FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
Semiannual Report
March 31, 1994
Printed on recycled paper
FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. (FMR U.K.)
London, England
Fidelity Management & Research
(Far East) Inc. (FMR Far East)
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
George A. Vanderheiden, VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTION AGENT
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
I.BD-DESSA-594
AN INTERVIEW WITH
GEORGE A. VANDERHEIDEN,
PORTFOLIO MANAGER OF
FIDELITY DESTINY PORTFOLIOS
Q. GEORGE, HOW DID THE FUNDS PERFORM?
A. Despite the sharp downturn in the market at the end of the period, both
funds finished ahead of most of their peers. For the six months ended March
31, 1994, Destiny I had a total return of 6.46% and Destiny II, 7.03%. Both
beat the average growth fund tracked by Lipper Analytical Services, which
returned -2.33% during the same period. Over the past year, Destiny I
returned 16.26% and Destiny II returned 17.22%. The average growth fund
returned 3.79% for the year.
Q. WHAT HELPED THE FUNDS BEAT THE AVERAGE?
A. Broadly speaking, earnings-driven stocks - those companies with
currently fast-growing earnings - boosted the performance of both funds
over the past six months. Stocks such as Compaq, General Motors, Chrysler
and Caterpillar were up 50% or more. However, some value stocks - those
that have relatively low prices compared to other measures such as earnings
- - - - - - also did very well. For example, Hospital Corporation of America - a top
10 investment in both funds - was acquired by Columbia Healthcare, and its
stock price doubled in the past six months.
Q. DID YOU MAKE ANY MAJOR SHIFTS IN YOUR STRATEGY DURING THE PERIOD?
A. As the market rose and investor optimism increased, I built up the
fund's investments in defensive sectors. These sectors are groups of stocks
that I felt would be less vulnerable in a market downturn than most others,
largely because the prices of many of these stocks had already fallen
before I bought them. In addition, the earnings of these defensive
companies tend to be more stable than those of cyclical companies - those
whose stock prices rose in step with the strengthening economy. Examples of
defensive stocks included electric and telephone utilities, tobacco, food
and health-care companies.
Q. AT ABOUT 20% OF EACH, FINANCIAL STOCKS WERE BOTH FUNDS' LARGEST SECTOR
INVESTMENT ON MARCH 31. WHERE DID YOU FIND OPPORTUNITIES?
A. The top investment of both funds - the Federal National Mortgage
Association or Fannie Mae - continued to show solid earnings growth. And
the stock's valuation remains attractive going forward. In addition, I
increased the fund's stake in regional banks over the past six months. As
the economy improves, I believe loan quality will get better and loan
volume will begin to accelerate. The regional banks I've added to the funds
include Shawmut National, Bank of Boston, First Union and NationsBank.
Q. YOU'VE INCREASED BOTH FUNDS' STAKES IN TECHNOLOGY STOCKS OVER THE PAST
SIX MONTHS. WHY?
A. Many of the technology companies have been among the market's fastest
earnings growers over the past year. U.S. businesses have increasingly
turned to technology to improve their productivity. In addition, many
technologies have become affordable to the public, and consumers have
embraced new products and services. These trends have helped companies in
the computer, communications and semiconductor industries.
Q. PHILIP MORRIS IS A NEW NAME IN THE TOP 10 OF BOTH FUNDS. WHAT MADE THE
STOCK ATTRACTIVE?
A. The stock collapsed last year when Philip Morris cut the price of its
premium cigarette brands. Back then, many people thought the industry was
in for a long, ruinous price war. Instead, the price war appears
short-lived, and prices have actually gone up recently. The company's
earnings are growing again - mostly from international tobacco and food
businesses - and future earnings estimates look attractive.
Q. DESPITE THE RECENT MARKET SLIDE, MANY SAY VALUATIONS STILL APPEAR HIGH.
WHAT'S YOUR VIEW?
A. I believe the market is not as overvalued as it appears, because
earnings are growing so rapidly. That's not to say that corrections of 10
to 15% won't occur - historically, they are fairly common and can happen
any time. However, they should be of little concern to longer-term
investors. Above all, it's important to remember that it's still a market
of stocks rather than a stock market. So while it's interesting to
speculate on where the stock market might be heading, it's much more useful
to focus on which stocks to own.
PERFORMANCE UPDATE - DESTINY I
$10,000 OVER 10 YEARS
Destiny I (006)S&P 500
03/31/84 10000.00 10000.00
04/30/84 10072.06 10095.00
05/31/84 9439.56 9535.74
06/30/84 9703.77 9742.66
07/31/84 9599.99 9621.85
08/31/84 10769.77 10685.07
09/30/84 10653.76 10687.21
10/31/84 10760.11 10728.89
11/30/84 10740.77 10608.72
12/31/84 11059.80 10888.79
01/31/85 12016.90 11737.03
02/28/85 11862.22 11881.39
03/31/85 11746.21 11889.71
04/30/85 11572.19 11879.01
05/31/85 12142.58 12565.62
06/30/85 12384.27 12762.90
07/31/85 12548.62 12743.75
08/31/85 12384.27 12635.43
09/30/85 11931.32 12239.94
10/31/85 12516.84 12805.43
11/30/85 13544.26 13683.88
12/31/85 14273.40 14346.18
01/31/86 14626.92 14426.52
02/28/86 16096.24 15505.62
03/31/86 17156.80 16370.84
04/30/86 17101.56 16185.85
05/31/86 17609.75 17046.93
06/30/86 17720.22 17335.03
07/31/86 16427.66 16366.00
08/31/86 17554.09 17580.35
09/30/86 16192.25 16126.46
10/31/86 16982.12 17056.96
11/30/86 17254.49 17471.44
12/31/86 16927.65 17025.92
01/31/87 19174.68 19319.31
02/28/87 20454.81 20082.42
03/31/87 20686.32 20662.80
04/30/87 20672.70 20478.91
05/31/87 20822.50 20657.07
06/30/87 21694.08 21700.25
07/31/87 23001.44 22800.46
08/31/87 24222.49 23650.91
09/30/87 23649.17 23132.96
10/31/87 17645.31 18150.12
11/30/87 16132.40 16654.55
12/31/87 17925.82 17921.96
01/31/88 18578.92 18676.48
02/29/88 19885.12 19546.80
03/31/88 19421.07 18942.80
04/30/88 19850.74 19153.07
05/31/88 19936.68 19319.70
06/30/88 21380.37 20206.47
07/31/88 21174.13 20129.69
08/31/88 20267.57 19445.28
09/30/88 21062.72 20273.65
10/31/88 21345.44 20837.26
11/30/88 20850.68 20539.28
12/31/88 21417.02 20898.72
01/31/89 23231.72 22428.51
02/28/89 22710.67 21870.04
03/31/89 23231.72 22379.61
04/30/89 24291.79 23541.11
05/31/89 25783.08 24494.53
06/30/89 25208.12 24354.91
07/31/89 26897.05 26554.16
08/31/89 27625.19 27074.62
09/30/89 27850.24 26963.61
10/31/89 26912.52 26338.06
11/30/89 27043.80 26875.35
12/31/89 26887.15 27520.36
01/31/90 25278.69 25673.74
02/28/90 25814.84 26004.94
03/31/90 26370.85 26694.07
04/30/90 25516.98 26026.71
05/31/90 28336.75 28564.32
06/30/90 28277.18 28370.08
07/31/90 27482.88 28279.30
08/31/90 24668.55 25722.85
09/30/90 23005.97 24470.15
10/31/90 22839.71 24364.92
11/30/90 24793.25 25938.90
12/31/90 26040.18 26662.59
01/31/91 28845.79 27825.08
02/28/91 30840.89 29814.58
03/31/91 31568.27 30536.09
04/30/91 31963.13 30609.38
05/31/91 33875.10 31931.70
06/30/91 31651.40 30469.23
07/31/91 33750.41 31889.10
08/31/91 34895.46 32644.87
09/30/91 34306.97 32099.70
10/31/91 34154.39 32529.83
11/30/91 32061.97 31218.88
12/31/91 36175.29 34790.32
01/31/92 36566.25 34143.22
02/29/92 37900.11 34587.08
03/31/92 37049.20 33912.63
04/30/92 38383.06 34909.67
05/31/92 38705.03 35080.72
06/30/92 38038.10 34558.02
07/31/92 39578.94 35971.44
08/31/92 38529.62 35234.03
09/30/92 38917.76 35649.79
10/31/92 38684.87 35774.57
11/30/92 40547.96 36994.48
12/31/92 41656.67 37449.51
01/31/93 42943.04 37764.09
02/28/93 43079.89 38277.68
03/31/93 45214.73 39085.34
04/30/93 45488.42 38139.47
05/31/93 46774.80 39161.61
06/30/93 47130.61 39275.18
07/31/93 47732.74 39118.08
08/31/93 49377.16 40600.65
09/30/93 49377.16 40288.03
10/31/93 51192.92 41121.99
11/30/93 50870.77 40731.33
