.
Because higher turnover rates increase transaction costs and may increase
taxable capital gains, FMR carefully weighs the anticipated benefits of
short-term investing against these consequences.
A FEW WORDS ABOUT DISTRIBUTIONS AND TAXES
Each Fund distributes substantially all of its net investment income and
capital gains to shareholders each year, normally in December.
FEDERAL TAXES. Distributions from each Fund's income and short-term
capital gains are taxed as dividends, and long-term capital gain
distributions are taxed as long-term capital gains. Each Fund's
distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares, except that distributions declared
in December and paid in January are taxable as if paid on December 31st.
Each Fund will send you a tax statement by January 31, showing the tax
status of the distributions you received in the past year, and will file a
copy with the Internal Revenue Service (IRS).
CAPITAL GAINS. You may realize a capital gain or loss when you sell
(redeem) or exchange shares. For most types of accounts, each Fund will
report the proceeds of your redemptions to you and the IRS annually.
However, because the tax treatment also depends on your purchase price and
your personal tax position, you should also keep your regular account
statements to use in determining your tax basis.
"BUYING A DIVIDEND." On the record date for a distribution, each Fund's
share value is reduced by the amount of the distribution. If you buy shares
just before the record date (buying a dividend), you will pay the full
price for the shares, and then receive a portion of the price back as a
taxable distribution.
OTHER TAX INFORMATION. In addition to federal taxes, you may be subject to
state or local taxes on your investment, depending on the laws in your
area.
When you sign your Plan Application, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the Funds
to withhold 31% of your taxable distributions and redemptions.
Each Fund is treated as a separate entity for federal income tax purposes.
DESTINY FUNDS AND THE FIDELITY ORGANIZATION
Fidelity Destiny Portfolios (the trust) is an open-end management
investment company made up of two separate diversified funds. Originally
organized as a Massachusetts corporation on January 7, 1969, the Trust was
reorganized as a Massachusetts business trust on August 1, 1984. The Board
of Trustees supervises each Fund's activities and reviews contractual
arrangements with companies that provide each Fund with services. Each Fund
offers its own shares exclusively. As a trust, it is not required to hold
annual shareholder meetings. However, special meetings may be called for a
specific Fund or the Trust as a whole for purposes such as electing or
removing Trustees, changing fundamental policies or approving a management
contract. As a shareholder, the number of votes you are entitled to is
based upon the dollar value of your investment. If a matter affects
just one Fund, a separate vote of the shareholders of that Fund is taken.
Fidelity Investments is one of the largest investment management
organizations in the U.S. and has its principal business address at 82
Devonshire Street, Boston, MA 02109. It includes a number of different
companies that provide a variety of financial services and products. Each
Fund employs various Fidelity companies to perform certain activities
required to operate each Fund.
FMR, the Funds' adviser, is the original Fidelity company, founded
in 1946. It provides a number of mutual funds and other clients with
investment research and fund management services. It maintains a large
staff of experienced investment personnel and a full complement of related
support facilities. As of September 30, 199 4 , FMR advised funds
having approximately ___ million shareholder accounts with a total
value of more than $ ____ billion. Fidelity Distributors
Corporation , 82 Devonshire Street, Boston, MA, an affiliate of FMR,
distributes shares for the Fidelity funds. FMR Corp. is the parent company
for the Fidelity companies. FMR Corp. is the ultimate parent company of
FMR, Fidelity Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity
Management & Research (Far East) Inc. (FMR Far East). Through ownership of
voting common stock, members of the Edward C. Johnson 3d family form a
controlling group with respect to FMR Corp. Changes may occur in the
Johnson family group, through death or disability, which would result in
changes in each individual family members' holding of stock. Such changes
could result in one or more family members becoming holders of over 25% of
the stock. The Funds have received an opinion of counsel that changes in
the composition of the Johnson family group under these circumstances would
not result in the termination of the Funds' management or distribution
contracts and, accordingly, would not require a shareholder vote to
continue operation under those contracts.
George A. Vanderheiden is manager and Vice President of Destiny I and
Destiny II, which he has managed since 1980 and 1985, respectively. Mr.
Vanderheiden also manages the Fidelity Advisor Growth
Opportunities Fund . Mr. Vanderheiden is a managing director of FMR
Corp., and leader of the Growth Group. He joined Fidelity in 1971.
MANAGEMENT AND SERVICE FEES
For managing its investment and business affairs, each Fund pays FMR a
monthly fee based on a basic fee rate, which is the sum of two
components:
1. A GROUP FEE RATE based on the monthly average net assets of all the
mutual funds advised by FMR. The rate cannot rise above .52%, and it drops
(to as low as a marginal rate of .31%*) as total assets in all these funds
rise. The effective group fee rate for September 199 4 was
. ____ %.
2. An INDIVIDUAL FUND FEE RATE, which varies for each Fund.
One-twelfth of the annual basic fee rate is applied to each Fund's
net assets averaged over the most recent month, giving a dollar amount,
which is the basic fee for that month.
The following are the individual Fund fee rates, total management fees
and total operating expenses for the Funds' most recent fiscal year end,
expressed as a percentage of average net assets:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INDIVIDUAL FUND TOTAL MANAGEMENT FEE TOTAL OPERATING EXPENSES
FEE RATES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Destiny I .17% ____% .____%
Destiny II .30% ____% .____%
</TABLE>
______________________
In addition to the basic fee, each Fund's management fee varies based
on performance. The performance adjustment rate is added to or
subtracted from the management fee and is calculated monthly. It is
based on a comparison of each Fund's performance to that of the
Standard & Poor's Composite Index of 500 Stocks (S&P 500), a
widely recognized, unmanaged index of common stock prices, over the most
recent 36-month period. The difference is convert ed into a dollar
amount that is added to or subtracted from the management fee. This
adjustment rewards FMR when the Fund outperforms the S&P 500 and reduces
FMR's fee when the Fund underperforms the S&P 500. The maximum annualized
performance adjustment rate is -/+ .24% of average net assets up to and
including $100,000,000 and -/+ .20% of average net assets in excess of
$100,000,000.
Effective November 1, 1993, FMR has entered into sub-advisory
agreements on behalf of the Funds. Sub-advisors provide research and
investment advice and research services with respect to issuers based
outside the United States and FMR may grant sub-advisors investment
management authority to buy and sell securities if FMR believes it would be
beneficial to a Fund.
The Funds have entered into sub-advisory agreements with FMR U.K. and
FMR Far East. FMR U.K. focuses primarily on issuers based in Europe, and
FMR Far East focuses primarily on issuers based in Asia and the Pacific
Basin. Under the sub-advisory agreements, FMR, not the Fund, pays FMR U.K.
and FMR Far East fees equal to 110% and 105%, respectively, of each
sub-advisor's costs incurred in connection with its sub-advisory
agreement.
Fidelity Service Co. (Service), 82 Devonshire Street, Boston, MA, an
affiliate of FMR, acts as each Fund's transfer and dividend-paying
agent and maintains the Funds' shareholder records. With respect to those
accounts not associated with the Plans, each Fund pays fees based on
the type, size, and number of accounts, and the number of transactions made
by shareholders. For the fiscal year ended September 30,
199 4 , Destiny I and Destiny II's transfer agent fees amounted
to $ ______ and $______, respectively . The Funds also pay Service to
calculate their net asset value (NAV) per share, to maintain their general
accounting records, and to administer their securities lending programs.
The fees for pricing and bookkeeping services are based on each Fund's
average net assets, but must fall within a range of $45,000 to $750,000 per
year. The fees for securities lending are based on the number and duration
of individual securities loans. For the fiscal year ended September
30, 199 4 , fees for pricing and bookkeeping and securities lending
services (including related out-of-pocket expenses) for Destiny I and
Destiny II amounted to $ _______ and $______, respectively .
* On October 20, 1993, each Fund's shareholders approved new management
contracts with the group fee rate schedule providing for a marginal rate as
low as .30% when average group net assets exceed $174 billion. Effective
November 1, 1993, FMR voluntarily agreed to adopt a revised group fee rate
schedule providing for a marginal rate as low as .285% when average group
net assets exceed $336 billion. Effective August 1, 1994, FMR voluntarily
agreed to adopt a revised group fee rate schedule providing for a marginal
rate as low as .270% when average group assets exceed $390 billion. These
revised schedules will be presented to shareholders for approval at the
next shareholder meeting.
THE FUNDS' PERFORMANCE
Each Fund's performance may be quoted in advertising in various ways. All
performance information is historical and is not intended to indicate
future performance. Share price, yield and total return fluctuate in
response to market conditions and other factors, and the value of each
Fund's shares when redeemed may be worth more or less than their original
cost.
Each Fund's performance may be quoted in advertising in terms of
cumulative or average annual total return. A CUMULATIVE TOTAL RETURN
reflects each Fund's performance over a stated period of time. An AVERAGE
ANNUAL TOTAL RETURN reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if each Fund's
performance had been constant over the entire period. Because average
annual returns tend to smooth out variations in each Fund's
performance , shareholders should recognize that they are not the
same as actual year-by-year results. All total returns quoted below do not
include the effect of paying the separate Creation and Sales Charges
and Custodian Fees associated with the purchase of shares of the Funds
through the Plans. Total returns would be lower if Creation and Sales
Charges and Custodian Fees were taken into account. Please refer to the
"Performance" section in the SAI for the average annual total return
figures associated with investment in a Destiny Plan. As previously
discussed, shares of the Funds may be acquired only through Fidelity
Systematic Investment Plans. Investors should consult the Plans' Prospectus
for complete information regarding Creation and Sales Charges and Custodian
Fees.
HISTORICAL FUND RESULTS. The following charts show each Fund's total
returns for the period ended September 30, 199 4 :
1.DESTINY I
AVERAGE ANNUAL RETURNS CUMULATIVE RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND* ONE YEAR FIVE YEARS TEN YEARS
LIFE OF FUND*
% % % % % % % %
DESTINY II
AVERAGE ANNUAL RETURNS CUMULATIVE RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND** ONE YEAR FIVE YEARS TEN YEARS
LIFE OF FUND**
% % % % % %
* Life of Fund - July 10, 1970 (Commencement of Operations) - September 30,
199 4 .
** Life of Fund - December 30, 1985 (Commencement of Operations) -
September 30, 199 4 .
To illustrate the components of overall performance, each Fund may
separate its cumulative and average annual total returns into income
results and capital gain or loss. Other illustrations of performance may
show moving averages over specified periods.
HOW TO BUY SHARES
Each Fund has an agreement with Distributors under which each Fund issues
shares at NAV to State Street Bank and Trust Company as Custodian for the
Plans. EACH FUND WILL NOT OFFER ITS SHARES PUBLICLY EXCEPT THROUGH THE
PLANS. Generally, State Street Bank and Trust Company will hold directly
all shares of each Fund unless a Planholder owns Fund shares directly after
completing or terminating a Plan. The terms of the offering of the
Plans are contained in the Plans' Prospectus.
SHARE VALUE
Each Fund's NAV is computed by adding the value of all securities plus
cash and other assets, deducting liabilities and then dividing the result
by the number of shares of that Fund that are outstanding. Service
calculates each Fund's NAV at the close of the Fund's business day which
coincides with the close of business of the New York Stock Exchange (NYSE),
normally 4:00 p.m., Eastern time. Each Fund is open for business
each day the NYSE is open. Purchase orders are processed at the NAV next
determined after an order is received. Securities and other assets held by
each Fund and other assets are valued primarily on the basis of market
quotations . Foreign securities are valued based on quotations from the
primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates. I f quotations
are not readily available or if the values have been materially affected
by events occurring after the foreign market's closing, assets are
valued by a method which the Trust's Board of Trustees believes
accurately reflects fair value.
SHAREHOLDER SERVICES
THE FOLLOWING SHAREHOLDER SERVICES ARE APPLICABLE ONLY TO THOSE
SHAREHOLDERS WHO HAVE COMPLETED OR TERMINATED A PLAN AND HOLD SHARES OF THE
FUNDS DIRECTLY. Planholders should consult the section titled "Rights and
Privileges of Planholders" on page 10 of their Plan's Prospectus for a
discussion of distribution options and other pertinent data.
CHOOSING A DISTRIBUTION OPTION
You can choose from three distribution options:
1. The SHARE OPTION reinvests your income dividends and capital gain
distributions in additional shares. You are assigned this option
automatically unless you specify otherwise in writing.
2. The INCOME-EARNED OPTION reinvests your capital gain distributions and
pays your income dividends in cash.
3. With the CASH OPTION you receive both income dividends and capital gain
distributions in cash.
Income dividends and capital gain distributions will be reinvested at the
NAV as of the record date for the distribution. On the day a Fund goes
ex-dividend, the amount of the distribution is deducted from its share
price. Reinvestment of distributions will be made at that day's NAV. Cash
distribution checks will be mailed within seven days.
EXCHANGE PRIVILEGE
The exchange privilege is a convenient way to buy shares in Fidelity's
other funds in order to respond to changes in your goals or in market
conditions and is available only to those who have completed or terminated
a Plan and received shares of the Fund directly. In addition, those who
have completed or terminated a Plan and received shares directly may
exchange at NAV into any of the Fidelity Advisor Funds. However, to protect
the Funds' performance and shareholders, Fidelity discourages frequent
trading in response to short-term market fluctuations. The Fidelity family
of funds includes, among others, common stock funds, tax-exempt and
corporate bond funds and money market funds. Before you make an exchange
from either Fund please note the following:
1. You may exchange shares of the Funds for shares of Fidelity's other
funds that are registered in your state as long as the funds will not be
adversely affected by your exchange. You will not have to pay any sales
charge on the shares of another Fidelity fund you acquire by exchange from
the Funds.
