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. 59 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No. 59
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)
( ) On pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) On ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
(X) On November 29, 1995 pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for a
previously filed post-effective
amendment.
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 30, 1995.
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; The
Funds'Investment Policies, Risks and
Limitations
b,c The Funds' Investment Policies, Risks and
Limitations
5a,b(i)(ii) Destiny Funds and the Fidelity Organization
b(iii), c,d,e Management and Service Fees; Destiny
Funds and the Fidelity Organization
f Management and Service Fees
5(g) Portfolio Transactions
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 *
*Not Applicable
FIDELITY DESTINY
PORTFOLIOS:
DESTINY I AND
DESTINY II
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS
PROSPECTUS
November 29, 1995
Fidelity Destiny Portfolios is an open-end management investment company
made up of two separate diversified portfolios: Destiny I and Destiny II
(the funds). Each fund seeks capital growth. Although many of the
securities in each fund's portfolio at any given time may be
income-pr oducing, income generally will not be a consideration in the
selection of securities.
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.
To learn more about each fund and its investments, you can obtain a copy
of the funds' most recent financial report and portfolio listing or a copy
of the Statement of Additional Information (SAI) dated November 29,
1995. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is incorporated herein by reference (legally forms a
part of the prospectus). For a free copy of either document, call Fidelity
Distributors Corporation (FDC) at the appropriate number listed
below .
FIDELITY DISTRIBUTORS CORPORATION
FIDELITY INVESTMENTS INSTITUTIONAL SERVICES COMPANY, INC., BROKER/DEALER
SERVICES DIVISION
NATIONWIDE (TOLL FREE) 1 -800-433-0734
IN ALASKA OR OVERSEAS (CALL COLLECT) 1-617-439-0547
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, THESE 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-5
The Funds' Investment Policies, Risks
and Limitations F-5
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-8
The Funds' Performance F-9
How to Buy Shares
Shareholder Services
How to Redeem Shares
Appendix
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 funds' 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 Distributions 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
a 5% annual return and full redemption at the end of each time 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, sell,
or exchange 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 paid out of each fund's assets. Each
fund pays a fee to Fidelity Management & Research Company (FMR) that
varies based on performance. Each fund also incurs other expenses for
services such as maintaining shareholder records and furnishing
shareholder statements and financial reports. 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. Pleas e 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%. These
examples illustrate the effect of expenses, but are not meant to suggest
actual or expected costs or returns, all of which may vary. Please refer to
page F-9 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 financial highlights tables that follow and each fund's financial
statements are included in the funds' Annual Report and have been
audited by _______________, independent accountants. Their report on the
financi al statements and financial highlights is included in the Annual
Report. The financial statements, the financial highlights and the report
are incorporated by reference into the funds' SAI, which may be obtained
free of charge from FDC.
The financial highlights tables that follow and each fund's financial
statements are included in the fund's Annual Report and have been
audited by ______________, independent accountants. Their report on the
financial statements and f inancial highlights is included in the Annual
Report. The financial statements, the financial highlights and the report
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 capital growth. Although many of the securities in each
fund's portfolio at any given time may be income-producing, income
generally will not be a consideration in the selectio n of securities.
Each fund may not always achieve its objective, but each will always follow
the investment style described below.
THE FUNDS' INVESTMENT POLICIES, RISKS AND LIMITATIONS
Each fund seeks capital growth primarily from equity securities. Each fund
will tend to be fully invested in common stocks and securities convertible
into common stocks, but may also buy other types of securities such as
preferred stocks and bonds. The funds have the flexibility to invest in
large or small, domestic or foreign issuers.
The value of each fund's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies and general market and economic
conditions. FMR may use various investment techniques to hedge a portion
of the funds' risks, but there is no guarantee that these strategies will
work as FMR intends. Also as a mutual fund, each fund seeks to spread
investment risk by diversifying its holdings among many companies and
industries. When you sell your shares, they may be worth more or less than
what you paid for them.
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.
See the "Appendix" beginning on page F-13 for more information on those
instruments in which the funds can invest.
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.
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 o ther funds, and on an agency basis to Fidelity Brokerage
Services, Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries
of FMR Corp. FMR will make such allocations if commissions are
comparable to those charged by non-affiliated, qualified broker-dealers for
similar services.