12/31/93 52661.96 41224.18
01/31/94 56014.03 42625.80
02/28/94 55168.19 41466.38
03/31/94 52567.98 39658.45
$10,000 OVER 10 YEARS: LET'S SAY YOU INVESTED $10,000 IN DESTINY I FUND ON
MARCH 31, 1984. BY MARCH 31, 1994, THE VALUE OF YOUR INVESTMENT WOULD HAVE
GROWN TO $52,568 - A 425.68% INCREASE ON YOUR INITIAL INVESTMENT. FOR
COMPARISON LOOK AT HOW A $10,000 INVESTMENT IN THE S&P 500 (WITH
DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO
$39,663 - A 296.63% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1994
Six One Five Ten
Month Year Years Years
s
DESTINY I FUND
16.26 126.28 425.68
6.46% % % %
S&P 500(Registered trademark) -1.55 1.47 77.23 296.63
% % % %
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1994
One Year Five Ten
Years Years
DESTINY I 16.26% 17.74% 18.05%
FUND
$50/MONTH
15-YEAR PLAN -44.43% 13.49% 16.51%
THE CHARTS ABOVE SHOW DESTINY I FUND'S TOTAL RETURNS WHICH INCLUDE CHANGES
IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE FUND'S
CUMULATIVE TOTAL RETURNS AND AVERAGE ANNUAL TOTAL RETURNS DO NOT INCLUDE
THE EFFECTS OF THE SEPARATE SALES CHARGES AND CUSTODIAN FEES ASSESSED
THROUGH FIDELITY SYSTEMATIC INVESTMENT PLANS (THE PLANS); AVERAGE ANNUAL
TOTAL RETURNS FOR A $50/MONTH 15-YEAR PLAN INCLUDE THE EFFECTS OF THE
SEPARATE SALES CHARGES AND CUSTODIAN FEES ASSESSED THROUGH DESTINY I'S
$50/MONTH 15-YEAR PLAN. AS SHARES OF THE FUNDS MAY BE ACQUIRED ONLY THROUGH
THE PLANS, INVESTORS SHOULD CONSULT THE PLANS' PROSPECTUS FOR MORE COMPLETE
INFORMATION ON THE IMPACT OF THE SEPARATE CHARGES AND FEES APPLICABLE TO
EACH PLAN. THE RATE (%) OF DEDUCTIONS DECREASES PROPORTIONATELY AS PLAN
SIZES INCREASE. FIGURES FOR THE S&P 500, AN UNMANAGED INDEX OF COMMON
STOCK PRICES, INCLUDE REINVESTMENT OF DIVIDENDS. THE S&P 500 FIGURE FOR
ONE YEAR IS PUBLISHED BY S&P. THE S&P 500 IS A REGISTERED TRADEMARK
OF STANDARD & POOR'S CORPORATION.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
PERFORMANCE UPDATE - DESTINY II
$10,000 OVER LIFE OF FUND
Destiny II Standard & Poor
12/30/85 10000.00 10000.00
12/31/85 10130.00 10081.75
01/31/86 11240.00 10138.21
02/28/86 12320.00 10896.55
03/31/86 14600.00 11504.57
04/30/86 15280.00 11374.57
05/31/86 16140.00 11979.70
06/30/86 16530.00 12182.15
07/31/86 15620.00 11501.17
08/31/86 16003.10 12354.56
09/30/86 15065.34 11332.84
10/31/86 15972.53 11986.74
11/30/86 16288.51 12278.02
12/31/86 16237.54 11964.93
01/31/87 18215.00 13576.61
02/28/87 20141.49 14112.88
03/31/87 20335.15 14520.74
04/30/87 20365.73 14391.51
05/31/87 20508.44 14516.72
06/30/87 21385.04 15249.81
07/31/87 22628.59 16022.98
08/31/87 23791.87 16620.63
09/30/87 23126.67 16256.64
10/31/87 16884.91 12754.96
11/30/87 15499.08 11703.95
12/31/87 17383.76 12594.62
01/31/88 17898.14 13124.86
02/29/88 19476.36 13736.47
03/31/88 19359.45 13312.02
04/30/88 19862.14 13459.78
05/31/88 19663.40 13576.88
06/30/88 21335.14 14200.06
07/31/88 21218.24 14146.10
08/31/88 20470.05 13665.13
09/30/88 21300.07 14247.27
10/31/88 21346.83 14643.34
11/30/88 20680.48 14433.94
12/31/88 21350.63 14686.53
01/31/89 23136.89 15761.59
02/28/89 22678.25 15369.13
03/31/89 22967.92 15727.23
04/30/89 24295.54 16543.47
05/31/89 25828.34 17213.48
06/30/89 24911.08 17115.36
07/31/89 26407.67 18660.88
08/31/89 27251.47 19026.63
09/30/89 27404.57 18948.62
10/31/89 26511.50 18509.02
11/30/89 26766.66 18886.60
12/31/89 26990.12 19339.88
01/31/90 25234.88 18042.17
02/28/90 25707.45 18274.92
03/31/90 26342.03 18759.20
04/30/90 25531.92 18290.22
05/31/90 28448.31 20073.52
06/30/90 28502.32 19937.02
07/31/90 27489.69 19873.22
08/31/90 24515.38 18076.68
09/30/90 22685.67 17196.35
10/31/90 22520.59 17122.40
11/30/90 24831.80 18228.51
12/31/90 26309.30 18737.08
01/31/91 29263.38 19554.02
02/28/91 31551.75 20952.13
03/31/91 32550.31 21459.18
04/30/91 33188.28 21510.68
05/31/91 35074.45 22439.94
06/30/91 32591.92 21412.19
07/31/91 34880.28 22410.00
08/31/91 36250.87 22941.12
09/30/91 35631.85 22558.00
10/31/91 35480.86 22860.28
11/30/91 33185.93 21939.01
12/31/91 37207.74 24448.83
01/31/92 37924.50 23994.08
02/29/92 39517.29 24306.00
03/31/92 38306.77 23832.04
04/30/92 39596.93 24532.70
05/31/92 40202.20 24652.91
06/30/92 39310.23 24285.58
07/31/92 40887.10 25278.86
08/31/92 39700.86 24760.64
09/30/92 39823.40 25052.82
10/31/92 39805.89 25140.50
11/30/92 41801.44 25997.80
12/31/92 42968.77 26317.57
01/31/93 44452.35 26538.64
02/28/93 44562.24 26899.56
03/31/93 46430.45 27467.14
04/30/93 46430.45 26802.44
05/31/93 48042.24 27520.74
06/30/93 48463.50 27600.55
07/31/93 48921.39 27490.15
08/31/93 50717.94 28532.03
09/30/93 50851.36 28312.33
10/31/93 52757.33 28898.40
11/30/93 52547.68 28623.86
12/31/93 54487.06 28970.21
01/31/94 57918.85 29955.20
02/28/94 57216.43 29140.42
03/31/94 54406.79 27869.89
$10,000 OVER LIFE OF FUND: LET'S SAY YOU INVESTED $10,000 IN DESTINY II
FUND ON DECEMBER 30, 1985, WHEN THE FUND STARTED. BY MARCH 31, 1994, THE
VALUE OF YOUR INVESTMENT WOULD HAVE GROWN TO $54,427 - A 444.27% INCREASE
ON YOUR INITIAL INVESTMENT. FOR COMPARISON LOOK AT HOW A $10,000 INVESTMENT
IN THE S&P 500 (WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT
WOULD HAVE GROWN TO $27,873 - A 178.73% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1994
Six One Five Life of
Month Year Years Fund*
s
DESTINY II FUND
17.22 136.97 444.27
7.03% % % %
S&P 500(Registered trademark) -1.55 1.47 77.23 178.73
% % % %
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1994
Life of
One Year Five Fund/Pla
Years n*
DESTINY II 17.22% 18.83% 22.77%
FUND
$50/MONTH
15-YEAR PLAN -43.97% 14.55% 20.68%
THE CHARTS ABOVE SHOW DESTINY II FUND'S TOTAL RETURNS WHICH INCLUDE CHANGES
IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE FUND'S
CUMULATIVE TOTAL RETURNS AND AVERAGE ANNUAL TOTAL RETURNS DO NOT INCLUDE
THE EFFECTS OF THE SEPARATE SALES CHARGES AND CUSTODIAN FEES ASSESSED
THROUGH FIDELITY SYSTEMATIC INVESTMENT PLANS (THE PLANS); AVERAGE ANNUAL
TOTAL RETURNS FOR A $50/MONTH 15-YEAR PLAN INCLUDE THE EFFECTS OF THE
SEPARATE SALES CHARGES AND CUSTODIAN FEES ASSESSED THROUGH DESTINY II'S
$50/MONTH 15-YEAR PLAN. AS SHARES OF THE FUNDS MAY BE ACQUIRED ONLY THROUGH
THE PLANS, INVESTORS SHOULD CONSULT THE PLANS' PROSPECTUS FOR MORE COMPLETE
INFORMATION ON THE IMPACT OF THE SEPARATE CHARGES AND FEES APPLICABLE TO
EACH PLAN. THE RATE (%) OF DEDUCTIONS DECREASES PROPORTIONATELY AS PLAN
SIZES INCREASE. FIGURES FOR THE S&P 500, AN UNMANAGED INDEX OF COMMON
STOCK PRICES, INCLUDE REINVESTMENT OF DIVIDENDS. THE S&P 500 FIGURE FOR
ONE YEAR IS PUBLISHED BY S&P. S&P 500 IS A REGISTERED TRADEMARK OF
STANDARD & POOR'S CORPORATION.
* THE LIFE OF FUND AND LIFE OF PLAN FIGURES ARE FROM COMMENCEMENT OF
OPERATIONS, DECEMBER 30, 1985, TO THE PERIOD ENDED MARCH 31, 1994.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
TOP TEN EQUITY HOLDINGS - DESTINY I
AS OF MARCH 31, 1994 AS OF SEPTEMBER 30, 1993
Federal National Mortgage Association
Compaq Computer Corp.
Philip Morris Companies, Inc.
Intel Corp.
Citicorp
British Petroleum PLC ADR
Microsoft Corp.
Columbia/HCA Healthcare Corp.
Caterpillar, Inc.
Motorola Inc.
Federal National Mortgage Association
Citicorp
Compaq Computer Corp.
Chrysler Corp.
HCA - Hospital Corporation of America Class A
Caterpillar, Inc.
General Motors Corp.
British Petroleum PLC ADR
Vodafone Group PLC sponsored ADR
Microsoft Corp.
TOP TEN EQUITY HOLDINGS - DESTINY II
AS OF MARCH 31, 1994 AS OF SEPTEMBER 30, 1993
Federal National Mortgage Association
Compaq Computer Corp.
Philip Morris Companies, Inc.
Intel Corp.
Citicorp
British Petroleum PLC ADR
Microsoft Corp.
Columbia/HCA Healthcare Corp.
Motorola Inc.
Caterpillar, Inc.
Federal National Mortgage Association
Compaq Computer Corp.
Citicorp
Chrysler Corp.
HCA - Hospital Corporation of America Class A
Caterpillar, Inc.
British Petroleum PLC ADR
Microsoft Corp.
Vodafone Group PLC sponsored ADR
Bank of Boston Corp.