2. Fidelity's Investor Center s can provide information and a
prospectus for any of Fidelity's other funds registered in your state
excluding the Fidelity Advisor Funds. For information on those funds, ask
your investment professional. Read the prospectus of the fund into which
you want to exchange for relevant information.
(small solid bullet) 3. You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
4. RESTRICTIONS: Although the exchange privilege is an important benefit,
fund performance and shareholders can be hurt by excessive trading. To
protect the interests of shareholders, the Funds reserve the right to
temporarily or permanently terminate the exchange privilege for any person
who makes more than four exchanges out of each Fund during the calendar
year. For purposes of the four exchange limit, accounts under common
ownership or control, including accounts having the same taxpayer
identification number, will be aggregated. There are currently no
administrative or redemption fees applicable to exchanges out of the
Destiny Funds. However, other funds may restrict or limit exchanges, and
may impose administrative fees of up to $7.50 and redemption fees of up to
1.5% on exchanges. Read the prospectus of each fund into which you want
to exchange for details.
5. TAXES: Each exchange actually represents the sale of shares of one fund
and the purchase of shares in another, which may produce a gain or loss for
tax purposes.
The Funds reserve the right at any time without prior notice to refuse
exchange purchases by any person or group if, in FMR's judgment, a Fund
would be unable to invest effectively in accordance with its investment
objective and policies or might otherwise be adversely affected. In
particular, a pattern of exchanges that coincide with a "market timing"
strategy may be disruptive to the Funds. Although each Fund will attempt to
give you prior notice whenever it is reasonably able to do so, it may
impose these restrictions at any time. The Funds may terminate or modify
the exchange privilege in the future.
You can make exchanges either in writing or by telephone by calling
1-800-544-7777. You may initiate many transactions by telephone. Note that
Fidelity will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. Fidelity will request personalized security codes
or other information, and may also record calls. You should verify the
accuracy of your confirmation statements immediately after you receive
them. If you do not want the ability to redeem and exchange by telephone,
call Fidelity for instructions. Written requests for exchange should be
sent to Fidelity Investments, Account Transfers, P.O. Box 929, Boston, MA
02105-0929.
STATEMENTS AND REPORTS
For accounts not associated with the Plans, Service will send a statement
of account after every transaction that affects the share balance or the
account registration (the Funds currently do not issue share certificates).
A statement with tax information will be mailed to you by January 31 of
each year, and will also be filed with the IRS. To reduce annual expenses
only one copy of most reports (such as the Funds' Annual Report) may be
mailed to your household. Please call Fidelity if you need additional
copies.
Service pays for shareholder services but not for special services, such
as producing and mailing historical account documents. You may be required
to pay a fee for special services.
HOW TO REDEEM SHARES
THE FOLLOWING DISCUSSION RELATES ONLY TO THOSE INVESTORS WHO HOLD SHARES
OF THE FUNDS DIRECTLY. PLANHOLDERS SHOULD CONSULT THEIR PLANS' PROSPECTUS
FOR THE REQUIREMENTS FOR REDEMPTION OF SHARES FROM A PLAN.
You may sell (redeem) all or a portion of your shares on any
business day. Your shares will be redeemed at the NAV next calculated after
Service has received and accepted your written redemption request. Each
Fund may hold payment until it is reasonably satisfied that investments
which were made by check have been collected (which may take up to seven
(7) days).
Once your shares are redeemed, each Fund normally will send you the
proceeds on the next business day. However, if making immediate payment
could affect the Fund adversely, it may take up to seven (7) days to pay
you. Also, when the NYSE is closed (or when trading is restricted) for any
reason other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, each
Fund may suspend redemption or postpone payment dates. If you are unable to
execute your transaction by telephone (for example, during periods of
unusual market activity) consider placing your order by mail or contact
your investment professional.
If you have certificates for your shares, you must submit them to Service
in order to redeem your shares, and you should call Service for specific
instructions. The Funds currently do not issue share certificates.
TO REDEEM BY MAIL - Send a "letter of instruction" to Fidelity
Investments, Monetary Services, Redemption Transactions, P.O. Box 878,
Boston, MA 02103-0878. The letter should specify the name of the Fund, the
number of shares to be sold, your name, your account number, and the
additional requirements listed below that apply to your particular account.
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Sole Proprietorship, Custodial Letter of
instruction signed by all person(s) required to
(Uniform Gifts/Transfers to Minors Act), General sign for the
account exactly as it is registered, accompa-
Partners nied by signature guarantee(s).
Corporations, Associations Letter of instruction and a corporate
resolution, signed by person(s) required to sign for the account by
signature guarantee(s).
Trusts A letter of instruction signed by the Trustee(s) with a signature
guarantee. (If the Trustee's name is not registered on your account, also
provide a copy of the trust document, certified within the last 60 days.)
If you do not fall into any of the above registration categories (e.g.,
Executors, Administrators, Conservators or Guardians) please call Service
for further instructions.
A signature guarantee is a widely accepted way to protect you and Service
by guaranteeing the signature on your request; it may not be provided by a
notary public. Signature guarantees will be accepted from banks, brokers,
dealers, municipal securities dealers, municipal securities brokers,
government securities dealers, government securities brokers, credit unions
(if authorized under state law), national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Planholders who have redeemed shares under "Cancellation and Refund
Rights" (discussed in the Plans' Prospectus, page 13), may not reinstate at
NAV the proceeds from such a cancellation or refund until all refunded
Creation and Sales Charges included in the cancellation have first been
deducted in full from the amount being replaced. To redeem shares from a
Plan, see page 14 of the Plans' Prospectus.
APPENDIX
The following paragraphs provide a brief description of securities in
which each Fund may invest and transactions they may make. The Funds
are not limited by this discussion, however, and may purchase other types
of securities and enter into other types of transactions if they are
consistent with the Funds' investment objectives and policies.
FOREIGN INVESTMENTS involve additional risks. Foreign securities
and securities denominated in or indexed to foreign currencies may be
affected by the strength of foreign currencies relative to the U.S. dollar,
or by political or economic developments in foreign countries. Foreign
companies may not be subject to accounting standards or governmental
supervision comparable to U.S. companies, and there may be less public
information about their operations. Foreign markets may be less liquid or
more volatile than U.S. markets, and may offer less protection to
investors. In addition to the political and economic factors that can
affect foreign securities, a governmental issuer may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign investments,
especially those in developing countries, more volatile. FMR considers
these factors when making foreign investments.
ILLIQUID INVESTMENTS . Under the supervision of the Board of
Trustees, FMR determines the liquidity of each Fund's investments. The
absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be
difficult or impossible for a Fund to sell them promptly at an acceptable
price.
INDEXED SECURITIES. Each Fund may invest in indexed securities whose value
is linked to currencies, interest rates, commodities, indices, or other
financial indicators. Most indexed securities are short to intermediate
term fixed-income securities whose values at maturity or interest rates
rise or fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself.
INTERFUND BORROWING PROGRAM. The Funds have received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates. Interfund loans and borrowings normally will extend
overnight, but can have a maximum duration of seven days. The Funds will
lend through the program only when the returns are higher than those
available at the same time from other short-term instruments (such as
repurchase agreements), and will borrow through the program only when the
costs are equal to or lower than the cost of bank loans. Each Fund will not
lend more than 5% of its assets to other funds and will not borrow through
the program if, after doing so, total outstanding borrowings will exceed
15% of total assets. Loans may be called on one day's notice, and the Funds
may have to borrow from a bank at a higher interest rate if an interfund
loan is called or not renewed. Any delay in repayment to a lending fund
could result in a lost investment opportunity or additional borrowing
costs.
LOWER- QUALITY DEBT SECURITIES are those rated Ba or lower by
Moody's Investors Service, Inc. (Moody's) or BB or lower by Standard &
Poor's Corporation (S&P) that have poor protection against default in the
payment of principal and interest, or may already be in default.
These securities are often considered to be speculative and involve greater
risk of loss or price changes due to changes in the issuer's capacity to
pay. The market prices of lower- quality debt securities may
fluctuate more than those of higher- rated s ecurities, and may
decline significantly in periods of general economic difficulty, which may
follow periods of rising interest rates.
Each Fund may enter into currency forward contracts (agreements to
exchange one currency for another at a future date) to manage currency
risks and to facilitate transactions in foreign securities. Although
currency forward contracts can be used to protect a Fund from adverse
exchange rate changes, they involve a risk of loss if FMR fails to predict
foreign currency values correctly.
OPTIONS AND FUTURES CONTRACTS. Each Fund may buy and sell options and
futures contracts to manage its exposure to changing interest rates,
security prices, and currency exchange rates. Some options and futures
strategies, including selling futures, buying puts, and writing calls, tend
to hedge a Fund's investments against price fluctuations. Other strategies,
including buying futures, writing puts, and buying calls, tend to increase
market exposure. Options and futures may be combined with each other or
with forward contracts in order to adjust the risk and return
characteristics of the overall strategy. Each Fund may invest in options
and futures based on any type of security, index, or currency, including
options and futures traded on foreign exchanges and options not traded on
exchanges.
Options and futures can be volatile investments, and involve certain
risks. If FMR applies a hedge at an inappropriate time or judges market
conditions incorrectly, options and futures strategies may lower a Fund's
return. A Fund could also experience losses if the prices of its options
and futures positions were poorly correlated with its other investments, or
if it could not close out its positions because of an illiquid secondary
market.
Each Fund will not hedge more than 25% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. In
addition, a Fund will not buy futures or write puts whose underlying value
exceeds 25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement, a
Fund buys a security and simultaneously agrees to sell it back at a higher
price. In the event of the bankruptcy of the other party to a repurchase
agreement or a loan, a Fund could experience delays in recovering either
the cash or the securities it lent. To the extent that, in the meantime,
the value of the securities the Fund purchased had decreased, and the value
of securities the Fund lent had increased, the Fund could experience a
loss. In all cases, FMR must find the creditworthiness of the other party
to the transaction to be satisfactory. The Funds may lend portfolio
securities to an affiliate, FBSI.
RESTRICTED SECURITIES are securities which cannot be sold to the
public without registration under the Securities Act of 1933. Unless
registered for sale, these securities can only be sold in privately
negotiated transactions or pursuant to an exemption from registration.
SWAP AGREEMENTS. As one way of managing its exposure to different types of
investments, each Fund may enter into interest rate swaps, currency swaps,
and other types of swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return
for payments equal to a fixed rate times the same amount, for a specified
period of time. If a swap agreement provides for payments in different
currencies, the parties might agree to exchange the notional principal
amount as well. Swaps may also depend on other prices or rates, such as the
value of an index or mortgage prepayment rates.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also
suffer losses if it is unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
DEBT OBLIGATIONS. The table below provides a summary of ratings assigned
to debt holdings (not including money market instruments) in each
Fund 's portfolio . These figures are dollar-weighted averages of
month-end fund holdings during the twelve months ended September 30,
199 4 , presented as a percentage of total investments. These
percentages are historical and are not necessarily indicative of the
quality of current or future fund holdings, which may vary. Refer to page
F-4 for policies regarding the quality of Fund investments.
S&P RATING MOODY'S
AVERAGE DESTINY I DESTINY II RATING AVERAGE DESTINY I
DESTINY II
INVESTMENT GRADE
AAA / AA /A % % Aaa / Aa / A % % Highest quality,
High quality,
Upper medium
BBB % % Baa % % Medium grade, speculative characters
LOWER QUALITY
BB % % Ba % % Moderately speculative
B % % B % % Speculative
CCC % % Caa % % Highly speculative
CC / C % % Ca / C % % Poor quality, Lowest quality,
no interest
D % % In default, in arrears
The dollar-weighted average of debt securities not rated by either S&P or
Moody's amounted to ___ % and ___ % for Destiny I and Destiny
II, respectively. This may include securities rated by other nationally
recognized statistical rating organizations as well as unrated securities.
Unrated securities are not necessarily lower-quality securities. Please
refer to the Funds' SAI for a more complete discussion of these ratings.
FIDELITY DESTINY PORTFOLIOS: DESTINY I AND DESTINY II
(THE FUND OR THE FUNDS )
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 29, 1994
This Statement is not a prospectus but should be read in conjunction with
the Funds ' current Prospectus dated November 29, 1994. Please
retain this document for future reference. The Funds' financial
statements and financial highlights, included in the Annual Report, for the
fiscal year ended September 30, 1994 are incorporated herein by reference.
To obtain an additional copy of the Prospectus, Statement of Additional
Information (SAI) or Annual Report please call your investment professional
or Fidelity Distributors Corporation:
NATIONWIDE (TOLL FREE) 1-800-752-2347
ALASKA OR OVERSEAS (CALL COLLECT) 617-439-0547
TABLE OF CONTENTS PAGE
Investment Policies and Limitations 2
Portfolio Transactions 10
Valuation of Fund Securities 11
Performance 12
Additional Purchase and Redemption Information 15
Distributions and Taxes 16
FMR 16
Trustees and Officers 17
Management Contracts 18
Contracts With Companies Affiliated With FMR 21
Description of the Trust 22
F inancial Statements 23
Appendix 2 3
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR or Manager)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (Distributors)
TRANSFER AGENT
Fidelity Service Co. (Service)
CUSTODIAN
The Chase Manhattan Bank, N.A. (the Custodian )
I.BD-DESSAI-1194
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Whenever an investment policy or limitation states a maximum
percentage of a Fund's assets which may be invested in any security or
other asset or sets forth a policy regarding quality standards, such
standard or percentage limitation shall be determined immediately after and
as a result of the Fund's acquisition of such security or other asset.