A broker-dealer may use a portion of the commissions paid by a fund to
reduce custodian or transfer agent fees for the fund. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
A FEW WORDS ABOUT DISTRIBUTIONS AND TAXES
Each fund distributes substanti ally all of its net income and
cap ital gains to shareholders each year. Normally, dividends and
capital gains are distributed in December.
As with any investment, you should consider how your investment in a
fund will be taxed. If your account is not a tax-deferred retirement
account, you should be aware of these tax implicati ons.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax, and may also be subject to state or local taxes. If you live outside
the United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
TAXES ON TRANSACTIONS . Your redemptions-including exchanges-are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you sell
them.
Whenever you sell shares of a fund, the transfer agent will send you a
confirmation statement showing how many shares you sold and at what price.
You will also receive a transaction statement at least quarterly. However,
it is up to you or your tax preparer to determine whether this sale
resulted in a capital gain and, if so, the amount of tax to be paid. BE
SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the information they contain
will be essential in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
capital gain distribution or dividend distribution, as applicable, from its
NAV, you will pay the full price for the shares and then receive a portion
of the price back in the form of a taxable distribution.
CURRENCY CONSIDERATIONS. If each fund's dividends exceed its taxable
income in any year, which is sometimes the result of currency-related
losses, all or a portion of the fund's dividends may be treated as a return
of capital to shareholders for tax purposes. To minimize the risk of a
return of capital, each fund may adjust its dividends to take currency
fluctuations into account, which may cause the dividends to vary. Any
return of capital will reduce the cost basis of your shares, which will
result in a higher reported capital gain or a lower reported capital loss
when you sell your shares. The statement you receive in January will
specify if any distributions included a return of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the funds
and their investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the funds, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
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.
DESTINY FUNDS AND THE FIDELITY ORGANIZATION
EACH FUND IS A MUTUAL FUND: an investment that po ols shareholders'
money and invests it toward a specified goal. Each fund is a diversified
fund of Fidelity Destiny Portfolios, an open-end management investment
company originally organized as a Massachusetts corporation on January 7,
1969 and reorganized as a Massachusetts business trust on June 20, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of t he trustees
are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. The number of
votes you are entitled to is based upon the dollar value of your
investment .
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business
address at 82 Devonshire Street, Boston, MA 02109. It includes a number of
different subsidiaries and divisi ons which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which chooses their investments and
handles their business affairs. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) in London, England, and Fidelity Management & Research (Far
East) Inc. (FMR Far East) in Tokyo, Japan, assist FMR with foreign
investments .
As of September 30, 1995, FMR advised funds having approximately __
million shareholder accounts with a total value of more than $___
billion.
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 Fidelity Advisor Growth Opportunities. Mr.
Vanderheiden is a managing director of FMR Corp., and leader of the growth
group. He joined Fidelity in 1971.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC, an affiliate of FMR, distributes and markets Fidelity funds and
services. Fidelity Service Company (FSC) performs transfer agent and
servicing functions for each fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K. and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately 49%
of the voting power of FMR Corp. Under the Investment Company Act of 1940
(1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form
a controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by the funds
to reduce the custodian or transfer agent fees for the funds. FMR may use
its broker-dealer affiliates and other firms that sell fund shares to carry
out a fund's transactions, provided that the fund receives brokerage
services and commission rates comparable to those of other
broker-dealers.
MANAGEMENT AND SERVICE FEES
Li ke all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each fund's assets are reflected in that
fund's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder acco unts.
Each fund pays a management fee to FMR for managing i ts investments and
business affairs. FMR in turn pays fees to affiliates who provide
a ssistance with these services. Each fund also pays other expenses,
which are explained on page F-9.
The management fee is calculated and paid to FMR every month. The fee is
determined by taking a basic fee and then applying a perfo rmance
adjustment. The performance adjustment either increases or decreases the
management fee, depending on how well a fund has performed relati ve to
the Standard and Poor's Composite Index of 500 Stocks (the S&P 500).
The basic fee rate (calculated monthly) is calculated by adding a group
fee rate to an individual fee rate, and multiplying the result by each
fund's average net assets. The group fee rate is based on the average net
assets of all the mutual funds advised by FMR. This rate cannot rise above
0.52%, and it drops as total assets under management increase.