TOP FIVE INDUSTRIES - DESTINY I
AS OF MARCH 31, 1994 AS OF SEPTEMBER 30, 1993
Finance 19.5%
Technology 15.1%
Energy 9.6%
Utilities 8.9%
Basic Industries 6.0%
Finance 20.7%
Technology 10.7%
Energy 8.7%
Durables 9.0%
Retail & Wholesale 6.2%
TOP FIVE INDUSTRIES - DESTINY II
AS OF MARCH 31, 1994 AS OF SEPTEMBER 30, 1993
Finance 19.6%
Technology 14.5%
Utilities 9.1%
Energy 8.5%
Basic Industries 5.8%
Finance 20.5%
Technology 13.8%
Durables 8.6%
Retail & Wholesale 7.3%
Energy 6.8%
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS/MARCH 31, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENTS)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 91.7%
AEROSPACE & DEFENSE - 1.4%
AEROSPACE & DEFENSE - 0.6%
Boeing Co. 90,000 $ 4,038,750
Rolls Royce Ltd. Ord. 4,763,887 12,826,972
Sundstrand Corp. 8,300 374,538
17,240,260
DEFENSE ELECTRONICS - 0.8%
Loral Corp. 201,000 7,537,500
Raytheon Co. 263,400 17,022,225
24,559,725
TOTAL AEROSPACE & DEFENSE 41,799,985
BASIC INDUSTRIES - 5.8%
CHEMICALS & PLASTICS - 1.3%
Akzo NV Ord. 45,700 5,272,890
Albemarle Corp. (a) 376,050 5,546,738
Georgia Gulf Corp. (a) 30,500 773,938
Grace (W.R.) & Co. 272,200 11,228,250
IMC Fertilizer Group, Inc. (a) 69,800 2,757,100
Imperial Chemical Industries Ord. 315,000 3,691,690
Monsanto Co. 99,400 7,728,350
Nalco Chemical Co. 120,500 4,112,063
41,111,019
IRON & STEEL - 2.0%
British Steel PLC:
ADR 113,500 2,312,563
Ord. 10,773,100 22,614,353
Chaparral Steel Company 19,200 213,600
Inland Steel Industries, Inc. (a) 217,300 6,546,163
LTV Corp. (a) 756,700 11,350,500
Nucor Corp. 7,600 460,750
Oregon Steel Mills, Inc. 42,500 977,500
USX-U.S. Steel Group 458,500 17,021,813
61,497,242
METALS & MINING - 1.6%
Alcan Aluminium Ltd. 168,300 3,725,066
Alumax, Inc. 48,750 1,176,094
Aluminum Co. of America 63,800 4,569,675
Broken Hill Proprietary Co. Ltd. (The) 84,200 975,147
Cyprus Amax Minerals Co. 74,850 2,161,294
De Beers Consolidated Mines Ltd. ADR 183,800 3,836,825
Noranda, Inc. 428,100 7,734,975
Reynolds Metals Co. 530,400 24,332,100
48,511,176
PACKAGING & CONTAINERS - 0.4%
Owens-Illinois, Inc. (a) 1,148,600 12,778,175
PAPER & FOREST PRODUCTS - 0.5%
Abitibi Price, Inc. installment receipts (d) 57,600 $ 343,439
Abitibi-Price, Inc. 47,400 590,937
Boise Cascade Corp. 48,100 1,094,275
Bowater, Inc. 56,000 1,197,000
International Paper Co. 121,000 8,243,125
Stone Consolidated Corp. (a) 270,000 3,366,098
Stone Container Corp. (a) 103,900 1,376,675
16,211,549
TOTAL BASIC INDUSTRIES 180,109,161
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.3%
Lafarge Corp. 53,600 1,152,400
Pilkington PLC Ord. 42,428 105,422
Tecumseh Products Co. Class A 155,000 7,498,125
8,755,947
ENGINEERING - 0.1%
EG&G, Inc. 147,500 2,415,313
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Crown American Realty Trust SBI 74,000 1,017,500
Developers Diversified Realty 65,000 2,023,125
General Growth Properties, Inc. 40,800 841,500
Health Care Property Investors, Inc. 47,500 1,448,750
Irvine Apartment Communities 1,000 19,875
Vornado Realty Trust 49,000 1,715,000
7,065,750
TOTAL CONSTRUCTION & REAL ESTATE 18,237,010
DURABLES - 4.4%
AUTOS, TIRES, & ACCESSORIES - 3.4%
Arvin Industries, Inc. 77,800 2,178,400
Brilliance China Auto Holding, Ltd (a) 14,600 171,550
Chrysler Corp. 657,000 33,917,625
Discount Auto Parts, Inc. (a) 419,200 10,113,200
Echlin, Inc. 25,800 761,100
Ford Motor Co. 1,350 79,313
General Motors Corp. 804,100 43,421,400
Lonrho Ltd. Ord. 6,154,218 13,375,147
Standard Products Co. 91,800 2,994,975
107,012,710
CONSUMER ELECTRONICS - 0.0%
Fossil, Inc. 21,800 419,650
HOME FURNISHINGS - 0.2%
LADD Furniture, Inc. 497,100 4,349,625
TEXTILES & APPAREL - 0.8%
Burlington Industries, Inc. 304,200 4,601,025
Fruit of the Loom, Inc. Class A (a) 241,900 7,317,475
Unifi, Inc. 303,600 6,413,550
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
VF Corp. 105,000 $ 5,250,000
Westpoint Stevens, Inc. Class A (a) 106,500 1,757,250
25,339,300
TOTAL DURABLES 137,121,285
ENERGY - 9.6%
ENERGY SERVICES - 1.7%
Baker Hughes, Inc. 674,100 11,965,275
Dreco Energy Services Ltd. Class A (a) 50,600 468,050
McDermott International, Inc. 218,800 4,430,700
Schlumberger Ltd. 631,200 33,374,700
Smith International, Inc. (a) 148,700 1,579,938
Western Co. of North America (a) 66,100 685,788
52,504,451
OIL & GAS - 7.9%
Amerada Hess Corp. 250,100 11,191,975
Apache Corp. 63,200 1,461,500
Atlantic Richfield Co. 159,200 15,124,000
British Petroleum PLC:
ADR 1,097,300 67,346,788
Ord. 5,956,110 30,925,612
Burlington Resources, Inc. 257,300 10,935,250
Cabot Oil & Gas Corp. Class A 70,333 1,371,494
Enron Oil & Gas Co. 39,400 1,684,350
Kerr-McGee Corp. 389,400 16,160,100
Louisiana Land & Exploration Co. 563,600 20,360,050
Mesa, Inc. (a) 120,000 690,000
Murphy Oil Corp. 92,100 3,684,000
Noble Affiliates, Inc. 256,500 6,091,875
Oryx Energy Co. 98,100 1,581,863
Phillips Petroleum Co. 155,400 4,137,525
Royal Dutch Petroleum Co. 107,000 10,633,125
Texaco, Inc. 91,700 5,777,100
Tosco Corp. 629,400 18,882,000
Unocal Corp. 670,300 16,925,075
YPF Sociedad Anonima sponsored ADR
representing Class D shares 65,700 1,560,375
246,524,057
TOTAL ENERGY 299,028,508
FINANCE - 19.5%
BANKS - 9.1%
Banc One Corp. 520,030 17,160,990
Bank of Boston Corp. 1,240,358 29,458,503
BankAmerica Corp. 405,000 $ 15,946,875
Barnett Banks, Inc. 36,600 1,614,975
Boatmen's Bancshares, Inc. 131,300 3,889,763
Chemical Banking Corp. 518,600 18,864,075
Citicorp (a) 1,802,500 67,593,750
Comerica, Inc. 581,900 14,765,713
First Alabama Bancshares, Inc. 57,700 1,803,125
First Chicago Corp. 85,400 4,099,200
First Fidelity Bancorporation 34,819 1,545,093
First Union Corp. 640,264 26,650,989
Fleet Financial Group, Inc. 349,103 12,262,243
Keycorp 294,381 8,831,430
Magna Group, Inc. 9,600 183,600
Mercantile Bancorporation, Inc. 1,300 62,238
Midlantic Corp. (a) 36,700 1,050,538
NationsBank Corp. 385,800 17,650,350
Norwest Corp. 86,000 2,053,250
Shawmut National Corp. 1,673,000 33,878,250
Signet Banking Corp. 82,682 3,265,939
Southern National Corp. 13,700 262,013
Union Planters Corp. 47,700 1,186,538
284,079,440
CLOSED END INVESTMENT COMPANY - 0.0%
ASA Ltd. 24,900 1,080,038
CREDIT & OTHER FINANCE - 0.3%
Brierley Investments Ltd. 7,799,500 5,219,425
Dean Witter Discover & Co. 83,756 2,732,540
7,951,965
FEDERAL SPONSORED CREDIT - 5.3%
Federal Home Loan Mortgage Corporation 399,200 20,259,400
Federal National Mortgage Association 1,851,300 143,938,575
164,197,975
INSURANCE - 3.2%
Allstate Corp. 785,200 18,844,800
Capital Holding Corp. 109,700 3,469,263
General Re Corp. 228,300 24,513,713
John Alden Financial Corp. 198,000 7,029,000
Progressive Corp. (Ohio) 64,700 1,884,388
SAFECO Corp. 192,500 10,178,438
St. Paul Companies, Inc. (The) 323,000 25,113,250
Travelers, Inc. (The) 135,433 4,757,084
UNUM Corp. 94,400 4,979,600
100,769,536
SAVINGS & LOANS - 1.1%
Ahmanson (H.F.) & Co. 881,100 14,868,563
Golden West Financial Corp. 530,900 20,373,288
35,241,851
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.5%
Morgan Stanley Group, Inc. 223,600 $ 14,310,400
TOTAL FINANCE 607,631,205
HEALTH - 4.4%
DRUGS & PHARMACEUTICALS - 1.8%
Allergan, Inc. 156,400 3,186,650
American Cyanamid Co. 24,600 1,143,900
Bristol-Myers Squibb Co. 112,800 5,823,300
Pfizer, Inc. 287,600 15,530,400
Schering-Plough Corp. 238,500 13,415,625
Warner-Lambert Co. 256,000 15,840,000
54,939,875
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
Baxter International, Inc. 604,200 13,670,025
Johnson & Johnson 105,100 3,967,525
Medtronic, Inc. 172,500 13,800,000
Puritan Bennett Corp. 27,100 555,550
31,993,100
MEDICAL FACILITIES MANAGEMENT - 1.6%
Columbia/HCA Healthcare Corp. 1,268,725 51,066,181
TOTAL HEALTH 137,999,156
INDUSTRIAL MACHINERY & EQUIPMENT - 3.4%
ELECTRICAL EQUIPMENT - 1.0%
AMETEK, Inc. 88,300 1,092,713
General Electric Co. 61,600 6,136,900
Philips NV (a) 869,900 23,487,300
30,716,913
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Caterpillar, Inc. 426,300 47,905,463
Cincinnati Milacron, Inc. 48,200 1,126,675
Deere & Co. 18,700 1,570,800
Joy Technologies, Inc. Class A (a) 421,600 5,059,200
Moorco International, Inc. 48,300 754,688
TRINOVA Corp. 156,900 5,432,663
Watts Industries, Inc. Class A 4,400 103,400
61,952,889
POLLUTION CONTROL - 0.4%
Attwoods PLC:
ADR 358,020 3,132,675
Ord. 1,240,580 2,208,481
Laidlaw, Inc. Class B 1,466,300 8,477,868
13,819,024