Accordingly, any later increase or decrease resulting from a change in
values, net assets or other circumstances will not be considered when
determining whether the investment complies with the Fund's investment
policies and limitations.
The Funds' fundamental investment limitations may not be changed without
approval by a "majority of the outstanding voting securities" (as defined
in the Investment Company Act of 1940 (the 1940 Act)) of the Funds. THE
FOLLOWING ARE THE FUNDS' FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN
THEIR ENTIRETY. EACH FUND MAY NOT:
(1) with respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that each
Fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) Each Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain such securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(ii) Each Fund does not currently intend to purchase securities on margin,
except that each Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) Each Fund may borrow money only (a) from a bank or from a registered
investment company or fund 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)). Neither Fund will
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. Neither Fund will borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of its total assets.
(iv) Each Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
(v) Each Fund does not currently intend to invest in interests in
real estate investment trusts that are not readily marketable, or to invest
in interests in real estate limited partnerships that are not listed
on the New York Stock Exchange or the American Stock Exchange or traded on
the NASDAQ National Market System.
(vi) Each Fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
Fund's net assets) to a registered investment company or fund 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.)
(vii) Each Fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except to the ordinary broker's commission is paid, or (b) purchase or
retain securities issued by other open-end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(viii) Each Fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that including predecessors, have a record of less
than three years of continuous operation.
(ix) Each Fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the T rust and those
officers and directors of FMR who individually own more than 1/2 of 1% of
the securities of such issuer together own more than 5% of such issuer's
securities.
(x) Each Fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of each Fund's net assets.
Included in that amount, but not to exceed 2% of each Fund's net assets,
may be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the Funds in units or
attached to securities are not subject to these restrictions.
(xi) Each Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the Funds' limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 6 .
AFFILIATED BANK TRANSACTIONS. Each Fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the Fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
FUND'S RIGHTS AS A SHAREHOLDER. Each Fund does not intend to direct or
administer the day-to-day operations of any company. Each Fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of each Fund's investment in the company.
The activities that each Fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
company's direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing third party
takeover efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that each Fund could be involved in lawsuits
related to such activities. FMR will monitor such activities with a view
to mitigating, to the extent possible, the risk of litigation against a
Fund and the risk of actual liability if a Fund is involved in litigation.
No guarantee can be made, however, that litigation against a Fund will not
be undertaken or liabilities incurred.
LOWER- QUALITY DEBT SECURITIES. While the market for high-yield
corporate debt securities has been in existence for many years and has
weathered previous economic downturns, the 1980s brought a dramatic
increase in the use of such securities to fund highly leveraged corporate
acquisitions and restructurings. Past experience may not provide an
accurate indication of the future performance of the high-yield bond
market, especially during periods of economic recession. In fact, from
1989 to 1991, the percentage of lower- quality securities that
defaulted rose significantly above prior levels, although the default rate
decreased in 1992 and 1993 .
The market for lower- quality debt securities may be thinner
and less active than that for higher- quality debt securities, which
can adversely affect the prices at which the former are sold. If market
quotations are not available, lower- quality debt securities will be
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing service. Judgment plays a greater
role in valuing high-yield corporate debt securities than is the case for
securities for which more external sources for quotations and last-sale
information are available. Adverse publicity and changing investor
perceptions may adversely affect the ability of outside pricing services to
value lower- quality debt securities and each Fund's ability to
dispose of these securities.
Since the risk of default is higher for lower- quality securities,
FMR's research and credit analysis are an integral part of managing any
securities of this type held by a Fund. In considering investments
for the Funds, FMR will attempt to identify those high-yielding securities
whose financial condition is adequate to meet future obligations, has
improved, or is expected to improve in the future. FMR's analysis focuses
on relative values based on such factors as interest or dividend coverage,
asset coverage, earnings prospects, and the experience and managerial
strength of the issuer.
Each Fund may choose, at its expense or in conjunction with others, to
pursue litigation seeking to protect the interest of security holders of
investment companies if it determines this to be in the best interest of
the Funds' shareholders.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of each Fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of each Fund's investments, FMR may consider various
factors , including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security
(including any demand or tender features) , and (5) the nature of the
marketplace for trades (including the ability to assign or offset a Fund's
rights and obligations relating to the investment).
Investments currently considered by Fund to be illiquid include repurchase
agreements not entitling the holder to payment of principal and interest
within seven days, and over-the-counter options. Also, FMR may determine
some restricted securities, loans and other direct debt instruments, and
swap agreements to be illiquid. However, with respect to over-the-counter
options the Funds write, all or a portion of the value of the underlying
instruments may be illiquid depending on the assets held to cover the
option and the nature and terms of any agreement the Funds may have to
close out the option before expiration. In the absence of market
quotations, illiquid investments are priced at fair value as determined in
good faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets or other circumstances, a Fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, each Fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time a Fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, a Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each Fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by any
nationally recognized rating service. If a Fund does not receive scheduled
interest or principal payments on such indebtedness, the Fund's share price
and yield could be adversely affected. Loans that are fully secured offer a
Fund more protections than an unsecured loan in the event of non-payment of
scheduled interest or principal. However, there is no assurance that the
liquidation of collateral from a secured loan would satisfy the borrower's
obligation, or that the collateral could be liquidated. Indebtedness of
borrowers whose creditworthiness is poor involves substantially greater
risks and may be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a small
fraction of the amount owed. Direct indebtedness of developing countries
also involves a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and
repay principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks
to a Fund. For example, if a loan is foreclosed, a Fund could become part
owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, a Fund
could be held liable as a co-lender. Direct debt instruments may also
involve a risk of insolvency of the lending bank or other intermediary.
Direct debt instruments that are not in the form of securities may offer
less legal protection to a Fund in the event of fraud or misrepresentation.
In the absence of definitive regulatory guidance, each Fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect a Fund.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of the
loan, as specified in the loan agreement. Unless, under the terms of the
loan or other indebtedness, a Fund has direct recourse against the
borrower, it may have to rely on the agent to apply appropriate credit
remedies against a borrower. If assets held by the agent for the benefit of
a Fund were determined to be subject to the claims of the agent's general
creditors, a Fund might incur certain costs and delays in realizing payment
on the loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating a Fund to pay additional cash on demand. These commitments may
have the effect of requiring a Fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
A Fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
Each Fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see limitations 1 and
5). For purposes of these limitations, a Fund generally will treat the
borrower as the "issuer" of indebtedness held by a Fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between a Fund and the borrower, if the
participation does not shift to the Fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the Fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a Fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements. It is a policy of each Fund to enter into reverse repurchase
agreements only with those member banks of the Federal Reserve System,
primary dealers in United States government securities and other
selected dealers approved by the Board of Trustees whose creditworthiness
has been reviewed and found satisfactory by FMR. Such agreements involve
the sale of securities held by a Fund, subject to such Fund's agreement to
repurchase and the purchaser's agreement to resell the securities at an
agreed-upon price and date. When a Fund enters into a reverse repurchase
agreement, securities in a dollar amount equal in value to the securities
subject to the agreement will be maintained in a segregated account with
the Funds' custodian bank and will be marked to market daily. The
segregation of assets could impair a Fund's ability to meet its current
obligations or impede investment management if a large portion of a Fund's
assets are involved. FMR will consider reverse repurchase agreements to be
borrowings for the purposes of determining the Fund's abilities described
in fundamental limitation 3, and will enter into such agreements only for
temporary or emergency purposes.
REPURCHASE AGREEMENTS. In a repurchase agreement, a Fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed - upon price. The resale price reflects the purchase
price plus an agreed - upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. A repurchase
agreement involves the obligation of the seller to pay the
agreed - upon resale price, which obligation is in effect
secured by the value (at least equal to the amount of the
agreed - upon resale price and marked to market daily) of the
underlying security. Each Fund may engage in a repurchase agreement with
respect to any type of security in which it is authorized to
invest (except that the security may have a maturity in excess of 397
days) . While it does not presently appear possible to eliminate all
risks from these transactions (particularly the possibility of a decline in
the market value of the underlying securities, as well as delay s and
costs to a Fund in connection with bankruptcy proceedings), it is each
Fund's current policy to limit repurchase agreement transactions to those
parties whose creditworthiness has been reviewed and found satisfactory by
FMR.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a Fund's exposure to long- or
short-term interest rates (in the U nited States or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as security prices or inflation rates. Swap agreements can
take many different forms and are known by a variety of names. Each Fund
is not limited to any particular form of swap agreement if FMR determines
it is consistent with the Fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to United States interest
rates and increase its exposure to foreign currency and interest rates.
Caps and floors have an effect similar to buying or writing options.
Depending on how they are used, swap agreements may increase or decrease
the overall volatility of a Fund's investments and its share price.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a Fund. If a swap
agreement calls for payments by a Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. Each Fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a Fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If a Fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the Fund's accrued obligations under the
agreement.
INDEXED SECURITIES. Each Fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than United
States dollar-denominated securities of equivalent issuers.
Currency-indexed securities may be positively or negatively indexed; that
is, their maturity value may increase when the specified currency value
increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline when
foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values
of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
United States and abroad. At the same time, indexed securities are
subject to the credit risks associated with the issuer of the security, and
their values may decline substantially if the issuer's creditworthiness
deteriorates. Recent issuers of indexed securities have included banks,
corporations, and certain United States government agencies.
ZERO COUPON DEBT SECURITIES AND PAY-IN-KIND SECURITIES. Each Fund may
invest in zero coupon securities. Zero coupon debt securities do not make
regular interest payments. Instead, they are sold at a deep discount from
face value. In calculating its dividends, a Fund must take into account as
income a portion of the difference between these securities' purchase price
and their face value. Each Fund may also purchase pay-in-kind securities.
Pay-in-kind securities pay all or a portion of their interest or dividends
in the form of additional securities. Because they do not pay current
income, the prices of zero coupon and pay-in-kind securities can be very
volatile when interest rates change.
SECURITIES LENDING. Each Fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
Securities lending allows a Fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC staff that each Fund
may engage in loan transactions only under the following conditions: (1) a
Fund must receive 100% collateral in the form of cash or cash equivalents
(e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, a Fund must be able to terminate
the loan at any time; (4) a Fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) a Fund may pay only reasonable custodian
fees in connection with the loan; and (6) the Board of Trustees must be
able to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which a Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in United States investments. The
value of securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
Each Fund may invest in foreign securities that impose restrictions on
transfer within the U nited States or to U.S. persons. Although
securities subject to transfer restrictions may be marketable abroad, they
may be less liquid than foreign securities of the same class that are not
subject to such restrictions.
Each Fund may invest in American Depositary Receipts and European
Depositary Receipts (ADRs and EDRs) , which are certificates
evidencing ownership of shares of a foreign-based issuer held in trust by a
bank or similar financial institution. Designed for use in U.S. and
European securities markets, respectively, ADRs and EDRs are alternatives
to the purchase of the underlying securities in their national markets and
currencies.
FOREIGN CURRENCY TRANSACTIONS. Each Fund may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. The Funds will convert currency on a spot basis from time to time,
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.
Forward contracts are generally traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. The parties to a forward contract may agree to offset or
terminate the contract before its maturity, or may hold the contract to
maturity and complete the contemplated currency exchange.
Each Fund may use currency forward contracts for any purpose consistent
with its investment objective. The following discussion summarizes the
principal currency management strategies involving forward contracts that
could be used by each Fund. The Funds may also use swap agreements, indexed
securities, and options and futures contracts relating to foreign
currencies for the same purposes.
When a Fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, a Fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." The Funds may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
The Funds may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a Fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. A Fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a forward
contract to sell Deutschemarks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Each Fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting exposure
from U.S. dollars to a foreign currency, or from one foreign currency to
another foreign currency. For example, if a Fund held investments
denominated in Deutschemarks, the Fund could enter into forward contracts
to sell Deutschemarks and purchase Swiss Francs. This type of strategy,
sometimes known as a "cross-hedge," will tend to reduce or eliminate
exposure to the currency that is sold, and increase exposure to the
currency that is purchased, much as if a Fund had sold a security
denominated in one currency and purchased an equivalent security
denominated in another. Cross-hedges protect against losses resulting from
a decline in the hedged currency, but will cause a Fund to assume the risk
of fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Funds will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The Funds will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's
skill in analyzing and predicting currency values. Currency management
strategies may substantially change a Fund's investment exposure to changes
in currency exchange rates, and could result in losses to the Fund if
currencies do not perform as FMR anticipates. For example, if a currency's
value rose at a time when FMR had hedged a Fund by selling that currency in
exchange for dollars, the Fund would be unable to participate in the
currency's appreciation. If FMR hedges currency exposure through proxy
hedges, a Fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in
tandem. Similarly, if FMR increases a Fund's exposure to a foreign
currency, and that currency's value declines, the Fund will realize a loss.
There is no assurance that FMR's use of currency management strategies will
be advantageous to the Funds or that it will hedge at an appropriate
time.
SHORT SALES "AGAINST THE BOX." If a Fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The Funds will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales against the box.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each Fund intends to
file a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. Each Fund intends to comply
with Rule 4.5 under the Commodity Exchange Act, which limits the
extent to which the Funds can commit assets to initial margin deposits and
option premiums.
In addition, each Fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of each
Fund's total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, each Fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by each Fund would
exceed 5% of each Fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the Funds' investments in futures contracts and
options, and the Funds' policies regarding futures contracts and options
discussed elsewhere in this SAI, may be changed as regulatory agencies
permit.
FUTURES CONTRACTS. When a Fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date.