For fiscal year end 1995, the group fee rate was 0.___%. The individual
fund fee rate is .17% for Destiny I and .30% for Destiny II. The basic fee
rate for fiscal 1995 was 0.___% for Destiny I and 0.___% for Destiny II.
The performance adjustment rate is calculated monthly by comparing each
fund's performance to that of the S&P 500 over the most recent 36-month
period. The difference is translated into a dollar amount that is added to
or subtracted from the basic fee. 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.
FMR has sub-advi sory agreements with FMR U.K. and FMR Far East.
These sub-advisors provide FMR with investment research and advice on
issuers based outside the United States. Under the sub-advisory
agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services.
For fiscal 1995, FMR, on behalf of each fund, paid FMR U.K. and FMR Far
East fees equal to __% and __%, res pectively, of each fund's average
net assets.
While the management fee is a significant component of each fund's
annual operating costs, the funds have other expenses as well.
FSC performs transfer agency, dividend disbursing and shareholder
servicing functions for each fund. FSC also calculates the NAV and
dividends for each fund, maintains each fund's general accounting records,
and administers each fund's securities lending program. In fiscal 1995,
Destiny I and Destiny II paid FSC fees equal to $___ and $___,
respectively, of each fund's average net assets for transfer agency and
related services, and Destiny I and Destiny II paid FSC fees equal to $___
and $___, respectively, of its average net assets for pric ing and
bookkeeping services.
The portfolio turnover rates for Destiny I and Destiny II for fiscal 1995
were ___% and ___%, respectively.
THE FUNDS' PERFORMANCE
Mutual fund performance is commonly measured as total return. The total
returns that follow are based on historical fund results and do not reflect
the effects of taxes.
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. 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. Each fund's fiscal year runs from October 1 to
September 30. T he tables below show each fund's total returns for the
period ended September 30, 1995:
DESTINY I
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND* ONE YEAR FIVE YEARS TEN YEARS
LIFE OF FUND*
% % % % % % % %
DESTINY II
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND** ONE YEAR FIVE YEARS TEN YEARS
LIFE OF FUND**
% % N/A % % % N/A %
* Life of Fund - July 10, 1970 (Commencement of Operations) - September 30,
1995.
** Life of Fund - December 30, 1985 (Commencement of Operations) -
September 30, 1995.
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, 1995 for a $ 50/month,
15 year Plan. Life of Plan figures are for the periods October 1, 1980
to September 30, 1 995 fo r Destiny Plans I and Commencement of
Operations (December 30, 1985) through September 30, 1995 for
Des tiny Plans II. 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 Custodian Fees assessed through the Plans. Consult the Plans'
Prospectus for more complete information on applicable charges and fees.
DESTINY PLANS I
AVERAGE ANNUAL TOTAL RETURNS
LIFE OF
$50/MONTH, ONE YEAR FIVE YEARS TEN YEARS PLAN
15 YEAR PLAN
% % % %
DESTINY PLANS II
AVERAGE ANNUAL TOTAL RETURNS
LIFE OF
$50/MONTH, ONE YEAR FIVE YEARS TEN YEARS PLAN
15 YEAR PLAN
% % N/A %
TOTAL RETURN is the change in value of an investment in a fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
A growth or growth and income fund may quote its adjusted net asset
value including all distributions paid. This value may be averaged over
specified periods and may be used to calculate a fund's moving averag e.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
HOW TO BUY SHARES
Each fund has an agreement with FDC 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 th e value of a single share. The NAV is computed
by adding the value of the fund's investments, cash and other assets,
subtracting its liabilities , and dividing the result by the
number of shares outstanding. The funds are open for business
each day the New York Stock Exchange (NYSE) is open. FSC normally
calculates each fund's NAV as of t he close of business of the
NYSE, normally 4:00 p.m. Eastern time. Purchase orders are processed at
the NAV next determined after an order is received. E ach fund 's
assets are valued primarily on the basis of market quotations. Foreign
securities are valued on the basis of 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. If quotations are not
readily available or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued
by a method that the 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 A
FUND DIRECTLY. Planholders should consult the section titled "Rights and
Privileges of Planholders" on page 11 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 wi ll generally b e 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 funds, including 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 Centers 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.