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 106,488,826
MEDIA & LEISURE - 3.8%
BROADCASTING - 1.3%
Capital Cities/ABC, Inc. 8,600 $ 5,882,400
Home Shopping Network, Inc. (a) 307,017 3,952,844
Tele-Communications, Inc. Class A (a) 1,421,900 29,504,425
39,339,669
ENTERTAINMENT - 0.4%
Royal Carribean Cruises Ltd. 464,500 11,554,438
LEISURE DURABLES & TOYS - 0.3%
Fleetwood Enterprises, Inc. 64,900 1,322,338
Outboard Marine Corp. 399,300 7,686,525
9,008,863
LODGING & GAMING - 0.2%
Circus Circus Enterprises, Inc. (a) 12,400 399,900
Club Med, Inc. 78,300 1,957,500
President Riverboat Casinos, Inc. (a) 79,000 1,323,250
Sholodge, Inc. 21,466 488,352
Video Lottery Technologies, Inc. (a) 194,200 3,010,100
7,179,102
PUBLISHING - 1.0%
American Greetings Corp. Class A 81,000 2,136,375
Central Newspapers, Inc. Class A 93,800 2,520,875
Enquirer/Star Group, Inc. Class A 121,700 1,977,625
Gannett Co., Inc. 397,900 20,939,488
Knight-Ridder, Inc. 84,800 4,865,400
32,439,763
RESTAURANTS - 0.6%
Bertucci's, Inc. (a) 114,500 1,946,500
McDonald's Corp. 250,300 14,235,813
Ryan's Family Steak Houses, Inc. (a) 257,100 1,960,388
18,142,701
TOTAL MEDIA & LEISURE 117,664,536
NONDURABLES - 4.6%
AGRICULTURE - 0.1%
Pioneer Hi-Bred International, Inc. 58,700 1,922,425
BEVERAGES - 0.0%
PepsiCo, Inc. 38,900 1,424,713
FOODS - 1.0%
Borden, Inc. 715,600 9,571,150
IBP, Inc. 993,885 23,356,298
32,927,448
TOBACCO - 3.5%
Philip Morris Companies, Inc. 1,511,800 76,723,850
RJR Nabisco Holdings Corp. (a) 3,405,100 19,579,325
UST, Inc. 455,000 11,261,250
107,564,425
TOTAL NONDURABLES 143,839,011
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
PRECIOUS METALS - 0.2%
Homestake Mining Co. 330,400 $ 7,434,000
RETAIL & WHOLESALE - 5.1%
APPAREL STORES - 0.7%
Limited, Inc. (The) 77,300 1,613,638
Ross Stores, Inc. (a) 112,200 1,711,050
TJX Companies, Inc. 681,925 17,985,772
21,310,460
DRUG STORES - 0.3%
Rite Aid Corporation 401,800 7,634,200
GENERAL MERCHANDISE STORES - 2.7%
Dayton Hudson Corp. 217,900 15,906,700
Dillard Department Stores, Inc Class A 138,100 4,626,350
Federated Department Stores, Inc. (a) 1,026,973 22,593,406
Sears, Roebuck and Co. 436,700 18,778,100
Value City Department Stores, Inc (a) 288,900 4,333,500
Wal-Mart Stores, Inc. 712,600 18,438,525
84,676,581
GROCERY STORES - 0.7%
Bruno's, Inc. 238,500 1,848,375
Food Lion, Inc. Class A 1,712,700 9,633,938
Safeway, Inc. (a) 314,600 7,511,075
Stop & Shop Companies, Inc. 137,000 3,339,375
22,332,763
RETAIL & WHOLESALE, MISC - 0.7%
Barnes & Noble, Inc. 10,800 259,200
Body Shop International PLC (a) 496,000 1,626,156
Circuit City Stores, Inc. 72,500 1,440,938
Good Guys, Inc. (a) 316,400 5,220,600
Hancock Fabrics, Inc. 34,500 314,813
Lowe's Companies, Inc. 61,800 1,993,050
Rex Stores Corp. (a) 30,500 541,375
Staples, Inc. 36,300 912,038
Toys "R" Us, Inc. (a) 256,700 8,920,325
21,228,495
TOTAL RETAIL & WHOLESALE 157,182,499
SERVICES - 0.3%
Borg Warner Securities Corp. (a) 127,000 2,143,125
Pinkertons, Inc. (a) 239,900 4,827,988
Supercuts, Inc. (a) 149,400 2,241,000
9,212,113
TECHNOLOGY - 15.1%
COMMUNICATIONS EQUIPMENT - 0.5%
Cisco Systems, Inc. (a) 295,800 $ 10,131,150
Newbridge Networks Corp. (a) 23,300 1,272,763
Wellfleet Communications, Inc. (a) 63,100 4,448,550
15,852,463
COMPUTER SERVICES & SOFTWARE - 2.6%
Ceridian Corp. (a) 100,600 2,338,950
Cheyenne Software, Inc. (a) 243,750 6,276,563
Crosscommunications Corp. (a) 87,900 1,098,750
Microsoft Corp. (a) 624,900 52,960,275
Oracle Systems Corp. (a) 80,300 2,579,638
SHL Systemhouse, Inc. (a) 534,600 3,675,375
Viewlogic Systems, Inc. (a) 489,300 12,538,313
81,467,864
COMPUTERS & OFFICE EQUIPMENT - 5.5%
Compaq Computer Corp. (a) 1,029,900 100,672,725
Diebold, Inc. 33,450 1,220,925
Hewlett-Packard Co. 199,400 16,375,725
International Business Machines Corp. 548,700 29,904,150
Media Vision Technology, Inc. (a) 70,800 681,450
SCI Systems, Inc. (a) 785,500 12,568,000
Tandem Computers, Inc. (a) 384,300 5,428,238
Tech Data Corp. (a) 100,200 3,632,250
170,483,463
ELECTRONIC INSTRUMENTS - 0.1%
Analogic Corp. (a) 45,200 689,300
Kulicke & Soffa Industries, Inc. (a) 295,400 3,249,400
3,938,700
ELECTRONICS - 6.4%
Anthem Electronics, Inc. (a) 350,100 10,415,475
Intel Corp. 1,125,100 75,944,250
Methode Electronics, Inc.:
Class A (c) 1,546,800 25,328,850
Class B 30,000 510,000
Molex, Inc. 70,700 2,333,100
Motorola, Inc. 471,800 47,769,750
Solectron Corp. (a) 685,200 20,641,650
Texas Instruments, Inc. 206,700 15,967,575
198,910,650
TOTAL TECHNOLOGY 470,653,140
TRANSPORTATION - 4.6%
AIR TRANSPORTATION - 1.2%
AMR Corp. (a) 336,400 19,174,800
Delta Air Lines, Inc. 162,100 7,335,025
UAL Corp. (a) 90,500 11,538,750
38,048,575
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - 3.0%
Burlington Northern, Inc. 106,200 $ 6,318,900
CSX Corp. 117,600 9,643,200
Canadian Pacific Ltd. Ord. 1,729,600 27,188,084
Chicago & North Western Holdings Corp (a). 136,000 3,298,000
Conrail, Inc. 34,000 1,963,500
Illinois Central Corp., Series A 21,800 735,750
Santa Fe Pacific Corp. 1,267,600 28,837,900
Southern Pacific Rail Corp. (a) 635,500 13,345,500
Wisconsin Central Transportation Corp. (a) 17,200 1,208,300
92,539,134
SHIPPING - 0.3%
Ned Lloyd (a) 238,400 7,993,187
Overseas Shipholding Group, Inc. 42,100 863,050
8,856,237
TRUCKING & FREIGHT - 0.1%
Yellow Corp. 97,700 2,332,588
TOTAL TRANSPORTATION 141,776,534
UTILITIES - 8.9%
CELLULAR - 1.8%
Cencall Communications Corp. (a) 38,000 893,000
Dial Page, Inc. 8,800 398,200
Nextel Communications, Inc. Class A (a) 77,500 3,041,875
Vodafone Group PLC (a) 575,291 4,403,772
Vodafone Group PLC sponsored ADR 611,600 47,322,550
56,059,397
ELECTRIC UTILITY - 5.7%
American Electric Power Co., Inc. 291,300 8,957,475
Baltimore Gas & Electric Co. 387,600 8,963,250
Carolina Power & Light Co. 283,000 7,358,000
Central & South West Corp. 201,400 4,984,650
Commonwealth Edison Co. 307,100 7,715,888
Consolidated Edison Co. of New York, Inc. 246,500 7,179,313
Detroit Edison Company 244,900 6,489,850
Dominion Resources, Inc. (Va.) 159,300 6,372,000
Duke Power Co. 149,600 5,404,300
Entergy Corp. 273,100 8,670,925
FPL Group, Inc. 172,600 5,717,375
Houston Industries, Inc. 154,700 5,491,850
Niagara Mohawk Power Corp. 386,800 6,914,050
Northern States Power Co. (Minn.) 143,600 5,869,650
Ohio Edison Co. 340,100 6,461,900
PSI Resources, Inc. 275,000 6,428,125
Pacific Gas & Electric Co. 301,700 8,787,013
PacifiCorp. 478,400 8,431,800
Peco Energy Co. 403,700 $ 11,202,675
Public Service Co. of New Mexico (a) 115,800 1,519,875
Public Service Enterprise Group, Inc. 294,500 8,209,188
SCE Corp. 478,100 7,888,650
Southern Co. 537,000 10,270,125
Texas Utilities Co. 190,600 7,123,675
Union Electric Co. 161,700 5,699,925
178,111,527
GAS - 0.2%
Arkla, Inc. 134,800 909,900
Columbia Gas System, Inc. (The) (a) 150,200 3,923,975
4,833,875
TELEPHONE SERVICES - 1.2%
Ameritech Corp. 254,000 9,683,750
Bell Atlantic Corp. 22,000 1,138,500
BellSouth Corp. 82,800 4,781,700
Southwestern Bell Corp. 417,100 16,840,413
Sprint Corporation 161,000 5,514,250
37,958,613
TOTAL UTILITIES 276,963,412
TOTAL COMMON STOCKS
(Cost $2,414,594,359) 2,853,140,381
CONVERTIBLE PREFERRED STOCKS - 0.4%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Alumax, Inc., Series A, $4.00 20,000 2,210,000
Cyprus Amax Minerals Co.,
Series A, $4.00 25,700 1,773,300
3,983,300
NONDURABLES - 0.3%
TOBACCO - 0.3%
RJR Nabisco Holdings Corp., Series A,
depositary shares representing 1/4 share 1,234,100 7,558,863
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $9,831,362) 11,542,163
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
CONVERTIBLE BONDS - 0.2%
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
Stone Consolidated Corp. 8%,
12/31/03 - $ 2,800,000 $ 2,630,723
RETAIL & WHOLESALE - 0.1%
GROCERY STORES - 0.1%
Food Lion, Inc. 5%, 6/1/03 (b) A3 2,000,000 2,035,000
TOTAL CONVERTIBLE BONDS
(Cost $4,105,484) 4,665,723
U.S. TREASURY OBLIGATIONS - 4.0%
U.S.Treasury bills yield at date
of purchase 3.42%, 4/21/94
(Cost $124,797,500) 125,000,000 124,797,500
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 3.7%
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.58% dated
3/31/94 due 4/4/94, 115,597,964 115,552,000
TOTAL INVESTMENTS - 100%
(Cost $2,668,880,705) $ 3,109,697,767
LEGEND:
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,035,000 or 0.1% of net
assets.