When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the Fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's Composite Index
of 500 Stocks (S&P 500). Futures can be held until their delivery
dates, or can be closed out before then if a liquid secondary market is
available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a Fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a Fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a Fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a Fund, a Fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
each Fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. A Fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the Fund will lose the entire premium it paid. If the Fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A Fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the Fund will be required to make margin payments to an FCM as
described above for futures contracts. A Fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the Fund has written, however, the
Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. A Fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a Fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult
to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a Fund's current or
anticipated investments exactly. The Funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically invest
which involves a risk that the options or futures position will not track
the performance of a Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a Fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a Fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a Fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
Fund's access to other assets held to cover its options or futures
positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
Funds greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. A Fund
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign
currencies. A Fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
Fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a Fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of a Fund's investments exactly over time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Funds will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of a Fund's assets could
impede portfolio management or a Fund's ability to meet redemption requests
or other current obligations.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as changes in real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the management
skill and creditworthiness of the issuer. Real estate-related instruments
may also be affected by tax and regulatory requirements, such as those
relating to the environment.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each Fund by FMR pursuant to authority contained in the
m anagement c ontract. If FMR grants investment management
authority to the sub-advisors (see the section entitled "Management
Contracts"), the sub-advisors are authorized to place orders for the
purchase and sale of portfolio securities, and will do so in accordance
with the policies described below. FMR is also responsible for the
placement of transaction orders for other investment companies and accounts
for which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, FMR consider s various relevant factors, including, but not
limited to : the size and type of the transaction , the nature
and character of the markets for the security to be purchased or
sold , the execution efficiency, settlement capability, and financial
condition of the broker-dealer firm ; the broker-dealer's execution
services rendered on a continuing basis ; the reasonableness of any
c ommissions , and arrangements for payment of Fund expenses.
Generally, c ommissions for foreign investments traded will be higher
than for U.S. investments and may not be subject to negotiation.
The Funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the Funds or other
accounts over which FMR or its affiliates exercise investment discretion.
Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). The selection of
such broker-dealers generally is made by FMR (to the extent possible
consistent with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff based upon
the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Fund s may be useful to FMR in rendering
investment management services to the Funds or its other clients,
and conversely, such research provided by broker-dealers who have executed
transaction orders on behalf of other FMR clients may be useful to FMR in
carrying out its obligations to the Fund s . The receipt of
such research has not reduced FMR's normal independent research activities;
however, it enables FMR to avoid the additional expenses that could be
incurred if FMR tried to develop comparable information through its own
efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each Fund to pay such higher commissions, FMR must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing
broker-dealers , viewed in terms of a particular transaction or FMR's
overall responsibilities to the Funds and its other clients. In reaching
this determination, FMR will not attempt to place a specific dollar value
on the brokerage and research services provided , or to determine
what portion of the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with FBSI and Fidelity
Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior to
September 4, 1992, FBSL operated under the name Fidelity Fund Services,
Ltd. (FPSL) as a wholly owned subsidiary of Fidelity International Limited
(FIL). Edward C. Johnson 3d, is Chairman of FIL. Mr. Johnson 3d, Johnson
family members, and various trusts for the benefit of the Johnson family
own, directly or indirectly, more than 25% of the voting common stock of
FIL.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer allocates
a portion of the commissions paid by each Fund toward payment of the Fund's
expenses, such as transfer agent fees or custodian fees. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions for
accounts that they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC
rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
the Fund s and review the commissions paid by each Fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the Fund.
Each Fund's annual portfolio turnover rate generally will not exceed
100% but may be substantially greater than that of similar investment
companies. Each Fund's turnover rate for the periods shown is illustrated
in the following table.
TURNOVER RATES
PERIOD JULY 1, 1993
FISCAL YEAR ENDED THROUGH
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
DESTINY I _____% %
DESTINY II _____% %
The following tables list the total brokerage commissions paid by each
Fund; the percentage of brokerage commissions paid to brokerage firms that
provided research services; and the dollar amount of commissions paid to
FBSI for the periods shown. Each Fund pays both commissions and spreads in
connection with the placement of portfolio transactions; FBSI is paid on a
commission basis. The tables also list the percentage of each fund's
aggregate dollar amount of transactions executed through FBSI during the
same periods. The difference in the percentage of brokerage commissions
paid to and the percentage of the dollar amount of transactions effected
through FBSI is a result of the low commission rates charged by FBSI.
DESTINY I
% Paid to Commissions % of Commissions
Firms Providing Paid Paid
TOTAL Research To FBSI to FBSI
Fiscal Year Ended September 30, 1994 $ % $ %
July 1 - September 30, 1993 $ % $ %
Year Ended June 30, 1993 $ % $ %
DESTINY II
% Paid to Commissions % of Commissions
Firms Providing Paid Paid
TOTAL Research To FBSI to FBSI
Fiscal Year Ended September 30, 1994 $ % $ %
July 1 - September 30, 1993* $ % $ %
Year Ended June 30, 1993 $ % $ %
From time to time, the Fund's Trustees will review whether the recapture
for the benefit of the Fund s of some portion of the brokerage
commissions or similar fees paid by the Fund s on portfolio
transactions is legally permissible and advisable. Each Fund seeks to
recapture soliciting broker- dealer fees on the tender of portfolio
securities, but at present no other recapture arrangements are in effect.
The Trustees intend to continue to review whether recapture opportunities
are available and are legally permissible and, if so, to determine, in the
exercise of their business judgment, whether it would be advisable for each
Fund to seek such recapture.
Although the Trustees and officers of the Fund s are substantially
the same as those of other funds managed by FMR, investment decisions for
the Fund s are made independently from those of other funds advised
by FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these funds
or accounts. Simultaneous transactions are inevitable when several funds
and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable for
each fund . In some cases this system could have a detrimental effect
on the price or volume of the security as far as each Fund is concerned.
In other cases, however, the ability of each Fund to participate in volume
transactions will produce better executions and prices for each Fund. It
is the current opinion of the Trustees that the desirability of retaining
FMR as investment adviser to each Fund outweighs any disadvantages that may
be said to exist from exposure to simultaneous transactions.
VALUATION OF FUND SECURITIES
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Most equity securities for
which the primary market is the United States are valued at last sale price
or, if no sale has occurred, at the closing bid price. Most equity
securities for which the primary market is outside the United States are
valued using the official closing price or the last sale price in the
principal market where they are traded. If the last sale price (on the
local exchange) is unavailable, the last evaluated quote or last bid price
is normally used. Short-term securities are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. Convertible securities and fixed-income securities are
valued primarily by a pricing service that uses a vendor security valuation
matrix which incorporates both dealer-supplied valuations and electronic
data processing techniques. This two-fold approach is believed to more
accurately reflect fair value because it takes into account appropriate
factors such as institutional trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the counter prices. Use of pricing services has
been approved by the Board of Trustees.
Securities and other assets for which there is no readily available
market are valued in good faith by a committee appointed by the Board of
Trustees. The procedures set forth above need not be used to determine the
value of the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market
instruments, and repurchase agreements, is substantially completed each day
at the close of the NYSE. The values of any such securities held by each
Fund is determined as of such time for the purpose of computing the Fund's
net asset value (NAV). Foreign security prices are furnished by independent
brokers or quotation services which express the value of securities in
their local currency. Service gathers all exchange rates daily at the-
close of the NYSE using the last quoted price on the local currency and
then translates the value of foreign securities from their local currency
into U.S. dollars. Any changes in the value of forward contracts due to
exchange rate fluctuations and days to maturity are included in the
calculation of NAV. If an extraordinary event that is expected to
materially affect the value of a portfolio security occurs after the close
of an exchange on which that security is traded, then the security will be
valued as determined in good faith by a committee appointed by the Board of
Trustees.
PERFORMANCE
Each Fund may quote its performance in various ways. All performance
information supplied by the Funds in advertising is historical and is not
intended to indicate future returns. Each Fund's share price and total
returns fluctuate in response to market conditions and other factors, and
the value of each Fund's shares when redeemed may be worth more or less
than their original cost.
TOTAL RETURN CALCULATIONS. TOTAL RETURNS quoted in advertising reflect all
aspects of each Fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in each Fund's
NAV over the period. Total returns quoted by the Funds do not include
the effect of paying the separate C reation and S ales
C harges and C ustodian F ees associated with the
purchase of shares of the Funds through Fidelity Destiny Systematic
Investment Plans; of course total returns would be lower if creation and
sales charges and custodian fees were taken into account.
AVERAGE ANNUAL TOTAL RETURNS are calculated by determining the growth or
decline in value of a hypothetical historical investment in each Fund over
a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative return of 100% over 10 years would produce an average annual
return of 7.18%, which is the steady annual rate that would equal 100%
growth on a compounded basis in 10 years. While average annual returns are
a convenient means of comparing investment alternatives, investors should
realize that each Fund's performance is not constant over time, but changes
from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of each Fund.
In addition to average annual returns, each Fund may quote unaveraged or
CUMULATIVE TOTAL RETURNS reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a
series of redemptions, over any time period. Total returns may be broken
down into their components of income and capital (including capital gains
and changes in share price) in order to illustrate the relationship of
these factors and their contributions to total return. An example of this
type of illustration is given below . Total returns and other
performance information may be quoted numerically or in a table, graph, or
similar illustration.
NET ASSET VALUE. Charts and graphs using the Funds ' NAVs ,
adjusted NAVs , and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a
Fund and reflects all elements of its return. Unless otherwise indicated,
a Fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. The Fund s may illustrate performance using
moving averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving average
is the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed, stayed above, or
stayed below its moving average. On September __, 199 4 , the 13-week
and 39-week moving averages were $ _____ and $ _____ for
Destiny I , respectively, and $ _____ and $ ____ for
Destiny II, respectively.
HISTORICAL PLAN RESULTS: The following charts show Destiny Plans I and
Destiny Plans II average annual total returns calculated for the one, five,
ten years and Life of Plan ended September 30, 199 4 for a $50/month,
15 year Plan. Life of Plan figures for the Destiny Plans II are from the
Destiny II Fund's Commencement of Operations (December 30, 1985) through
September 30, 199 4 . The following Plan - related average
annual total returns include change in share price, reinvestment of
dividends and capital gains, and the effects of the separate Creation
and Sales Charges and C ustodian F ees assessed through the
Plans. Consult the Plans' Prospectus for more complete information on
applicable charges and fees.
DESTINY PLANS I
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$PLAN SIZE/MONTH LIFE OF
DURATION/YEARS ONE YEAR FIVE YEARS TEN YEARS PLAN
$ 50 PER MONTH:
15 Years % % % %
</TABLE>
DESTINY PLANS II
AVERAGE ANNUAL TOTAL RETURNS
$PLAN SIZE/MONTH LIFE OF
DURATION/YEARS ONE YEAR FIVE YEARS TEN YEARS PLAN
$ 50 PER MONTH:
15 Years % % N/A %
INDEX COMPARISONS. Each Fund may compare its performance to that of the
S&P 500 which is a registered trademark of Standard & Poor's
Corporation, and the Dow Jones Industrial Average (the Dow or DJIA).
The S&P 500 and the D JIA are widely recognized, unmanaged
indexes of common stock prices. The performance of the S&P 500 and
the DJIA are based on changes in the prices of stocks comprising the Index
and assumes the reinvestment of all dividends paid on such stocks. Taxes,
brokerage commissions and other fees are disregarded in computing the level
of the S&P 500 and the DJIA. Each Fund's performance also may be
compared to the increase in the cost of living as measured by the
Consumer Price Index ( CPI ) and to the NASDAQ Composite Index
(NASDAQ), an index of 500 over-the-counter stocks.
The following charts show the income and capital elements of Destiny I's
total return for the 15 year period ended September 30, 199 4 , and
Destiny II's total return from December 30, 1985, the date it commenced
operations, until September 30, 199 4 . The charts compare each
Fund's return to the record of the S&P 500 , the DJIA, the NASDAQ and
the cost of living (measured by the CPI) over the same period. The
comparison to the S&P 500 shows how each Fund's total return
compared to the record of a broad average of common stock prices; the
comparison to the DJIA shows how each Fund's total return compared to the
record of a narrower set of stocks of major industrial companies; and the
comparison to the NASDAQ shows how each Fund's total return compared to the
record of a broad range of over-the-counter stocks. The Funds have the
ability to invest in securities not included in the indices, and their
investment portfolios may or may not be similar in composition to the
indices. The S&P 500 , DJIA and the NASDAQ are based on the prices
of unmanaged groups of stocks, and, unlike each Fund's returns, their
returns do not include the effect of paying brokerage commissions and other
costs of investing.
During the period from September 30, 1978 to September 30, 199 4 , a
hypothetical $10,000 investment in Destiny I would have grown to
$ ________, assuming all distributions were reinvested, and during
the period from December 30, 1985 to September 30, 199 4 , a
hypothetical $10,000 investment in Destiny II would have grown to
$ ______ . These were periods of widely fluctuating stock prices, and
the charts should not necessarily be considered representative of the
income or capital gain or loss that could be realized from an investment in
Destiny I or Destiny II today.