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. Fidelity
may only be liable for losses resulting from unauthorized transactions if
it does not follow 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, P.O. Box 660602, Dallas, TX 75266-0602.
STATEMENTS AND REPORTS
For accounts not associated with the Plans, FSC 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.
FSC 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 FSC 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 FSC in
order to redeem your shares, and you should call FSC for specific
instructions. The funds currently do not issue share certificates.
TO REDEEM BY MAIL - Send a "letter of instruction" to Fidelity
Investments, P.O. Box 660602, Dallas, TX 75266-0602. 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, Letter of instruction
signed by all person(s) required to
Custodial (Uniform Gifts/Transfers to Minors Act), sign for the account
exactly as it is registered, accompa-
General 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 FSC for
further instructions.
A signature guarantee is a widely accepted way to protect you and FSC 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 14), 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 15 of the Plans' Prospectus.
APPENDIX
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks. A
complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Current holdings and recent investment strategies are described in each
fund's financial reports, which are sent to shareholders twice a year. For
a free SAI or financial report, call 1-800-433-0734 or your investment
professional.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTION: With respect to 75% of its total assets, each fund may not
purchase more than 10% of the outstanding voting securities of any issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities, loans and other direct debt have varying degrees of quality and
varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics, and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness,
or they may already be in default. The market prices of these securities
may fluctuate more than higher-quality securities and may decline
significantly in periods of general economic difficulty.
The following table provides a summary of ratings assigned to debt
holdings (not including money market instruments) in the funds' portfolios.
These figures are dollar-weighted averages of month-end portfolio holdings
during fiscal 1995, and are presented as a percentage of total security
investments. These percentages are historical and do not necessarily
indicate a fund's current or future debt holdings.
FISCAL 1995 DEBT HOLDINGS, BY RATING
Fiscal 1995 Debt Holdings, by Rating MOODY'S STANDARD & POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average [A] Rating Averag
e[A]
INVESTMENT GRADE %
Highest quality Aaa % AAA %
High quality Aa % AA %
Upper-medium grade A % A %
Medium grade Baa % BBB %
LOWER QUALITY
Moderately speculative Ba % BB %
Speculative B % B %
Highly speculative Caa % CCC %
Poor quality Ca % CC %
Lowest quality, no interest C C
In default, in arrears -- D %
% %
[A] FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF THE
SOVEREIGN CREDIT OF THE
ISSUING GOVERNMENT. THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT
RATED DIRECTLY OR INDIRECTLY BY
MOODY'S OR S&P AMOUNTED TO __% FOR DESTINY I AND __% FOR DESTINY II. THIS
MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED
SECURITIES. [delete if <5% of debt
securities are unrated: FMR HAS DETERMINED THAT UNRATED SECURITIES THAT ARE
LOWER QUALITY ACCOUNT FOR __% OF
DESTINY I 'S AND __% OF DESTINY II 'S TOTAL SECURITY
INVESTMENTS.] R EFER TO THE FUND'S SAI FOR A MORE
COMPLETE DISCUSSION OF THESE RATINGS.
RESTRICTIONS: Purchase of a debt security is consistent with a fund's
debt quality policy if it is rated at or above the stated level by Moody's
or rated in the equivalent categories by S&P, or is unrated but judged to
be of equivalent quality by FMR. Each fund currently intends to limit its
investments in lower than Baa-quality debt securities to 10% of its assets.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security
at one price and si multaneously agrees to sell it back at a higher
price. De lays or losses could result if the other party to the
agreement defaults or becomes insolvent.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that the fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be illiq uid,
which means that they may be difficult to sell promptly at an acceptable
price. The sale of some illiquid securities, and some other securities, may
be subject to legal restrictions. Difficulty in selling securities may
result in a loss or may be costly to a fund.
RESTRICTIONS: Each fund may not purchase a security if, as a result,
more than 10% of its net assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include real estate-related instruments.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry.
Economic, business, or political changes can affect all securities of a
similar type.