(c) Affiliated Company (see Note 6 of Notes to Financial Statements)
(d) Market value reflects the payment of the first installment. Additional
equal payments of $288,000 CAD are payable in January and October of 1995.
CURRENCY TYPE ABBREVIATIONS
CAD - Canadian dollars
OTHER INFORMATION:
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 88.3%
United Kingdom 6.8
Netherlands 2.6
Canada 1.9
Others (individually less than 1%) 0.4
TOTAL 100.0%
INCOME TAX INFORMATION:
At March 31,1994, the aggregate cost of investment securities for income
tax purposes was $2,669,978,647. Net unrealized appreciation aggregated
$439,719,120, of which $559,629,900 related to appreciated investment
securities and $119,910,780 related to depreciated investment securities.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1994 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $115,552,000) (cost $ 3,109,697,767
$2,668,880,705) (Notes 1 and 2) - See accompanying schedule
Cash 829
Receivable for investments sold 44,771,085
Receivable for fund shares sold 300,522
Dividends receivable 7,882,691
Interest receivable 66,140
Other receivables 1,556,408
Total assets 3,164,275,442
LIABILITIES
Payable for investments purchased $ 29,070,966
Payable for fund shares redeemed 1,281,755
Accrued management fee 1,776,221
Other payables and accrued expenses 202,433
Total liabilities 32,331,375
NET ASSETS $ 3,131,944,067
Net Assets consist of (Note 1):
Paid in capital $ 2,388,271,095
Undistributed net investment income 10,141,204
Accumulated undistributed net realized gain (loss) on investments 292,714,706
Net unrealized appreciation (depreciation) on investment securities 440,817,062
NET ASSETS, for 186,679,183 shares outstanding $ 3,131,944,067
NET ASSET VALUE, offering price and redemption price per share ($3,131,944,067 (divided by) 186,679,183 shares) $16.78
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended March 31, 1994 (Unaudited)
INVESTMENT INCOME $ 27,715,932
Dividends
Interest 3,911,040
Total income 31,626,972
EXPENSES
Management fee (Note 4) $ 7,707,294
Basic fee
Performance adjustment 2,481,491
Transfer agent fees (Note 4) 61,685
Accounting fees and expenses (Note 4) 381,816
Non-interested trustees' compensation 9,843
Custodian fees and expenses 174,403
Registration fees 7,308
Audit 15,954
Legal 23,758
Miscellaneous 65,509
Total expenses before reductions 10,929,061
Expense reductions (Note 7) (16,020) 10,913,041
Net investment income 20,713,931
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3) 344,218,292
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (173,033,316)
Net gain (loss) 171,184,976
Net increase (decrease) in net assets resulting from operations $ 191,898,907
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED THREE MONTHS YEAR ENDED
MARCH 31, 1994 ENDED JUNE 30,
(UNAUDITED) SEPTEMBER 30, 1993 1993
INCREASE (DECREASE) IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Operations $ 20,713,931 $ 8,223,822 $ 47,110,814
Net investment income
Net realized gain (loss) on investments 344,218,292 137,464,586 286,103,905
Change in net unrealized appreciation (depreciation) on investments (173,033,316) (10,287,058) 227,662,206
Net increase (decrease) in net assets resulting from operations 191,898,907 135,401,350 560,876,925
Distributions to shareholders (19,385,473) (23,304,303) (45,364,933)
From net investment income
From net realized gain (183,280,870) (168,123,876) (361,912,739)
Total distributions (202,666,343) (191,428,179) (407,277,672)
Share transactions 75,151,989 30,602,732 126,604,125
Net proceeds from sales of shares
Reinvestment of distributions from: 18,276,957 21,188,303 42,664,974
Net investment income
Net realized gain 174,804,917 160,706,522 350,559,626
Cost of shares redeemed (98,746,885) (52,021,231) (177,496,388)
Net increase (decrease) in net assets resulting from share transactions 169,486,978 160,476,326 342,332,337
Total increase (decrease) in net assets 158,719,542 104,449,497 495,931,590
NET ASSETS
Beginning of period 2,973,224,525 2,868,775,028 2,372,843,438
End of period (including undistributed net investment income of $10,141,204, $ 3,131,944,067 $ 2,973,224,525 $ 2,868,775,028
$36,359,014, and $51,439,495, respectively)
OTHER INFORMATION
Shares
Sold 4,309,242 1,794,188 7,993,828
Issued in reinvestment of distributions from: 1,107,694 1,290,396 2,852,076
Net investment income
Net realized gain 10,594,237 9,787,243 23,399,471
Redeemed (5,684,875) (3,080,615) (11,147,606)
Net increase (decrease) 10,326,298 9,791,212 23,097,769
</TABLE>
Financial Highlights
DRAFT
SIX MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1994 SEPTEMBER 30, YEARS ENDED JUNE 30,
(UNAUDITED) 1994 1993 1992 1991 1990 1989
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24 $ 14.03 $ 12.44
Income from Investment Operations
Net investment income .11 .04 .26 .31 .33 .46(double dagger) .30
Net realized and unrealized gain .96 .75 3.16 2.55 1.25 1.18 1.81
(loss)
on investments
Total from investment operations 1.07 .79 3.42 2.86 1.58 1.64 2.11
Less Distributions
From net investment income (.11) (.14) (.30) (.49) (.10) (.38) (.26)
From net realized gain (1.04) (1.01) (2.44) (1.06) (.49) (1.05) (.26)
Total distributions (1.15) (1.15) (2.74) (1.55) (.59) (1.43) (.52)
Net asset value, end of period $ 16.78 $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24 $ 14.03
TOTAL RETURN** 6.46% 4.77% 23.90% 20.18% 11.93% 12.17% 17.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 3,132 $ 2,973 $ 2,869 $ 2,373 $ 2,023 $ 1,832 $ 1,662
Ratio of expenses to average net .69%* .65%* .66% .61% .50% .53% .60%
assets
Ratio of net investment income to 1.31%* 1.11%* 1.83% 2.00% 2.45% 3.37% 2.35%
average net assets (double dagger)
Portfolio turnover rate 90%* 82%* 75% 75% 84% 75% 72%
</TABLE>
* ANNUALIZED
** TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS OF
$.06 AND $.03 PER SHARE, RESPECTIVELY.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS/MARCH 31, 1994 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENTS)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 92.0%
AEROSPACE & DEFENSE - 1.3%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. 35,000 $ 1,570,625
Rolls Royce Ltd. Ord. 1,968,094 5,299,165
Sundstrand Corp. 3,400 153,425
7,023,215
DEFENSE ELECTRONICS - 0.8%
Loral Corp. 83,100 3,116,250
Raytheon Co. 108,800 7,031,200
10,147,450
TOTAL AEROSPACE & DEFENSE 17,170,665
BASIC INDUSTRIES - 5.5%
CHEMICALS & PLASTICS - 0.9%
Akzo NV Ord. 17,600 2,030,697
Albemarle Corp. (a) 155,450 2,292,888
Georgia Gulf Corp. (a) 12,600 319,725
Grace (W.R.) & Co. 88,400 3,646,500
IMC Fertilizer Group, Inc. (a) 28,800 1,137,600
Monsanto Co. 13,000 1,010,750
Nalco Chemical Co. 49,300 1,682,363
12,120,523
IRON & STEEL - 2.2%
British Steel PLC:
ADR 87,000 1,772,625
Ord. 4,450,500 9,342,267
Chaparral Steel Company 7,900 87,888
Inland Steel Industries, Inc. (a) 89,700 2,702,213
LTV Corp. (a) 411,700 6,175,500
Nucor Corp. 3,200 194,000
Oregon Steel Mills, Inc. 16,900 388,700
USX-U.S. Steel Group 189,400 7,031,475
27,694,668
METALS & MINING - 1.5%
Alcan Aluminium Ltd. 50,000 1,106,674
Alumax, Inc. (a) 20,150 486,119
Aluminum Co. of America 25,300 1,812,113
Broken Hill Proprietary Co. Ltd. (The) 33,400 386,816
Cyprus Amax Minerals Co. 20,750 599,156