DESTINY I INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF
INITIAL VALUE OF REINVESTED
$10,000 REINVESTED CAPITAL GAIN TOTAL
YEAR ENDED INVESTMENT DIVIDENDS DISTRIBUTIONS VALUE NASDAQ S&P DJIA CPI
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
September 1994
1993 $ $ $ $ $ $ $ $
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
</TABLE>
EXPLANATORY NOTES: With an initial investment of $10,000 made on September
30, 1978, the net amount invested in Fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(that is, their cash value at the time they were reinvested), amounted to
$ ______ . If distributions had not been reinvested, the amount of
distributions earned from the Fund over time would have been smaller, and
the cash payments for the period would have come to $ ______ for
income dividends and $ _______ for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
DESTINY II INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF
INITIAL VALUE OF REINVESTED
$10,000 REINVESTED CAPITAL GAIN TOTAL
YEAR ENDED INVESTMENT DIVIDENDS DISTRIBUTIONS VALUE NASDAQ S&P DJIA CPI**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
September
1994
1993 $ $ $ $ $ $ $ $
1992
1991
1990
1989
1988
1987
1986*
</TABLE>
* December 30, 1985 (commencement of operations) - September 30, 1986
** From month-end closest to initial investment.
EXPLANATORY NOTES: With an initial investment of $10,000 made on December
30, 1985, the net amount invested in Fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(that is, their cash value at the time they were reinvested), amounted to
$ _____ . If distributions had not been reinvested, the amount of
distributions earned from the Fund over time would have been smaller, and
the cash payments for the period would have come to $ ______ for
income dividends and $______ for capital gain distributions. If FMR
had not reimbursed certain Fund expenses during the periods shown above,
the Fund's returns would have been lower. Tax consequences of different
investments have not been factored into the above figures.
The following table illustrates, on a calendar year basis, Destiny I's and
Destiny II's total returns that are based on the changes in NAV, with all
dividends and capital gains reinvested, as compared with the S&P
500 , and the DJIA figures that are based on the changes in NAV, with
all dividends reinvested. No brokerage commissions or other fees have been
factored into any of these figures and no adjustment has been made for a
shareholder's income tax liability on dividends or capital gains. The
Funds' performance figures do not reflect operation expenses incurred at
the Plan level. The S&P 500 , DJIA and NASDAQ are unmanaged indices
of security prices. They were selected because many investors regard them
as representative of the stock market in general. The period covered was
one of widely fluctuating stock prices, and the table should not
necessarily be considered representative of the dividend income or capital
gain or loss, which may be realized on an investment in Destiny I or
Destiny II today.
TOTAL RETURN
YEAR DESTINY I DESTINY II NASDAQ DJIA S&P
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1978 % N/A % % %
1979 N/A
1980 N/A
1981 N/A
1982 N/A
1983 N/A
1984 N/A
1985 %*
1986
1987
1988
1989
1990
1991
1992
1993
1994 through 9/30/94
Life of Fund * ** N/A N/A N/A
</TABLE>
* From commencement of operations, July 10, 1970.
** From commencement of operations, December 30, 1985.
Unlike an investment in a common stock mutual fund, an investment in bonds
that are held to maturity provides a fixed and stated rate of return.
Bonds have a senior priority in liquidation or bankruptcy to common stocks
and interest on bonds is generally paid from assets of the corporation
before any distributions to common shareholders. Bonds rated in the two
highest rating categories are considered high quality and present minimal
risks of default. (See the "Appendix" for a more complete explanation of
these ratings of corporate bonds.) An additional advantage of investing in
government bonds is that they are securities backed by the credit and
taxing power of the United States Government, and therefore, present
virtually no risk of default. Although government securities fluctuate in
price, they are highly liquid and may be purchased and sold with relatively
small transaction costs (direct purchase of Treasury securities can be made
with no transaction costs).
Each Fund may compare its performance to that of other compilations or
indices of comparable quality to those listed above which may be developed
and made available in the future.
PERFORMANCE COMPARISONS. Each Fund's performance may be
compared to the performance of other mutual funds in general, or to the
performance of particular types of mutual funds. These comparisons may be
expressed as mutual fund rankings prepared by Lipper Analytical Services,
Inc. (Lipper), an independent service located in Summit, New Jersey which
monitors the performance of mutual funds. Lipper generally ranks funds on
the basis of total return, assuming reinvestment of distributions, but does
not take sales charges or redemption fees into consideration, and is
prepared without regard to tax consequences. In addition to the mutual
fund rankings, each Fund's performance may be compared to mutual fund
performance indices prepared by Lipper. As of September 30,
199 4 , FMR managed $ ___ billion in equity fund assets as
defined and tracked by Lipper.
From time to time, each Fund's performance also may be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the Funds may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in
advertising.
The Funds may be compared in advertising to certificates of deposit
(CDs) or other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, a Fund may offer greater
liquidity or higher potential returns than CDs, and a Fund does not
guarantee your principal or your return.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging. In addition, Fidelity may
quote financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques.
Each Fund may present its fund number, Quotron(trademark) number, CUSIP
number, and discuss or quote its current fund manager.
VOLATILITY. The Fund s may quote various measures of
volatility and benchmark correlation in advertising. In addition, the
Funds may compare these measures to those of other funds. Measures of
volatility seek to compare each Fund's historical share price
fluctuations or total returns compared to those of a benchmark. Measures
of benchmark correlation indicate how valid a comparative benchmark may be.
All measures of volatility and correlation are calculated using averages of
historical data.
MOMENTUM INDICATORS indicate each Fund's price movements over
specific periods of time. Each point on the momentum indicator represents
the Fund's percentage change in price movements over that period.
The Fund s may advertise examples of the effects of periodic
investment plan s, including the principle of "dollar-cost
averaging." In such a program, the investor invests a fixed dollar amount
in a fund at periodic intervals, thereby purchasing fewer shares when
prices are high, more shares when prices are low. While such a strategy
does not assure a profit nor guard against loss in a declining market, the
investor's average cost per share is lower than if fixed numbers of shares
are purchased at those intervals. In evaluating such a plan,
investors should consider their financial ability to continue purchasing
shares during periods of low price levels.
The Fund s may be available for purchase through retirement plans or
other programs offering deferral of , or exemption from ,
income taxes, which may produce superior after-tax returns over time. For
example, a $1,000 investment earning a taxable return of 10% annually would
have an after-tax value of $1,949 after 10 years, assuming tax was deducted
from the return each year at a 31% rate. An equivalent tax-deferred
investment would have an after-tax value of $2,100 after 10 years, assuming
tax was deducted at a 31% rate from the tax- deferred earnings at the
end of the ten year period.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each Fund is open for business and each NAV is calculated each day
the NYSE is open for trading. The NYSE has designated the following
holiday closings for 199 4 : Presidents' Day, Good Friday, Memorial
Day, Independence Day (observed), Labor Day, Thanksgiving Day, and
Christmas Day (observed). Although FMR expects the same holiday schedule,
with the addition of New Year's Day, to be observed in the future, the NYSE
may modify its holiday schedule at any time. On any day that the NYSE
closes early, or as permitted by the SEC, the right is reserved to advance
the time on that day by which purchase and redemption orders must be
received. To the extent that portfolio securities are traded in
other markets on days when the NYSE is closed, a Fund's NAV may be
affected on days when investors do not have access to the Fund to purchase
or redeem shares. Certain Fidelity funds may follow different holiday
closing schedules.
If the Trustees determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing each Fund's NAV. Shareholders receiving securities or other
property on redemption may realize either a gain or loss for tax purposes,
and will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if, (i) the only effect of a modification would be to reduce
or eliminate an administrative fee, redemption fee, or deferred sales
charge ordinarily payable at the time of exchange, or (ii) the Fund
suspends the redemption of the shares to be exchanged as permitted under
the 1940 Act or the rules and regulations thereunder, or the Fund to be
acquired suspends the sale of its shares because it is unable to invest
amounts effectively in accordance with its investment objective and
policies.
In the prospectus, the Funds have notified shareholders that they reserve
the right at any time, without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the Funds would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of each Fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that each Fund's income is derived from qualifying dividends.
Because each Fund may also earn other types of income, such as interest,
income from securities loans, non-qualifying dividends and short-term
capital gains, the percentage of dividends from the equity portfolios that
qualify for the deduction will generally be less than 100%. Each Fund will
notify corporate shareholders annually of the percentage of Fund dividends
which qualify for the dividends received deduction. A portion of the
Fund's dividends derived from certain U.S. government obligations may be
exempt from state and local taxation. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary income and
therefore increase (decrease) dividend distributions. Each Fund will send
each shareholder a notice in January describing the tax status of dividends
and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains realized by each Fund
on the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a Fund and such shares are held less
than six months and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by each Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from the
short-term capital gains do not qualify for the dividends-received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes from dividends or
interest paid with respect to foreign securities typically at a rate
between 10% and 35%. The Funds intend to elect to pass through foreign
taxes paid in order for a shareholder to take a credit or deduction if, at
the close of its fiscal year, more than 50% of each Fund's assets are
invested in securities of foreign issuers.
TAX STATUS OF THE FUND. Each Fund has qualified and intends to continue to
qualify as a "regulated investment company" for tax purposes, so that it
will not be liable for federal tax on income and capital gains distributed
to shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes, each Fund intends to
distribute substantially all of its net investment income and realized
capital gains within each calendar year as well as on a fiscal year basis.
Each Fund also intends to comply with other tax rules applicable to
regulated investment companies, including a requirement that capital gains
from the sale of securities held for less than three months must constitute
less than 30% of each Fund's gross income for each fiscal year. Gains from
some forward currency contracts, futures contracts, and options are
included in this 30% calculation, which may limit each Fund's investments
in such instruments. If a Fund purchases shares in certain foreign
investment entities, called passive foreign investment companies (PFIC's),
it may be subject to U.S. federal income tax on a portion of any excess
distribution or gain from the disposition of such shares. Interest charges
may also be imposed on the Fund with respect to deferred taxes arising from
such distributions gains.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Funds and their shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of a Fund may be subject to
state and local taxes on distributions received from the Fund. Investors
should consult their tax advisors to determine whether the Funds are
suitable to their particular tax situation.
Each Fund is treated as a separate entity for tax purposes.
FMR
FMR is a wholly owned subsidiary of FMR Corp., ultimate parent
company organized in 1972. All of the stock of FMR is owned by FMR
Corp. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson, 3d, Johnson family
members, and various trusts for the benefit of the Johnson family form a
controlling group with respect to FMR Corp. At present, the principal
operating activities of FMR Corp. are those conducted by three of its
divisions as follows: Service, which is the transfer and shareholder
servicing agent for certain of the funds advised by FMR; Fidelity
Investments Institutional Operations Company , which performs
shareholder servicing functions for certain institutional customers; and
Fidelity Investments Retail Marketing Company, which provides marketing
services to various companies within the Fidelity organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far
East research and visit thousands of domestic and foreign companies each
year. FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989,
supplies portfolio management and research services in connection with
certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Fund's Trustees and executive officers are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, MA 02109, which is also the address of FMR.
Those Trustees who are "interested persons" as defined in the 1940 Act by
virtue of their affiliation with either the Fund or FMR, are indicated by
an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1993), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous
waste, 1993) and CH2M Hill Companies (engineering). In addition, he served
on the Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1993).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensselaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company of
Vermont, American Software, Inc. (1989), and AppleSouth, Inc. (restaurants,
1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior
Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President and
Clerk of Distributors.
GEORGE A. VANDERHEIDEN, Vice President, is Managing Director of FMR Co. and
Leader of the Growth Group of mutual funds managed by Fidelity.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
Under a retirement program, which became effective on November 1, 1989,
Trustee s , upon reaching age 72, become eligible to participate in a
defined benefit retirement program under which they receive payments
during their lifetime from the Funds, based on their basic
trustee fees and length of service. Currently, Messrs. Robert L. Johnson,
William R. Spaulding, Bertram H. Witham, and David L. Yunich participate in
the program.
MANAGEMENT CONTRACT S
Each Fund employs FMR to furnish investment advisory and other
services. Under its Management Contract with each Fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of the Fund in accordance with its
investment objective, policies and limitations. FMR also provides
each Fund with all necessary office facilities and personnel for
servicing the Funds' investments, and compensates all officers of
the Trust , all Trustees who are "interested persons" of the
Trust or FMR performing services relating to research,
statistical , and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each Fund. These services include :
providing facilities for maintaining the Funds ' organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters and other persons dealing with the Fund s ;
preparing all general shareholder communications and conducting shareholder
relations; maintaining each Fund's records and the registration of
each Fund's shares under federal and state law; developing
management and shareholder services for the Fund s ; and furnishing
reports, evaluations and analyses on a variety of subjects to the Board of
Trustees.
In addition to the management fee payable to FMR and the fees payable to
S ervice, each Fund pays all of its expenses, without
limitation, that are not assumed by those parties. Each Fund pays
for typesetting, printing and mailing of its p rospectuses,
SAI s, reports, and proxy material to shareholders, legal expenses,
and the fees of the custodian, auditor, and non-interested Trustees. With
respect only to those accounts not associated with the Plans,
although each Fund's management contract provides that the Fund will
pay for typesetting, printing, and mailing of prospectuses, statements of
additional information, notices, and reports to existing shareholders, the
Trust has entered into a revised transfer agent agreement with Service,
pursuant to which Service bears the cost of providing these services to
existing shareholders. Other expenses paid by the Fund s include
interest, taxes, brokerage commissions, each Fund's proportionate
share of insurance premiums and Investment Company Institute dues, and the
costs of registering shares under federal and state securities laws.
Each Fund is also liable for such nonrecurring or extraordinary
expenses as may arise, including those relating to litigation to which it
may be a party and any obligation it may have to indemnify the
Funds ' officers and Trustees with respect to litigation.
FMR is each Fund's manager pursuant to management contract s
dated November 1, 1993, which w ere approved by each Fund's
shareholders on October 20, 1993. For the services of FMR under the
contract, each Fund pays a monthly management fee composed of the
sum of two elements: a basic fee and a performance adjustment based on the
comparison of each Fund's performance to that of the S&P 500 .