RESTRICTIONS: With respect to 75% of its total assets, each fund may not
purchase a security if, as a result, more than 5% would be invested in the
securities of any issuer. These limitations do not apply to U.S. Government
securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including FBSI, an
affiliate of FMR, is a means of earning income. This practice could result
in a loss or delay in recovering a fund's securities. A fund may also lend
money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Each fund seeks capital growth. Although many of the securities in each
fund's portfolio at any given time may be income-producing, income
generally will not be a consideration in the selection of securities.
With respect to 75% of its total assets, each fund may not purchase a
security if, as a result, more than 5% would be invested in the securities
of any issuer and may not purchase more than 10% of the outstanding voting
securities of any issuer.
Each fund may borrow only for temporary or emergency purposes, but not in
an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
FIDELITY DESTINY PORTFOLIOS
CROSS REFERENCE SHEET
Form N-1A Item Number
Part B Statement of Additional Information
10,11 Cover Page
12 Description of the Trust
13a,b,c Investment Policies and Limitations
d *
14a, b, c Trustees and Officers
15a,b *
c Trustees and Officers
16a(i) FMR
a(ii) Trustees and Officers
a(iii),b Management Contracts
c *
d Contracts with FMR Affiliates
e,f,g *
h Description of the Trust
i Contracts with FMR Affiliates
17a,b,c,d Portfolio Transactions
e *
18a Description of the Trust
b *
19a Additional Purchase and Redemption
Information
b Valuation; Additional Purchase and
Redemption Information
c *
20 Distributions and Taxes
21a Contracts with FMR Affiliates
b,c *
22 Performance
23 **
*Not Applicable
**To be filed by subsequent amendment
FIDELITY DESTINY PORTFOLIOS: DESTINY I AND DESTINY II
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 29, 1995
This Statement of Additional Information (SAI) is not a prospectus
but should be read in conjunction with the funds' current Prospectus
( dated November 29, 1995 ) . 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,
1995, are incorporated herein by reference. To obtain an additional copy of
the Prospectus or the Annual Report, please call your investment
professional or Fidelity Distributors Corporation:
NATIONWIDE (TOLL FREE) 1-800-433-0734
ALASKA OR OVERSEAS (CALL COLLECT) 1-617-439-0547
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation 12
Performance
Additional Purchase , Exchange and Redemption Information
Distributions and Taxes
FMR 17
Trustees and Officers
Management Contracts 20
Contracts With FMR Affiliates 23
Description of the Trust
Financial Statements
Appendix 25
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
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 (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
CUSTODIAN
The Chase Manhattan Bank, N.A. (Custodian)
I.BD-DESSAI-1195
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, 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 subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies and
limitations.
The funds' fundamental investment policies and limitations cannot 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. However, except for the fundamental investment
limitations listed below, the investment policies and limitations described
in this SAI are not fundamental and may be changed without shareholder
approval. 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 the
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 portfolio 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 the fund's 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 to be 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 purchase interests in real
estate investment trusts that are not readily marketable or interests in
real estate limited partnerships that are not listed on an exchange or
traded on the NASDAQ National Market System if, as a result, the sum
of such interests and other investments considered illiquid under
limitation (iv) would exceed 10% of the fund's net assets .
(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 portfolio 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 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 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.
(x) Each fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) Each fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust 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.
For the funds' limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 6.
Each fund's investments must be consistent with its objectives and
policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the 1940 Act. 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.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign operations
may involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in foreign currencies and
dividends and interest paid with respect to such securities will fluctuate
based on the relative strength of the U.S. dollar.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include 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
is no assurance that FMR will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade
a small number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. Foreign
markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases the best available market for foreign
securities will be on an exchange or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may result in increased risk in the
event of a failed trade or the insolvency of a foreign broker-dealer, and
may involve substantial delays. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions and custodial
costs, are generally higher than for U.S. investors. In general, there is
less overall governmental supervision and regulation of securities
exchanges, brokers, and listed companies than in the United States. It may
also be difficult to enforce legal rights in foreign countries. Foreign
issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to
those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the United
States or to U.S. persons. Although securities subject to such 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.