De Beers Consolidated Mines Ltd. ADR 75,900 1,584,413
Noranda, Inc. 170,500 3,080,620
Reynolds Metals Co. 213,100 9,775,963
18,831,874
PACKAGING & CONTAINERS - 0.4%
Owens-Illinois, Inc. (a) 474,700 5,281,038
PAPER & FOREST PRODUCTS - 0.5%
Abitibi Price, Inc. installment receipts (c) 23,200 $ 138,330
Abitibi-Price Inc. 18,700 233,133
Boise Cascade Corp. 19,900 452,725
Bowater, Inc. 22,300 476,663
International Paper Co. 29,000 1,975,625
Stone Consolidated Corp. (a) 200,000 2,493,406
Stone Container Corp. (a) 42,000 556,500
6,326,382
TOTAL BASIC INDUSTRIES 70,254,485
CONSTRUCTION & REAL ESTATE - 0.5%
BUILDING MATERIALS - 0.2%
Lafarge Corp. 22,200 477,300
Pilkington PLC Ord. 2,492 6,193
Tecumseh Products Co. Class A 64,000 3,096,000
3,579,493
ENGINEERING - 0.1%
EG&G, Inc. 45,800 749,975
REAL ESTATE - 0.0%
Catellus Development Corp. (a) 50,800 323,850
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Developers Diversified Realty 25,200 784,350
General Growth Properties, Inc. 14,400 297,000
Health Care Property Investors, Inc. 18,400 561,200
Irvine Apartment Communities 400 7,950
Vornado Realty Trust 20,000 700,000
2,350,500
TOTAL CONSTRUCTION & REAL ESTATE 7,003,818
DURABLES - 4.9%
AUTOS, TIRES, & ACCESSORIES - 3.4%
Arvin Industries, Inc. 32,100 898,800
Brilliance China Auto Holding, Ltd (a) 5,800 68,150
Chrysler Corp. 271,600 14,021,350
Discount Auto Parts, Inc. 162,700 3,925,138
General Motors Corp. 332,400 17,949,600
Lonrho Ltd. Ord. 2,536,008 5,511,576
Standard Products Co. 37,175 1,212,834
43,587,448
CONSUMER ELECTRONICS - 0.5%
Fossil, Inc. 9,000 173,250
Harman International Industries, Inc. (a) 250,000 6,937,500
7,110,750
HOME FURNISHINGS - 0.2%
LADD Furniture, Inc. 286,800 2,509,500
TEXTILES & APPAREL - 0.8%
Burlington Industries, Inc. 89,500 1,353,688
Fruit of the Loom, Inc. Class A (a) 99,800 3,018,950
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Unifi, Inc. 124,300 $ 2,625,838
VF Corp. 43,300 2,165,000
Westpoint Stevens, Inc. Class A (a) 42,800 706,200
9,869,676
TOTAL DURABLES 63,077,374
ENERGY - 8.5%
ENERGY SERVICES - 1.5%
Baker Hughes, Inc. 278,600 4,945,150
Dreco Energy Services Ltd. Class A (a) 20,400 188,700
Schlumberger Ltd. 260,800 13,789,800
Smith International, Inc. (a) 58,400 620,500
Western Co. of North America (a) 27,300 283,238
19,827,388
OIL & GAS - 7.0%
Amerada Hess Corp. 103,200 4,618,200
Apache Corp. 25,500 589,688
Atlantic Richfield Co. 73,800 7,011,000
British Petroleum PLC:
ADR 443,900 27,244,363
Ord. 1,849,989 9,605,605
Burlington Resources, Inc. 106,200 4,513,500
Cabot Oil & Gas Corp. Class A 30,636 597,402
Enron Oil & Gas Co. 15,800 675,450
Kerr-McGee Corp. 95,300 3,954,950
Louisiana Land & Exploration Co. 169,900 6,137,638
Mesa, Inc. (a) 46,600 267,950
Murphy Oil Corp. 48,200 1,928,000
Noble Affiliates, Inc. 77,000 1,828,750
Oryx Energy Co. 40,600 654,675
Phillips Petroleum Co. 34,600 921,225
Texaco, Inc. 37,700 2,375,100
Tosco Corp. 290,500 8,715,000
Unocal Corp. 277,000 6,994,250
YPF Sociedad Anonima sponsored ADR
representing Class D shares 26,400 627,000
89,259,746
TOTAL ENERGY 109,087,134
FINANCE - 19.6%
BANKS - 9.2%
Banc One Corp. 214,370 7,074,210
Bank of Boston Corp. 611,240 14,516,950
BankAmerica Corp. 167,300 $ 6,587,438
Barnett Banks, Inc. 15,100 666,288
Boatmen's Bancshares, Inc. 54,200 1,605,675
Chemical Banking Corp. 213,900 7,780,613
Citicorp (a) 738,123 27,679,613
Comerica, Inc. 241,100 6,117,913
First Alabama Bancshares, Inc. 23,700 740,625
First Chicago Corp. 33,400 1,603,200
First Fidelity Bancorporation 13,678 606,961
First Union Corp. 264,441 11,007,357
Fleet Financial Group, Inc. 144,300 5,068,538
Keycorp 108,209 3,246,270
Magna Group, Inc. 4,000 76,500
Mercantile Bancorporation, Inc. 500 23,938
Midlantic Corp. (a) 15,200 435,100
NationsBank Corp. 159,500 7,297,125
Norwest Corp. 35,500 847,563
Shawmut National Corp. 688,000 13,932,000
Signet Banking Corp. 32,428 1,280,906
Southern National Corp. 5,700 109,013
Union Planters Corp. 19,600 487,550
118,791,346
CLOSED END INVESTMENT COMPANY - 0.0%
ASA Ltd. 10,200 442,425
CREDIT & OTHER FINANCE - 0.3%
Brierley Investments Ltd. 3,899,500 2,609,545
Dean Witter Discover & Co. 32,882 1,072,775
3,682,320
FEDERAL SPONSORED CREDIT - 5.3%
Federal Home Loan Mortgage Corporation 164,600 8,353,450
Federal National Mortgage Association 762,300 59,268,825
67,622,275
INSURANCE - 3.2%
Allstate Corp. 324,500 7,788,000
Capital Holding Corp. 45,400 1,435,775
General Re Corp. 94,300 10,125,463
John Alden Financial Corp. 81,800 2,903,900
Progressive Corp. (Ohio) 26,000 757,250
SAFECO Corp. 79,500 4,203,563
St. Paul Companies, Inc. (The) 135,300 10,519,575
Travelers, Inc. (The) 54,200 1,903,775
UNUM Corp. 38,900 2,051,975
41,689,276
SAVINGS & LOANS - 1.1%
Ahmanson (H.F.) & Co. 371,200 6,264,000
Golden West Financial Corp. 210,400 8,074,100
14,338,100
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.5%
Morgan Stanley Group, Inc. 92,200 $ 5,900,800
TOTAL FINANCE 252,466,542
HEALTH - 4.5%
DRUGS & PHARMACEUTICALS - 1.9%
Allergan, Inc. 119,700 2,438,888
American Cyanamid Co. 10,100 469,650
Bristol-Myers Squibb Co. 45,300 2,338,613
Pfizer, Inc. 118,800 6,415,200
Schering-Plough Corp. 98,600 5,546,250
Warner-Lambert Co. 105,800 6,546,375
23,754,976
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
Baxter International, Inc. 249,500 5,644,938
Johnson & Johnson 43,500 1,642,125
Medtronic, Inc. 67,400 5,392,000
Puritan Bennett Corp. 11,100 227,550
12,906,613
MEDICAL FACILITIES MANAGEMENT - 1.6%
Columbia/HCA Healthcare Corp. 524,340 21,104,685
TOTAL HEALTH 57,766,274
INDUSTRIAL MACHINERY & EQUIPMENT - 3.7%
ELECTRICAL EQUIPMENT - 1.0%
AMETEK, Inc. 84,400 1,044,450
General Electric Co. 25,500 2,540,438
Philips NV (a) 359,500 9,706,500
13,291,388
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Caterpillar, Inc. 174,450 19,603,819
Cincinnati Milacron, Inc. 19,700 460,488
Deere & Co. 7,700 646,800
Joy Technologies, Inc. Class A (a) 167,900 2,014,800
TRINOVA Corp. 64,800 2,243,700
Watts Industries, Inc. Class A 1,800 42,300
25,011,907
POLLUTION CONTROL - 0.7%
Attwoods PLC:
ADR 231,300 2,023,875
Ord. 889,120 1,582,811
Laidlaw, Inc. Class B 702,400 4,061,143
Zurn Industries, Inc. 46,700 1,097,450
8,765,279
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 47,068,574
MEDIA & LEISURE - 3.7%
BROADCASTING - 1.2%
Capital Cities/ABC, Inc. 3,600 $ 2,462,400
Home Shopping Network, Inc. (a) 122,712 1,579,917
Tele-Communications, Inc. Class A (a) 576,100 11,954,075
15,996,392
ENTERTAINMENT - 0.4%
Cedar Fair LP (depositary units) 10,300 346,338
Royal Carribean Cruises Ltd. 201,600 5,014,800
5,361,138
LEISURE DURABLES & TOYS - 0.3%
Fleetwood Enterprises, Inc. 26,800 546,050
Outboard Marine Corp. 164,800 3,172,400
3,718,450
LODGING & GAMING - 0.2%
Club Med, Inc. 32,300 807,500
President Riverboat Casinos, Inc. (a) 31,100 520,925
Video Lottery Technologies, Inc. (a) 80,300 1,244,650
2,573,075
PUBLISHING - 1.0%
American Greetings Corp. Class A 67,600 1,782,950
Central Newspapers, Inc Class A 65,000 1,746,875
Enquirer/Star Group, Inc. Class A 132,700 2,156,375
Gannett Co., Inc. 140,300 7,383,288
13,069,488
RESTAURANTS - 0.6%
Bertucci's, Inc. (a) 46,300 787,100
McDonald's Corp. 100,900 5,738,688
Ryan's Family Steak Houses, Inc. (a) 106,200 809,775
7,335,563
TOTAL MEDIA & LEISURE 48,054,106