COMPUTING THE BASIC FEE. Each Fund's basic fee rate is composed of
two elements: a group fee rate and an individual fund fee rate. The group
fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to a graduated fee rate
schedule shown on the left. On the right, the effective fee rate schedule
are the results of cumulatively applying the annualized rates at varying
asset levels. For example, the effective annual fee rate at $ ___
billion of group net assets - their approximate level for September
199 4 - was . ____% , which is the weighted average of the
respective fee rates for each level of group net assets up to $ ___
billion.
GROUP FEE EFFECTIVE ANNUAL
RATE SCHEDULE* FEE RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annualized Group Effective Annual
Group Assets Rate Net Assets Fee Rates
$ 0 - 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 10 .4840
6 - 9 .4600 20 .4398
9 - 12 .4300 30 .4115
12 - 15 .4000 40 .3944
15 - 18 .3850 50 .3823
18 - 21 .3700 60 .3728
21 - 24 .3600 70 .3656
24 - 30 .3500 80 .3599
30 - 36 .3450 90 .3552
36 - 42 .3400 100 .3512
42 - 48 .3350 110 .3475
48 - 66 .3250 120 .3444
66 - 84 .3200 130 .3417
84 - 102 .3150 140 .3394
102 - 138 .3100 150 .3371
138 - 174 .3050 160 .3351
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
174 - 228 .3000 170 .3333
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
228 - 282 .2950 180 .3316
282 - 336 .2900 190 .3299
</TABLE>
Over 336 .2850 200 .3284
* Under the Fund's current management contract with FMR, the group fee rate
is based on a schedule with breakpoints ending at .3000% for average group
assets in excess of $174 billion. Prior to November 1, 1993, the group fee
rate breakpoints shown above for avearge group assets in excess of $138
billion and under $228 billion were voluntarily adopted by FMR, and went
into effect on January 1, 1992. The additional breakpoints shown above for
average group assets in excess of $228 billion were voluntarily adopted by
FMR on November 1, 1993. On August 1, 1994, FMR voluntarily revised the
prior extensions to the group fee rate schedule, and added new breakpoints.
The revised group fee rate schedule provides for lower management fee rates
as FMR's assets under management increase. The revised group fee rate
schedule is identical to the above schedule for average group assets under
management under $210 billion. For average group assets in excess of $210
billion, the group fee rate schedule voluntarily adopted by FMR is as
follows
GROUP FEE EFFECTIVE ANNUAL
RATE SCHEDULE* FEE RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annualized Group Effective Annual
Group Assets Rate Net Assets Fee Rates
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
138 - 174 billion .3050%- 150 billion .3371%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
174 - 210 .3000 175 .3325
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
210 - 246 .2950 200 .3284
246 - 282 .2900 225 .3249
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
282 - 318 .2850 250 .3219
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
318 - 354 .2800 275 .3190
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
354 - 390 .2750 300 .3163
</TABLE>
Over 390 .2700 325 .3137
350 .3113
375 .3090
400 .3067
The individual fund fee rates for Destiny I and Destiny II are .17% and
.30%, respectively. Based on the average group net assets of the
funds advised by FMR for September 199 4 the annual basic fee
rate s would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE
Destiny I .____% + .17% = .____%
Destiny II .____% + .30% = .____%
One-twelfth (1/12) of the annual basic fee rate is then applied to each
Fund's n et assets averaged for the most recent month,
giving a dollar amount , which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee will be subject to
upward or downward adjustment, depending upon whether, and to what extent,
a Fund's investment performance for the performance period exceeds,
or is exceeded by, the record of the S&P 500 over the same period.
Each percentage point of difference is multiplied by a performance
adjustment rate of .02%. The maximum adjustment rate is limited to
+ .24% of the average net assets up to and including $100,000,000 and
+ .20% of the average net assets in excess of $100,000,000. This
performance comparison is made at the end of each month. One-twelfth
(1/12) of this rate is then applied to the Fund's average net assets for
the entire performance period, giving a dollar amount that will be added to
(or subtracted from) the basic fee.
E ach Fund 's performance is calculated based on change in
NAV . For the purpose of calculating the performance
adjustment , any dividends or capital gains distributions paid by
a Fund is treated as if reinvested in Fund shares at the NAV
as of the record date for payment. The record of the S&P 500 is
based on change in value and is adjusted for any cash distributions
from the companies whose securities comprise the S&P 500 .
Because the adjustment to the basic fee is based on a Fund's
performance compared to the investment record of the S&P 500 , the
controlling factor is not whether a Fund's performance is up or down
per se, but whether it is up or down more or less than the record of the
S&P 500 . Moreover, the comparative investment performance of
a Fund is based solely on the relevant performance period without
regard to the cumulative performance over a longer or shorter period of
time.
During the periods shown in the table below, FMR received payments for
its services as investment adviser to the Funds. These fees include both
the basic fee and the performance adjustment. If FMR had not voluntarily
adopted an extended group fee rate schedule, these fees would have been
higher.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MANAGEMENT FEE MANAGEMENT FEE PERFORMANCE
FISCAL PERIODS INCLUDING AS A % OF ADJUSTMENT
FUND NAME ENDED PERFORMANCE ADJUSTMENT AVERAGE NET ASSETS TO BASIC FEE*
Destiny I 9/30/94 $________ ____% $________
7/1/93 - 9/30/93 ________
6/30/93 ________ ____ ________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Destiny II 9/30/94 $________ ____% $________
7/1/93 - 9/30/93 ________
6/30/93 ________ ____ ________
</TABLE>
SUB-ADVISERS. Effective November 1, 1993, FMR has entered into
sub-advisory agreements with FMR U.K. and FMR Far East. Pursuant to the
sub-advisory agreements, FMR may receive investment advice and research
services outside the United States from the sub-advisers.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia, and the Pacific
Basin. FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR.
Under the sub-advisory agreements, FMR pays the fees of FMR U.K. and FMR
Far East. For providing non-discretionary investment advice and research
services, FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of FMR U.K.'s and FMR Far East's costs incurred in connection
with providing investment advice and research services.
For providing investment advice and research services, the table below
shows the fees paid to the sub-advisers during each Fund's last three
fiscal periods:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL YEAR ENDED PERIOD J ULY 1 THROUGH YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993 JUNE 30, 1993
</TABLE>
DESTINY I
FMR U.K. $ NA NA
FMR Far East $ NA NA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DESTINY I
FMR U.K. $ NA NA
FMR Far East $ NA NA
</TABLE>
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
Under revised transfer agent arrangements, effective January 1, 1993, each
Fund, with respect only to accounts not associated with Fidelity Systematic
Investment Plans, pays fees based on the type, size, and number of
transactions made by shareholders of the Fund. In addition to providing
transfer agent and shareholder servicing functions, the transfer agent pays
all transfer agent out-of-pocket expenses and for typesetting, printing and
mailing of Prospectuses and SAIs, reports, notices and statements of all
related accounts.
Each revised contract with Service changed the structure of fees payable to
Service for transfer agent services. Each Fund pays an annual fee
of $25.50 per regular shareholder account with a balance of $5,000 or more,
$15 per regular shareholder account with a balance of less than $5,000 and
a supplemental activity charge of $5.61 for monetary transactions. With
respect to certain institutional client master accounts, each Fund pays
Service a per account fee and a monetary transaction fee of $95 and $20 or
$17.50, respectively, or for broker/dealer accounts, $30 and $6,
respectively, depending on the nature of services provided. Fees for
certain institutional retirement plan accounts may be based on the
NAV of all such accounts in a Fund.
The table below shows the transfer agent fees, including reimbursement for
out-of-pocket expenses, paid to Service during each Fund's last three
fiscal periods.
TRANSFER AGENT FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL YEAR ENDED PERIOD JULY 1 THROUGH YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993 JUNE 30, 1993
</TABLE>
DESTINY I $ $ $
DESTINY II $ $ $
The Fund's contract with Service also provides that Service will perform
the calculations necessary to determine each Fund's NAV and
dividends and maintains each Fund's accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to each Fund's average net assets, and one
pertaining to the type and number of transactions each Fund made. The fee
rates in effect as of July 1, 1991 are based on each Fund's average net
assets, specifically, .06% for the first $500 million of average net assets
and .03% for average net assets in excess of $500 million. The fee is
limited to a minimum of $45,000 and a maximum of $750,000 per year.
The table below shows the fees paid to Service for pricing and bookkeeping
services, including related out-of-pocket expenses during each Fund's last
three fiscal periods.
PRICING AND BOOKKEEPING FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL YEAR ENDED PERIOD JULY 1 THROUGH YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993 JUNE 30, 1993
</TABLE>
DESTINY I $ $ $
DESTINY II $ $ $
Service also receives fees for administering each Fund's securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans.
The table below shows the fees paid to Service for securities lending
fees during each Fund's last three fiscal periods:
SECURITIES LENDING FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL YEAR ENDED PERIODS JULY 1 THROUGH YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993 JUNE 30, 1993
</TABLE>
DESTINY I $ $ $
DESTINY II $ $ $
FMR may, from time to time, agree to waive its fees or to reimburse the
Funds for certain expenses above a specified percentage of average net
assets. Fee waivers or expense limitations will increase the Funds'
returns. The fee waivers or expense limitations may be terminated at any
time without notice, at which time the Funds' expenses will go up and their
yield will be reduced.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. D estiny I and Destiny II are funds of
F idelity Destiny Portfolios (the Trust), an open-end management
investment company ; originally organized as a Massachusetts
corporation on January 7, 1969. On June 20 , 1984, the Trust was
reorganized as a Massachusetts business trust, at which time its name was
changed to Fidelity Destiny Fund. On December 2 0, 1985, the Trust's
name was changed to Fidelity Destiny Portfolios to reflect the creation
of a second series - the original series was named Destiny I and
the second series was named Destiny II. Currently Destiny I and
Destiny II are the only funds of the Trust. The Declaration of
Trust permits the trustees to create additional series (or portfolios).
In the event that FMR ceases to be the investment adviser to a fund ,
the right of the Trust or a fund to use the identifying name "Fidelity" may
be withdrawn . There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the Trust received for the issue or sale of shares of each
Fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each Fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the Trust . Expenses with respect to the
Trust are to be allocated in proportion to the asset value of the
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the Trust, subject to the general
supervision of the Board of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the Funds. In the event of the dissolution or liquidation of the
Trust, shareholders of each Fund are entitled to receive as a class the
underlying assets of such fund available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a Trust may, under certain circumstances, be held
personally liable for the obligations of the Trust. The Declaration of
Trust provides that the Trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Trust or the Trustees shall include a provision limiting the obligations
created thereby to the Trust and its assets. The Declaration of Trust
provides for indemnification out of each Fund's property of any shareholder
held personally liable for the obligations of the Fund . The
Declaration of Trust also provides that each Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which a Fund itself would be unable
to meet its obligations. FMR believes that, in view of the above, the risk
of personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects
Trustee s against any liability to which t he y would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
t h eir office.
VOTING RIGHTS. Each Fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value per share you own. The shares have no
preemptive or conversion rights; the voting and dividend rights, the right
of redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set forth
under the heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Fund may, as set forth in the Declaration
of Trust, call meetings of the Trust or a Fund for any purpose
related to the Trust or a Fund, as the case may be, including, in
the case of a meeting of the entire Trust, the purpose of voting on removal
of one or more Trustees. The Trust or any Fund may be terminated
upon the sale of its assets to another open-end management investment
company, or upon liquidation and distribution of its assets, if approved by
vote of the holders of a majority of the Trust or the Fund, as
determined by the current value of each shareholder's investment in the
Fund or Trust.
CUSTODIAN. The Chase Manhattan Bank, N.A., 1 Chase Manhattan Plaza, New
York, NY 10081, is custodian of the assets of each Fund. The
C ustodian is responsible for the safekeeping of each Fund's assets
and the appointment of subcustodian banks and clearing agencies. The
C ustodian takes no part in determining the investment policies of a
Fund or in deciding which securities are purchased or sold by a Fund. Each
Fund may, however, invest in obligations of the custodian and may purchase
securities from or sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the
Funds ' Trustees may from time to time have transactions with various
banks, including custodian banks serving as custodians for certain of the
funds advised by FMR. Transactions that have occurred to date included
mortgages and personal and general business loans. In the judgment of FMR,
the terms and conditions of those transactions were not influenced by
existing or potential custodial or other Fund relationships.
AUDITOR. Coopers & Lybrand L.L.P. , One Post Office Square, Boston,
Massachusetts, serves as the Trust's independent accountant. The auditor
examines financial statements for the Funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The Funds' financial statements and financial highlights for the
fiscal year ended September 30, 199 4 are included in the Funds'
Annual Report, which is a separate report supplied with this
Statement of Additional information. The Funds' financial statements
and financial highlights are incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "GILT
EDGE." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned individual
serves as a Board Member (collectively, the "Funds"), hereby severally
constitute and appoint Arthur J. Brown, Arthur C. Delibert, Robert C.
Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A. Xupolos, each
of them singly, my true and lawful attorneys-in-fact, with full power of
substitution, and with full power to each of them, to sign for me and in my
name in the appropriate capacity, all Pre-Effective Amendments to any
Registration Statements of the Funds, any and all subsequent Post-Effective
Amendments to said Registration Statements, any Registration Statements on
Form N-14, and any supplements or other instruments in connection
therewith, and generally to do all such things in my name and behalf in
connection therewith as said attorneys-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact or their substitutes may do or cause to be done
by virtue hereof.
WITNESS my hand on the date set forth below.
_____________________________ October 20, 1993
Ralph F. Cox
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Audited financial statements and financial highlights for the fiscal
year ended September 30, 1994 will be filed by subsequent amendment.
(b) Exhibits:
1. (a) Declaration of Trust of Registrant dated June 20, 1984, is
incorporated herein by reference as Exhibit 1(a) to Post-Effective
Amendment No. 33.
(b) Supplement to Declaration of Trust dated February 1, 1985 is
incorporated herein by reference as Exhibit 1(b) to Post-Effective
Amendment No. 35.
(c) Supplement to Declaration of Trust dated December 20, 1985 is
incorporated herein by reference as Exhibit 1(c) to Post-Effective
Amendment No. 37.
(d) Supplement to Declaration of Trust dated January 16, 1986 is
incorporated herein by reference as Exhibit 1(d) to Post-Effective
Amendment No. 45.
(e) Supplement to Declaration of Trust dated January 1, 1989 is
incorporated herein by reference as Exhibit 1(e) to Post-Effective
Amendment No. 45.
2. Bylaws of Registrant are incorporated herein by reference as Exhibit 2
to Post-Effective Amendment No. 33 to Registration Statement.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract between Registrant, on behalf of Destiny I and
Fidelity Management & Research Company dated November 1, 1993 is
electronically filed herein as Exhibit 5(a).
(b) Management Contract between Registrant, on behalf of Destiny II and
Fidelity Management & Research Company dated November 1, 1993 is
electronically filed herein as Exhibit 5(b).
(c) Sub-Advisory Agreement between Destiny I and FMR U.K. and Fidelity
Management & Research Company dated November 1, 1993 is electronically
filed herein by reference as Exhibit 5(c).
(d) Sub-Advisory Agreement between Destiny II and FMR U.K. and Fidelity
Management & Research Company dated November 1, 1993 is electronically
filed herein by reference as Exhibit 5(d).
(e) Sub-Advisory Agreement between Destiny I and FMR Far East and Fidelity
Management & Research Company dated November 1, 1993 is electronically
filed herein as Exhibit 5(e).
(f) Sub-Advisory Agreement between Destiny II and FMR Far East and Fidelity
Management & Research Company dated November 1, 1993 is electronically
filed herein as Exhibit 5(f).
6. (a) Franchise Agreemet dated August 2, 1984, between Registrant, on
behalf of Destiny I, and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(b ) to Post-Effective Amendment No. 41.
(b) Franchise Agreement dated December 30, 1985, between Registrant, on
behalf of Destiny II, and Fidelity Distributors Corporation, is
incorporated herein by reference to Exhibit 6(c) to Post-Effective
Amendment No. 41.
7. Retirement Plan for non interested person Trustees, directors, or
general partners is incorporated herein by reference to Exhibit 7 Post
Effective Amendment No. 51.
(b) Custodian fee schedule is incorporated herein by reference to
Exhibit 8(b) to Post-Effective Amendment No. 51.
9. (a) Master Service Agreement dated August 2, 1984 between Registrant,
FMR Corp., and Fidelity Service Co., covering transfer agent, pricing and
bookkeeping, and securities lending services, is incorporated herein by
reference to Exhibit 9 to Post-Effective Amendment No. 35.
(b) Schedule B to Pricing and Bookkeeping Agreement for Destiny I
is incorporated herein by reference to Exhibit 9(b) to Post-Effective
Amendment No. 50.
(c) Schedule B to Pricing and Bookkeeping Agreement for Destiny II is
incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 50.
10. Not applicable.
11. Opinion of Coopers & Lybrand will be filed by subsequent amendment as
part of the Financial Statements contained in Exhibit 24(a). Consent of
Coopers & Lybrand will be filed by subsequent investment.
12. Not applicable.
13. Not applicable.
14. (a) Form of Keogh Retirement Plan, as amended and as currently in
effect, was filed as Exhibit 1(a)14 to Post-Effective Amendment No. 27.
(b) Forms of Pension Plan and Trust Agreement and Profit-Sharing Plan and
Trust Agreement, as amended and as currently in effect were filed as
Exhibit 1(b)14 to Post-Effective Amendment No. 27.
(c) Form of Destiny Individual Retirement Account Plan, as amended, is
incorporated herein by reference to Exhibit 14(c) to Post-Effective
Amendment No. 42.
15. Not applicable.
16. (a) Schedule for computation of performance data contained in the
Registration Statement pursuant to Item 22 was filed as Exhibit 16 to
Post-Effective Amendment No. 43.
(b) Schedule for computation of performance data for the Destiny
Plans contained in the Registration Statement pursuant to Item 22 is
incorporated herein by reference to Exhibit 16(b) to Post Effective
Amendment No. 51.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these funds
are substantially identical. Nonetheless, Registrant takes the position
that it is not under common control with these other funds since the power
residing in the respective boards and officers arises as the result of an
official position with the respective funds.
Item 26. Number of Holders of Securities
August 31, 1994
Title of Class Number of Record Holders
Shares of Beneficial Interest
Destiny I 3,607
Destiny II 4,633
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the reasonable
and fair means for determining whether indemnification shall be provided to
any past or present Trustee or officer. It states that the Registrant
shall indemnify any present or past Trustee or officer to the fullest
extent permitted by law against liability and all expenses reasonably
incurred by him in connection with any claim, action, suit or proceeding in
which he is involved by virtue of his service as a trustee, an officer, or
both. Additionally, amounts paid or incurred in settlement of such matters
are covered by this indemnification. Indemnification will not be provided
in certain circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the
duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard Haberman Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephen Jonas Treasurer and Vice President of FMR (1993); Treasurer of
FMR Texas Inc. (1993), Fidelity Management & Research
(U.K.) Inc. (1993), and Fidelity Management & Research
(Far East) Inc. (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. McNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund .
Thomas T. Soviero Vice President of FMR (1993).
Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Leader.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management &
Research Company and Fidelity Management Trust Company. The directors and
officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management & Research
(Far East) Inc.; President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice President of
Fidelity Management & Research (Far East) Inc.; Director of
Worldwide Research of FMR.
Rick Spillane Senior Vice President and Director of Operations and
Compliance of FMR U.K. (1993).
Stephen Jonas Treasurer of FMR U.K. (1993), Fidelity Management &
Research (Far East) Inc. (1993), and FMR Texas Inc. (1993);
Treasurer and Vice President of FMR (1993).
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management & Research
(Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The directors
and officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management &
Research (U.K.) Inc.; Senior Vice President and Trustee
of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East; Senior Vice
President of Fidelity Management & Research (U.K.)
Inc.; Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Stephen Jonas Treasurer of FMR Far East (1993), Fidelity Management
& Research (U.K.) Inc. (1993), and FMR Texas Inc.
(1993); Treasurer and Vice President of FMR (1993).
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management &
Research (U.K.) Inc.; Secretary of FMR Texas Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the funds' custodian: The
Chase Manhattan Bank, 1211 Avenue of the Americas, New York, N.Y.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The Registrant on behalf of Destiny I and Destiny II undertakes, provided
the information required by Item 5A is contained in the annual report, to
furnish each person to whom a prospectus has been delivered, upon their
request and without charge, a copy of the Registrant's latest report to
shareholders.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned individual
serves as President and Board Member (collectively, the "Funds"), hereby
severally constitute and appoint J. Gary Burkhead, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
sign for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorney-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby ratify
and confirm all that said attorneys-in-fact or their substitutes may do or
cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 57 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and Commonwealth of Massachusetts, on the 16th day of September
1994.
FIDELITY DESTINY PORTFOLIOS
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee September 16, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer September 16, 1994
Gary L. French
/s/J. Gary Burkhead Trustee September 16, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee September 16, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee September 16, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee September 16, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee September 16, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee September 16, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee September 16, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee September 16, 1994
Edward H. Malone
/s/Marvin L. Mann * Trustee September 16, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee September 16, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee September 16, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signatures affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 57 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and Commonwealth of Massachusetts, on the ___ day of September
1994.
FIDELITY DESTINY PORTFOLIOS
By ______________________________(dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
_______________________________(dagger) President and Trustee September ,
1994
Edward C. Johnson 3d (Principal Executive Officer)
_______________________________ Treasurer September ,
1994
Gary L. French
_______________________________ Trustee September ,
1994
J. Gary Burkhead
_______________________________* Trustee September ,
1994
Ralph F. Cox
_______________________________* Trustee September ,
1994
Phyllis Burke Davis
_______________________________* Trustee September ,
1994
Richard J. Flynn
_______________________________* Trustee September ,
1994
E. Bradley Jones
_______________________________* Trustee September ,
1994
Donald J. Kirk
_______________________________* Trustee September ,
1994
Edward H. Malone
_______________________________* Trustee September ,
1994
Marvin L. Mann
_______________________________* Trustee September ,
1994
Gerald C. McDonough
_______________________________* Trustee September ,
1994
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by pursuant to a
power of attorney dated October 20, 1993, and filed herewith.
* Signatures affixed by pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
MANAGEMENT CONTRACT
between
FIDELITY DESTINY PORTFOLIOS:
DESTINY I
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
Modification made this 1st day of November, 1993 by and between Fidelity
Destiny Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund") on behalf of Destiny I (hereinafter called the "Portfolio"), and
Fidelity Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees have been
obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated,
modified January 1, 1989, to a modification of said Contract in the manner
set forth below. The Modified Management Contract shall, when executed by
duly authorized officers of the Fund and the Adviser, take effect on the
later of November 1, 1993 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio, and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to; (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best
efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable
in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Adviser and its
affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that Trustees, officers and shareholders of the Fund
are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are
or may be or become similarly interested in the Fund, and that the Adviser
may be or become interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable as soon as practicable after the last day
of each month, composed of a Basic Fee and a Performance Adjustment to the
Basic Fee based upon the investment performance of the Portfolio in
relation to the Standard & Poor's Daily Stock Price Index of 500 Common
Stocks (the "Index"). The Basic Fee and the Performance Adjustment will be
compared as follows:
(a) Basic Fee Rate. The Annual Basic Fee rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the nearest
millionth decimal point as follows:
(i) Group Fee Rate. The group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
group fee rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Annualized
Net Fee Rate
Assets (For each level)
$ 0 - 3 billion .52 %
3 - 6 .49
6 - 9 .46
9 - 12 .43
12 - 15 .40
15 - 18 .385
18 - 21 .37
21 - 24 .36
24 - 30 .35
30 - 36 .345
36 - 42 .34
42 - 48 .335
48 - 66 .325
66 - 84 .32
84 - 102 .315
102 - 138 .310
138 - 174 .305
Over 174 .300
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.17%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to the
average of the net assets of the Portfolio (computed in the manner set
forth in the Fund's Declaration of Trust) determined as of the close of
business on each business day throughout the month. The resulting dollar
amount comprises the Basic Fee. The Basic Fee will be subject to upward
and downward adjustment on the basis of the Portfolio's investment
performance as follows:
(c) Performance Adjustment. An adjustment to the monthly basic fee will
be made by applying a performance adjustment rate to the average net assets
of the Portfolio over the performance period. The resulting dollar figure
will be added to or subtracted from the basic fee depending on whether the
Portfolio experienced better or worse performance than the performance
Index. The amount of the basic fee payable to the Adviser by the Portfolio
will be increased by an amount determined by (i) computing an annual rate
of 0.02% for each percentage point, rounded to the nearer point, that the
Portfolio's investment performance for the performance period ending on the
last day of such month exceeds the record of the Index, for such
performance period, and (ii) multiplying 1/12 of this rate by the average
net assets for the performance period, with the maximum such increase in
fee being at the annual rate of 0.24% of the average net assets up to and
including $100,000,000 and at the annual rate of 0.2% of the average net
assets in excess of $100,000,000.
The amount of the basic fee payable to the Adviser by the Portfolio will
be reduced by an amount determined by (i) computing an annual rate of 0.02%
for each percentage point, rounded to the nearer point, that the record of
the Index for said performance period exceeds the investment performance of
the Portfolio, and (ii) multiplying 1/12 of this rate by the average net
assets for the performance period, with the maximum such reduction in fee
being at the annual rate of .24% of the average net assets up to and
including $100,000,000 and at the annual rate of 0.2% of the average net
assets in excess of $100,000,000.
The performance period will be a 12-month rolling period through July 31,
1985, consisting of the current month and the preceding 11 months.
Commencing with the month of August, 1985, the 12-month period will be
extended by adding each new month to the period until the period covers 36
months. Thereafter, as each new month is added, the oldest month will be
dropped producing a 36-month rolling performance period.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first
business day of the performance period with (ii) the closing net asset
value of one share of the Portfolio as of the last business day of such
period. In computing the investment performance of the Portfolio and the
investment record of the Index, distributions of realized capital gains,
the value of capital gains taxes per share paid or payable on undistributed
realized long-term capital gains accumulated to the end of such period and
dividends paid out of investment income on the part of the Portfolio, and
all cash distributions of the companies whose stocks comprise the Index,
will be treated as reinvested in accordance with Rule 205-1 or any other
applicable rules under the Investment Advisers Act of 1940, as the same
from time to time may be amended. The basic fee and the upward or downward
adjustment of the fee for investment performance will be accrued throughout
the month for the purpose of determining the net asset value of the shares
of the fund.
The adjustment of the Basic Fee will not be cumulative. An increased fee
will result even though the performance of the Portfolio over some period
of time shorter than the performance period has been behind that of the
Index, and, conversely, a reduction in fee will be made for that month even
though the performance of the Portfolio over some period of time shorter
than the performance period has been ahead of that of the Index.