NONDURABLES - 4.7%
AGRICULTURE - 0.1%
Pioneer Hi-Bred International, Inc. 23,300 763,075
BEVERAGES - 0.0%
PepsiCo, Inc. 16,000 586,000
FOODS - 1.2%
Borden, Inc. 295,700 3,954,988
IBP, Inc. 489,431 11,501,629
15,456,617
TOBACCO - 3.4%
Philip Morris Companies, Inc. 624,900 31,713,675
RJR Nabisco Holdings Corp. (a) 1,368,600 7,869,450
UST, Inc. 176,400 4,365,900
43,949,025
TOTAL NONDURABLES 60,754,717
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
PRECIOUS METALS - 0.3%
Free State Consolidated Gold Mines Ltd. ADR 40,800 $ 525,300
Homestake Mining Co. 136,100 3,062,250
3,587,550
RETAIL & WHOLESALE - 5.7%
APPAREL STORES - 0.7%
Limited, Inc. (The) 31,900 665,913
Ross Stores, Inc. (a) 55,700 849,425
TJX Companies, Inc. 281,400 7,421,925
8,937,263
DRUG STORES - 0.2%
Rite Aid Corporation 155,500 2,954,500
GENERAL MERCHANDISE STORES - 3.0%
Dayton Hudson Corp. 90,000 6,570,000
Dillard Department Stores, Inc Class A 51,200 1,715,200
Federated Department Stores, Inc. (a) 544,800 11,985,600
Sears, Roebuck & Co. 180,500 7,761,500
Value City Department Stores, Inc. (a) 116,100 1,741,500
Wal-Mart Stores, Inc. 317,600 8,217,900
37,991,700
GROCERY STORES - 1.1%
Bruno's, Inc. 116,400 902,100
Food Lion Inc.:
Class A 1,094,500 6,156,563
Class B 120,000 720,000
Safeway, Inc. (a) 159,400 3,805,675
Stop & Shop Companies, Inc. (a) 109,800 2,676,375
14,260,713
RETAIL & WHOLESALE, MISC - 0.7%
Barnes & Noble, Inc. 4,500 108,000
Body Shop International PLC (a) 197,600 647,840
Circuit City Stores, Inc. 30,000 596,250
Good Guys, Inc. (a) 130,700 2,156,550
Hancock Fabrics, Inc. 39,400 359,525
Lowe's Companies, Inc. 25,600 825,600
Rex Stores Corp. (a) 12,300 218,325
Staples, Inc. 14,700 369,338
Toys "R" Us, Inc. (a) 106,100 3,686,975
8,968,403
TOTAL RETAIL & WHOLESALE 73,112,579
SERVICES - 0.3%
Borg Warner Securities Corp. (a) 52,500 885,938
Pinkertons, Inc. (a) 120,700 2,429,088
Supercuts, Inc. (a) 58,600 879,000
4,194,026
TECHNOLOGY - 14.5%
COMMUNICATIONS EQUIPMENT - 0.5%
Cisco Systems, Inc. (a) 122,200 $ 4,185,350
Newbridge Networks Corp. (a) 9,300 508,013
Wellfleet Communications, Inc. (a) 26,100 1,840,050
6,533,413
COMPUTER SERVICES & SOFTWARE - 2.6%
Ceridian Corp. (a) 41,600 967,200
Cheyenne Software, Inc. (a) 100,500 2,587,875
Crosscommunications Corp. (a) 32,700 408,750
Microsoft Corp. (a) 254,900 21,602,775
Oracle Systems Corp. (a) 33,200 1,066,550
SHL Systemhouse, Inc. (a) 220,100 1,513,188
Viewlogic Systems, Inc. (a) 202,200 5,181,375
33,327,713
COMPUTERS & OFFICE EQUIPMENT - 5.6%
Compaq Computer Corp. (a) 421,400 41,191,850
Diebold, Inc. 9,225 336,713
Hewlett-Packard Co. 89,500 7,350,188
International Business Machines Corp. 226,500 12,344,250
Media Vision Technology, Inc. (a) 29,300 282,013
SCI Systems, Inc. (a) 439,900 7,038,400
Tandem Computers, Inc. (a) 148,900 2,103,213
Tech Data Corp. (a) 41,000 1,486,250
72,132,877
ELECTRONIC INSTRUMENTS - 0.1%
Kulicke & Soffa Industries, Inc. (a) 120,500 1,325,500
ELECTRONICS - 5.7%
Anthem Electronics, Inc. (a) 142,400 4,236,400
Esterline Corp. (a) 30,900 254,925
Intel Corp. 464,200 31,333,500
Methode Electronics, Inc. Class A 92,100 1,508,138
Molex, Inc. 28,100 927,300
Motorola, Inc. 194,300 19,672,875
Solectron Corp. (a) 283,198 8,531,340
Texas Instruments, Inc. 83,200 6,427,200
72,891,678
TOTAL TECHNOLOGY 186,211,181
TRANSPORTATION - 5.2%
AIR TRANSPORTATION - 1.2%
AMR Corp. (a) 139,000 7,923,000
Delta Air Lines, Inc. 66,900 3,027,225
UAL Corp. (a) 37,300 4,755,750
15,705,975
RAILROADS - 3.6%
Burlington Northern, Inc. 41,300 2,457,350
CSX Corp. 46,000 3,772,000
Canadian Pacific Ltd. Ord. 967,100 15,202,125
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - CONTINUED
Chicago & North Western Holdings Corp. (a) 63,500 $ 1,539,875
Conrail, Inc. 13,200 762,300
Illinois Central Corp., Series A 8,400 283,500
Santa Fe Pacific Corp. 694,900 15,808,975
Southern Pacific Rail Corp. (a) 249,000 5,229,000
Wisconsin Central Transportation Corp. (a) 7,100 498,775
45,553,900
SHIPPING - 0.3%
Ned Lloyd (a) 92,600 3,104,736
Overseas Shipholding Group, Inc. 58,800 1,205,400
4,310,136
TRUCKING & FREIGHT - 0.1%
Yellow Corp. 38,900 928,738
TOTAL TRANSPORTATION 66,498,749
UTILITIES - 9.1%
CELLULAR - 1.8%
Cencall Communications Corp. (a) 15,500 364,250
Dial Page, Inc. 3,500 158,375
Nextel Communications, Inc. Class A (a) 31,900 1,252,075
Vodafone Group PLC (a) 259,290 1,984,829
Vodafone Group PLC sponsored ADR 244,200 18,894,975
22,654,504
ELECTRIC UTILITY - 5.6%
American Electric Power Co., Inc. 118,900 3,656,175
Baltimore Gas & Electric Co. 158,500 3,665,313
Carolina Power & Light Co. 116,800 3,036,800
Central & South West Corp. 81,600 2,019,600
Commonwealth Edison Co. 124,300 3,123,038
Consolidated Edison Co. of New York, Inc. 99,800 2,906,675
Detroit Edison Company 99,200 2,628,800
Dominion Resources, Inc. (Va.) 64,500 2,580,000
Duke Power Co. 60,500 2,185,563
Entergy Corp. 111,400 3,536,950
FPL Group, Inc. 69,900 2,315,438
Houston Industries, Inc. 63,300 2,247,150
Niagara Mohawk Power Corp. 159,100 2,843,913
Northern States Power Co. (Minn.) 58,100 2,374,838
Ohio Edison Co. 137,700 2,616,300
PSI Resources, Inc. 111,300 2,601,638
Pacific Gas & Electric Co. 123,300 3,591,113
PacifiCorp. 193,700 3,413,963
Peco Energy Co. 165,000 4,578,750
Public Service Co. of New Mexico (a) 47,300 620,813
Public Service Enterprise Group, Inc. 120,200 3,350,575
SCE Corp. 193,500 $ 3,192,750
Southern Co. 219,600 4,199,850
Texas Utilities Co. 77,200 2,885,350
Union Electric Co. 65,500 2,308,875
72,480,230
GAS - 0.3%
Arkla, Inc. 239,800 1,618,650
Columbia Gas System, Inc. (The) (a) 62,100 1,622,363
3,241,013
TELEPHONE SERVICES - 1.4%
Ameritech Corp. 103,900 3,961,188
Bell Atlantic Corp. 9,000 465,750
BellSouth Corp. 34,200 1,975,050
Southwestern Bell Corp. 173,100 6,988,913
Sprint Corporation 134,500 4,606,625
17,997,526
TOTAL UTILITIES 116,373,273
TOTAL COMMON STOCKS
(Cost $1,063,702,563) 1,182,681,047
CONVERTIBLE PREFERRED STOCKS - 0.3%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Alumax, Inc., Series A, $4.00 5,666 626,093
Cyprus Amax Minerals Co., Series A, $4.00 10,633 733,677
1,359,770
NONDURABLES - 0.2%
TOBACCO - 0.2%
RJR Nabisco Holdings Corp., Series A,
depositary shares representing
1/4 share pfd. 491,600 3,011,050
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,798,330) 4,370,820
CONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL
RATINGS AMOUNT
BASIC INDUSTRIES - 0.2%
PAPER & FOREST PRODUCTS - 0.2%
Stone Consolidated Corp. 8%,
12/31/03 - $ 2,800,000 2,630,723
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.1%
GROCERY STORES - 0.1%
Food Lion, Inc. 5%, 6/1/03 (b) A3 $ 1,000,000 $ 1,017,500
TOTAL CONVERTIBLE BONDS
(Cost $3,105,484) 3,648,223
INTERFUND LOANS - 1.3%
With Fidelity Balanced Fund, at
3.98%, 4/4/94 16,642,000
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 6.1%
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.58% dated
3/31/94 due 4/4/94, 77,846,953 77,816,000
TOTAL INVESTMENTS - 100%
(Cost $1,165,064,377) $ 1,285,158,090
LEGEND:
(a) Non-income producing
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,017,500 or 0.1% of net
assets.
(c) Market value reflects the payment of the first installment. Additional
equal payments of $116,000 CAD are payable in January and October of 1995.