(d) One-twelfth of the annual performance adjustment rate shall be applied
to the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust) determined as of the close of
business on each business day through the month and the performance period.
The resulting dollar amount is added to or deducted from the basic fee.
(e) In the case of termination of the Contract during any month, the fee
will be reduced proportionately on the basis of the number of business days
during which it is in effect for that month. The Basic Fee Rate will be
computed upon the average net assets for the performance period ending on
the last business day on which this Contract is in effect. The amount of
this performance adjustment to the Basic Fee will be computed on the basis
of and applied to net assets averaged over the 36-month period ending on
the last business day on which this Contract is in effect.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses relating to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitation therefor; (ix) a pro rata share,
based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not deemed exclusive,
the Adviser being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner,
with the Adviser's ability to meet all of its obligations with respect to
rendering services to the Portfolio hereunder. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser
shall not be subject to liability to the Portfolio or to any shareholder of
the Portfolio for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. The Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligation from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY DESTINY PORTFOLIOS:
on behalf of Destiny I
By /s/J. Gary Burkhead___________________
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Gary Burkhead___________________
President
LG931950008
MANAGEMENT CONTRACT
between
FIDELITY DESTINY PORTFOLIOS:
DESTINY II
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
Modification made this 1st day of November, 1993, by and between Fidelity
Destiny Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny II (hereinafter called the "Portfolio"), and
Fidelity Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees have been
obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
January 1, 1989, to a modification of said Contract in the manner set forth
below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser take effect on the later of
November 1, 1993 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio, and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best
efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable
in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Adviser and its
affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that Trustees, officers and shareholders of the Fund
are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are
or may be or become similarly interested in the Fund, and that the Adviser
may be or become interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable as soon as practicable after the last day
of each month, composed of a Basic Fee and a Performance Adjustment to the
Basic Fee based upon the investment performance of the Portfolio in
relation to the Standard & Poor's Daily Stock Price Index of 500 Common
Stocks (the "Index"). The Basic Fee and the Performance Adjustment will be
compared as follows:
(a) Basic Fee Rate. The Annual Basic Fee rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the nearest
millionth decimal point as follows:
(i) Group Fee Rate. The group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
group fee rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Annualized Fee Rate
Assets (For each level)
$ 0 - 3 billion .52 %
3 - 6 .49
6 - 9 .46
9 - 12 .43
12 - 15 .40
15 - 18 .385
18 - 21 .37
21 - 24 .36
24 - 30 .35
30 - 36 .345
36 - 42 .34
42 - 48 .335
48 - 66 .325
66 - 84 .32
84 - 102 .315
102 - 138 .310
138 - 174 .305
Over 174 .300
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to the
average of the net assets of the Portfolio (computed in the manner set
forth in the Fund's Declaration) determined as of the close of business on
each business day throughout the month. The resulting dollar amount
comprises the Basic Fee. The Basic Fee will be subject to upward and
downward adjustment on the basis of the Portfolio's investment performance
as follows:
(c) Performance Adjustment. An adjustment to the monthly basic fee will
be made by applying a performance adjustment rate to the average net assets
of the Portfolio over the performance period. The resulting dollar figure
will be added to or subtracted from the basic fee depending on whether the
Portfolio experienced better or worse performance than the performance
Index. The amount of the basic fee payable to the Adviser by the Portfolio
will be increased by an amount determined by (i) computing an annual rate
of 0.02% for each percentage point, rounded to the nearer point, that the
Portfolio's investment performance for the performance period ending on the
last day of such month exceeds the record of the Index, for such
performance period, and (ii) multiplying 1/12 of this rate by the average
net assets for the performance period, with the maximum such increase in
fee being at the annual rate of 0.24% of the average net assets up to and
including $100,000,000 and at the annual rate of 0.2% of the average net
assets in excess of $100,000,000.
The amount of the basic fee payable to the Adviser by the Portfolio will
be reduced by an amount determined by (i) computing an annual rate of 0.02%
for each percentage point, rounded to the nearer point, that the record of
the Index for said performance period exceeds the investment performance of
the Portfolio, and (ii) multiplying 1/12 of this rate by the average net
assets for the performance period, with the maximum such reduction in fee
being at the annual rate of .24% of the average net assets up to and
including $100,000,000 and at the annual rate of 0.2% of the average net
assets in excess of $100,000,000.
The performance period will be a 12-month rolling period through December,
1986, consisting of the current month and the preceding 11 months.
Commencing with the month of January, 1987, the 12-month period will be
extended by adding each new month to the period until the period covers 36
months. Thereafter, as each new month is added, the oldest month will be
dropped, producing a 36-month rolling performance period.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first
business day of the performance period with (ii) the closing net asset
value of one share of the Portfolio as of the last business day of such
performance period. In computing the investment performance of the
Portfolio and the investment record of the Index, distributions of realized
capital gains, the value of capital gains taxes per share paid or payable
on undistributed realized long-term capital gains accumulated to the end of
such period and dividends paid out of investment income on the part of the
Portfolio, and all cash distributions of the companies whose stocks
comprise the Index, will be treated as reinvested in accordance with Rule
205-1 or any other applicable rules under the Investment Advisers Act of
1940, as the same from time to time may be amended. The basic fee and the
upward or downward adjustment of the fee for investment performance will be
accrued throughout the month for the purpose of determining the net asset
value of the shares of the fund.
The adjustment of the Basic Fee will not be cumulative. An increased fee
will result even though the performance of the Portfolio over some period
of time shorter than the performance period has been behind that of the
Index, and, conversely, a reduction in fee will be made for that month even
though the performance of the Portfolio over some period of time shorter
than the performance period has been ahead of that of the Index.
(d) One-twelfth of the annual performance adjustment rate shall be applied
to the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust) determined as the of the
close of business day throughout the month and the performance period. The
resulting dollar amount is added to or deducted from the basic fee.
(e) In the case of termination of the Contract during any month, the fee
will be reduced proportionately on the basis of the number of business days
during which it is in effect for that month. The Basic Fee Rate will be
computed upon the average net assets for the performance period ending on
the last business day on which this Contract is in effect. The amount of
this performance adjustment to the Basic Fee will be computed on the basis
of and applied to net assets averaged over the 36-month period ending on
the last business day on which this Contract is in effect.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation: (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses relating to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitation therefor; (ix) a pro rata share,
based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not deemed exclusive,
the Adviser being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner,
with the Adviser's ability to meet all of its obligations with respect to
rendering services to the Portfolio hereunder. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser
shall not be subject to liability to the Portfolio or to any shareholder of
the Portfolio for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. The Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligation from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts.
The terms "vote of a majority of the outstanding voting securities",
"assignment", and "interested persons", when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY DESTINY PORTFOLIOS:
on behalf of Destiny II
By /s/J. Gary Burkhead ______________
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Gary Burkhead _________________
President
LG931950005
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY II
AGREEMENT made this 1st day of November, 1993, by and between Fidelity
Management & Research (U.K.) Inc., a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Sub-Adviser") and Fidelity Management & Research
Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
Destiny Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny II (hereinafter called the "Portfolio"),
pursuant to which the Adviser is to act as investment adviser to the
Portfolio, and
WHEREAS the Sub-Adviser has personnel in Western Europe and was formed for
the purpose of researching and compiling information and recommendations
with respect to the economies of various countries and issuers located
outside of North America, principally in Western Europe.
NOW THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. The Sub-Adviser shall act as an investment consultant to the Adviser
and shall furnish the Adviser factual information, research reports and
investment recommendations relating to non-U.S. issuers of securities
located in, and the economies of, various countries outside the U.S., all
as the Adviser may reasonably require. Such information shall include
written and oral reports and analyses.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to pay
the Sub-Adviser a monthly fee equal to 110% of the Sub-Adviser's costs
incurred in connection with the agreement, said costs to be determined in
relation to the assets of the Portfolio that benefits from the services of
the sub-adviser.
3. It is understood that Trustees, officers and shareholders of the Fund
are or may be or become interested in the Adviser and the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser and the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. The Sub-Adviser shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The Sub-Adviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject to liability to the
Adviser, the Fund or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until July 31,
1994 and indefinitely thereafter, but only so long as the continuance after
such period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Fund
and agrees that any obligations of the Fund or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Adviser seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
By: /s/J. Charles F. Dornbush
Treasurer of FMR UK
FIDELITY MANAGEMENT & RESEARCH CO.
By: /s/J. Gary Burkhead
President of FMR
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY II
By:/s/J. Gary Burkhead
Senior Vice President of the Fund
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY II
AGREEMENT made this 1st day of November, 1993, by and between Fidelity
Management & Research (Far East) Inc., a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Sub-Adviser") and Fidelity Management & Research
Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
Destiny Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny II (hereinafter called the "Portfolio"),
pursuant to which the Adviser is to act as investment adviser to the
Portfolio, and
WHEREAS the Sub-Adviser has personnel in Asia and the Pacific Basin and
was formed for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries and
issuers located outside of North America, principally in Asia and the
Pacific Basin.
NOW THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. The Sub-Adviser shall act as an investment consultant to the Adviser
and shall furnish the Adviser factual information, research reports and
investment recommendations relating to non-U.S. issuers of securities
located in, and the economies of, various countries outside the U.S., all
as the Adviser may reasonably require. Such information shall include
written and oral reports and analyses.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to pay
the Sub-Adviser a monthly fee equal to 105% of the Sub-Adviser's costs
incurred in connection with the agreement, said costs to be determined in
relation to the assets of the Portfolio that benefits from the services of
the sub-adviser.
3. It is understood that Trustees, officers and shareholders of the Fund
are or may be or become interested in the Adviser and the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser and the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. The Sub-Adviser shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The Sub-Adviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject to liability to the
Adviser, the Fund or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until July 31,
1994 and indefinitely thereafter, but only so long as the continuance after
such period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Fund
and agrees that any obligations of the Fund or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Adviser seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
By: /s/J. Charles F. Dornbush
Treasurer of FMR UK
FIDELITY MANAGEMENT & RESEARCH CO.
By: /s/J. Gary Burkhead
President of FMR
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY II
By:/s/J. Gary Burkhead
Senior Vice President of the Fund
FORM OF:
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY I
AGREEMENT made this 1st day of November, 1993, by and between Fidelity
Management & Research (Far East) Inc., a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Sub-Adviser") and Fidelity Management & Research
Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
Destiny Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny I (hereinafter called the "Portfolio"),
pursuant to which the Adviser is to act as investment adviser to the
Portfolio, and
WHEREAS the Sub-Adviser has personnel in Asia and the Pacific Basin and
was formed for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries and
issuers located outside of North America, principally in Asia and the
Pacific Basin.
NOW THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. The Sub-Adviser shall act as an investment consultant to the Adviser
and shall furnish the Adviser factual information, research reports and
investment recommendations relating to non-U.S. issuers of securities
located in, and the economies of, various countries outside the U.S., all
as the Adviser may reasonably require. Such information shall include
written and oral reports and analyses.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to pay
the Sub-Adviser a monthly fee equal to 105% of the Sub-Adviser's costs
incurred in connection with the agreement, said costs to be determined in
relation to the assets of the Portfolio that benefits from the services of
the sub-adviser.
3. It is understood that Trustees, officers and shareholders of the Fund
are or may be or become interested in the Adviser and the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser and the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. The Sub-Adviser shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The Sub-Adviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject to liability to the
Adviser, the Fund or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until July 31,
1994 and indefinitely thereafter, but only so long as the continuance after
such period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Fund
and agrees that any obligations of the Fund or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Adviser seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
By: /s/J. Charles F. Dornbush
Treasurer of FMR Far East
FIDELITY MANAGEMENT & RESEARCH CO.
By: /s/J. Gary Burkhead
President of FMR
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY II
By:/s/J. Gary Burkhead
Senior Vice President of the Fund
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY I
AGREEMENT made this 1st day of November, 1993, by and between Fidelity
Management & Research (Far East) Inc., a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Sub-Adviser") and Fidelity Management & Research
Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
Destiny Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny I (hereinafter called the "Portfolio"),
pursuant to which the Adviser is to act as investment adviser to the
Portfolio, and
WHEREAS the Sub-Adviser has personnel in Asia and the Pacific Basin and
was formed for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries and
issuers located outside of North America, principally in Asia and the
Pacific Basin.
NOW THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. The Sub-Adviser shall act as an investment consultant to the Adviser
and shall furnish the Adviser factual information, research reports and
investment recommendations relating to non-U.S. issuers of securities
located in, and the economies of, various countries outside the U.S., all
as the Adviser may reasonably require. Such information shall include
written and oral reports and analyses.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to pay
the Sub-Adviser a monthly fee equal to 105% of the Sub-Adviser's costs
incurred in connection with the agreement, said costs to be determined in
relation to the assets of the Portfolio that benefits from the services of
the sub-adviser.
3. It is understood that Trustees, officers and shareholders of the Fund
are or may be or become interested in the Adviser and the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser and the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. The Sub-Adviser shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The Sub-Adviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject to liability to the
Adviser, the Fund or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until July 31,
1994 and indefinitely thereafter, but only so long as the continuance after
such period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Fund
and agrees that any obligations of the Fund or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Adviser seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
By: /s/J. Charles F. Dornbush
Treasurer of FMR Far East
FIDELITY MANAGEMENT & RESEARCH CO.
By: /s/J. Gary Burkhead
President of FMR
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF DESTINY II
By:/s/J. Gary Burkhead
Senior Vice President of the Fund