CURRENCY TYPE ABBREVIATIONS
CAD - Canadian dollars
OTHER INFORMATION:
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 88.4%
United Kingdom 6.5
Canada 2.4
Netherlands 2.3
Others (individually less than 1%) 0.4
TOTAL 100.0%
INCOME TAX INFORMATION:
At March 31, 1994 the aggregate cost of investment securities for income
tax purposes was $1,165,639,679. Net unrealized appreciation aggregated
$119,518,411, of which $173,298,208 related to appreciated investment
securities and $53,779,797 related to depreciated investment securities.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1994 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $77,816,000) (cost $ 1,285,158,090
$1,165,064,377) (Notes 1 and 2) - See accompanying schedule
Cash 919
Receivable for investments sold 22,200,856
Receivable for fund shares sold 534,225
Dividends receivable 3,030,856
Interest receivable 51,456
Other receivables 254,840
Total assets 1,311,231,242
LIABILITIES
Payable for investments purchased $ 14,598,992
Payable for fund shares redeemed 526,795
Accrued management fee 820,979
Other payables and accrued expenses 132,494
Total liabilities 16,079,260
NET ASSETS $ 1,295,151,982
Net Assets consist of (Note 1):
Paid in capital $ 1,082,286,115
Undistributed net investment income 3,710,849
Accumulated undistributed net realized gain (loss) on investments 89,061,305
Net unrealized appreciation (depreciation) on investment securities 120,093,713
NET ASSETS, for 47,764,789 shares outstanding $ 1,295,151,982
NET ASSET VALUE, offering price and redemption price per share ($1,295,151,982 (divided by) 47,764,789 shares) $27.12
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended March 31, 1994 (Unaudited)
INVESTMENT INCOME $ 10,822,050
Dividends
Interest 1,502,093
Total income 12,324,143
EXPENSES
Management fee (Note 4) $ 3,960,527
Basic fee
Performance adjustment 638,283
Transfer agent fees (Note 4) 30,166
Accounting fees and expenses (Note 4) 267,379
Non-interested trustees' compensation 3,874
Custodian fees and expenses 96,759
Registration fees 32,836
Audit 341
Legal 8,873
Reports to shareholders 29,334
Miscellaneous 13,992
Total expenses before reductions 5,082,364
Expense reductions (Note 7) (15,356) 5,067,008
Net investment income 7,257,135
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3) 112,691,762
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (39,775,575)
Net gain (loss) 72,916,187
Net increase (decrease) in net assets resulting from operations $ 80,173,322
</TABLE>
Statement of Changes in Net Assets
DRAFT
SIX MONTHS ENDED THREE MONTHS YEAR ENDED
MARCH 31, 1994 ENDED JUNE 30,
(UNAUDITED) SEPTEMBER 30, 1993 1993
INCREASE (DECREASE) IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Operations $ 7,257,135 $ 1,910,328 $ 9,378,198
Net investment income
Net realized gain (loss) on investments 112,691,762 35,014,898 57,686,800
Change in net unrealized appreciation (depreciation) on investments (39,775,575) 16,231,218 74,409,803
Net increase (decrease) in net assets resulting from operations 80,173,322 53,156,444 141,474,801
Distributions to shareholders (5,278,171) (5,712,746) (7,691,426)
From net investment income
From net realized gain (56,743,142) (37,133,128) (61,841,588)
Total distributions (62,021,313) (42,845,874) (69,533,014)
Share transactions 123,914,896 53,100,966 144,853,682
Net proceeds from sales of shares
Net asset value of shares issued in exchange for the net assets of
Security Action - - 343,907,268
Fund
(Note 8)
Reinvestment of distributions from: 5,263,084 4,962,137 7,168,549
Net investment income
Net realized gain 56,592,742 36,931,116 61,675,882
Cost of shares redeemed (51,776,826) (23,371,035) (47,880,114)
Net increase (decrease) in net assets resulting from share transactions 133,993,896 71,623,184 509,725,267
Total increase (decrease) in net assets 152,145,905 81,933,754 581,667,054
NET ASSETS
Beginning of period 1,143,006,077 1,061,072,323 479,405,269
End of period (including undistributed net investment income of $3,710,849, $ 1,295,151,982 $ 1,143,006,077 $ 1,061,072,323
$3,186,434,
and $6,988,852, respectively)
OTHER INFORMATION
Shares
Sold 4,459,776 2,004,987 5,937,663
Issued in exchange for the net assets of Security Action Fund (Note 8) - - 13,690,576
Issued in reinvestment of distributions from: 197,637 191,960 313,000
Net investment income
Net realized gain 2,125,151 1,428,670 2,691,696
Redeemed (1,863,829) (887,068) (1,951,871)
Net increase (decrease) 4,918,735 2,738,549 20,681,064
</TABLE>
Financial Highlights
DRAFT
SIX MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1994 SEPTEMBER 30, YEARS ENDED JUNE 30,
(UNAUDITED) 1994 1993 1992 1991 1990 1989
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 26.68 $ 26.46 $ 24.68 $ 23.50 $ 21.11 $ 20.64 $ 18.25
Income from Investment Operations
Net investment income .16 .04 .26 .33 .29 .56(double dagger) .24
Net realized and unrealized gain 1.69 1.23 4.85 4.08 2.61 2.27 2.72
(loss) on
investments
Total from investment operations 1.85 1.27 5.11 4.41 2.90 2.83 2.96
Less Distributions
From net investment income (.12) (.14) (.36) (.34) (.35) (.36) (.18)
From net realized gain (1.29) (.91) (2.97) (2.89) (.16) (2.00) (.39)
Total distributions (1.41) (1.05) (3.33) (3.23) (.51) (2.36) (.57)
Net asset value, end of period $ 27.12 $ 26.68 $ 26.46 $ 24.68 $ 23.50 $ 21.11 $ 20.64
TOTAL RETURN** 7.03% 4.93% 23.28% 20.61% 14.35% 14.42% 16.76%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 1,295 $ 1,143 $ 1,061 $ 479 $ 326 $ 221 $ 143
Ratio of expenses to average net .80%* .84%* .84% .88% .84% .87% .97%
assets
Ratio of net investment income to 1.14%* .69%* 1.41% 1.60% 1.70% 3.07%(double dagger) 1.53%
average net assets
Portfolio turnover rate 104%* 80%* 81% 113% 129% 112% 128%
</TABLE>
* ANNUALIZED
** TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS OF
$.14 AND $.06 PER SHARE, RESPECTIVELY.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 1994 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Destiny Portfolios: Destiny l and Destiny II (the funds) are
authorized to issue an unlimited number of shares. Each fund is registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. Shares of each fund are offered publicly through Fidelity
Systematic Investment Plans: Destiny l and Destiny II (the plans), a unit
investment trust with two series.
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
EXPENSES. Most expenses can be directly attributed to a fund. Expenses
which cannot be directly attributed are apportioned between the funds in
the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective October
1, 1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of September 30, 1993 have been
restated/reclassified as follows:
INCREASE (DECREASE) INCREASE (DECREASE) INCREASE (DECREASE)
FUND IN PAID IN CAPITAL IN UNDISTRIBUTED NET INVESTMENT INCOME IN
ACCUMULATED NET REALIZED GAIN
Destiny l $ 28,971,840 $ (27,476,590) $ (1,495,250)
Destiny ll 3,203,415 (1,440,580) (1,762,835)
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The funds' investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the funds, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
3. PURCHASES AND SALES OF INVESTMENTS.
Destiny l: Purchases and sales of securities, other than short-term
securities, aggregated $1,309,330,710 and $1,313,291,159, respectively.
Destiny ll: Purchases and sales of securities, other than short-term
securities, aggregated $556,448,095 and $527,049,641, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate applied
to the average net assets of each fund. The group fee rate is the weighted
average of a series of rates ranging from .31% to .52% and is based on the
monthly average net assets of all the mutual funds advised by FMR.
On October 20, 1993, the shareholders of the funds approved new management
contracts which took effect on November 1, 1993. The new management
contract increases Destiny l's individual fund fee rate from .12% to .17%,
and revises both funds' group fee rate schedule for rates ranging from .30%
to .52%.
Effective November 1, 1993, Destiny l's individual fund fee rate is .17%.
Destiny ll's individual fund fee rate remains .30%. The basic fee is
subject to a performance adjustment (up to a maximum of + or - .24%) based
on each fund's investment performance as compared to the appropriate index
over a specified period of time. For the period, the management fees were
equivalent to annualized rates of .64% and .72%, respectively of average
net assets after the performance adjustment for the Destiny l and Destiny
ll funds, respectively.
Fidelity Distributors Corporation (FDC), an affiliate of FMR and sponsor of
the plans, received $423,770 and $1,084,309 as its portion of the Creation
and Sales Charges of Destiny l and Destiny ll, respectively, for the
period.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
funds' transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the funds' accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms for Destiny l and Destiny ll
were $891,825 and $392,830, respectively, for the period.
5. INTERFUND LENDING PROGRAM.
Destiny ll participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding was $16,642,000. The weighted average interest
rate was 3.98%. Interest earned from the interfund lending program amounted
to $7,357 and is included in interest income on the Statement of
Operations.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows for Destiny l:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
Purchase Sales Dividend Market
Affiliate Cost Cost Income Value
Methode Electronics Inc. Class A $ - $ - $ 18,562 $ 25,328,850
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, Destiny l and Destiny ll's expenses
were reduced by $16,020 and $15,356, respectively under this arrangement.
8. MERGERS.
Pursuant to an Agreement and Plan of Reorganization approved by Security
Action Fund shareholders at a meeting held on March 15, 1993, Destiny II
acquired substantially all of the assets of Security Action Fund on March
26, 1993. The acquisition was accomplished by a tax-free exchange of assets
of Security Action Fund in exchange for 13,690,576 shares of Destiny II
(valued at $25.12 per share). Security Action Fund's net assets at that
date (valued at $343,907,268), including $29,767,865 of unrealized
appreciation were combined with those of Destiny II. The aggregate net
assets of Destiny II and Security Action Fund immediately before the
acquisition were $635,193,723 and $343,907,268, respectively.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE FUNDS NOR
FIDELITY DISTRIBUTORS CORPORATION IS A
BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY
THE FDIC.