American Depository Receipts (ADRs) as well as other "hybrid" forms of ADRs
including European Depository Receipts (EDRs) and Global Depository
Receipts (GDRs), are certificates evidencing ownership of shares of a
foreign issuer. These certificates are issued by depository banks and
generally trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depository bank may
not have physical custody of the underlying securities at all times and may
charge fees for various services, including forwarding dividends and
interest and corporate actions. ADRs are an alternative to directly
purchasing the underlying foreign securities in their national markets and
currencies. However, ADRs continue to be subject to many of the risks
associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks
of the underlying issuer's country.
FOREIGN CURRENCY TRANSACTIONS. The funds 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, the 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 the 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.
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 the 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
a 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 a 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.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options; Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures Margin
Payments, Limitations on Futures and Options Transactions, Liquidity of
Options and Futures Contracts, Options and Futures Relating to Foreign
Currencies, OTC Options, Purchasing Put and Call Options, and Writing Put
and Call Options.
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 the fund's ability to meet redemption requests or
other current obligations.
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.
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, the 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
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed 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
fu tures markets. Each fund intends to comply with Rule 4.5 un der 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 the fund would
exceed 5% of the 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.
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, the
fund's access to other assets held to cover its options or futures
positions could also be impaired.
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.
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.
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.
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 a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a 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 the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, over-the-counter options, and non-government
stripped fixed-rate mortgage-backed securities. Also, FMR may determine
some restricted securities, government-stripped fixed-rate mortgage-backed
securities, loans and other direct debt instruments, emerging market
securities, and swap agreements to be illiquid. However, with respect to
over-the-counter options a fund writes, 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 fund 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 was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
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 U.S.
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 U.S. government agencie s. Indexed securities
may be more volatile than the underlying instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend money
to, and borrow money from, other funds advised by FMR or its affiliates.
Interfund loans and borrowings normally extend overnight, but can have a
maximum duration of seven days. Loans may be called on one day's notice. A
fund will lend through the program only when the returns are higher than
those available 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. A fund 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.
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
the 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,
the 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 the fund to pay additional cash on demand. These commitments may
have the effect of requiring the 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.
Each 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, each fund generally will treat the
borrower as the "issuer" of indebtedness held by the 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.
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 services. 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 a fund's ability to dispose of these
securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering investments
for the funds, FMR will attempt to identify those issuers of 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 or otherwise to exercise its rights as a security holder
to seek to protect the interest of security holders if it determines this
to be in the best interest of a fund's shareholders.
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.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original 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. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
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, a 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 it 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.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
bro ker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid assets
in a segregated custodial account to cover its obligation under the
agreement. A fund will enter into reverse repurch ase agreements with
parties whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
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 a fund
may engage in loan transactions only under the following conditions: (1)
the 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, the fund must be able to terminate
the loan at any time; (4) the 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) the 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).
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 fund will incur
transaction costs, including interest expenses, in connection with opening,
maintaining, and closing short sales against the box.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety 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
United 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. A 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 U.S. 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.
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
management contract. 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
considers 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 commissions; and arrangements for payment of fund
expenses. Generally, commissions for investments traded on foreign
exchanges will be higher than for investments traded on U.S.
exchanges 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. In addition,
such broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
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 funds 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 funds. 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 Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL wa s converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio 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.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds 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 turnover rates for the fiscal years ended September 30, 1995
and 1994 are presented in the table below.
TURNOVER RATES
1995 1994
DESTINY I % 77%
DESTINY II % 72%
The tables below list th e total brokerage commissions; 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 total brokerage commissions paid to FBSI, the
percentage of eac h fund's aggregate brokerage commissions paid to FBSI,
as well as the percentage of each fund's aggregate dollar amount of
transactions executed through FBSI during the same periods. The difference
in the percentage of the 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Total Amount Paid to Commissions Commissions Total Amount
Brokerage Firms Providing Paid Paid of
Commissions Paid Research To FBSI To FBS Transactions
FYE 9/30/95 $ $ $ $ $
FYE 9/30/94 $3,962,343 $ $1,385,392 $ $
7/1/93-9/30/93 $1,596,724 $ $ 423,987 $ $
FYE 6/30/93 $3,827,788 $ $1,097,933 $ $
</TABLE>
DESTINY II
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
T otal Amount Paid to Commissions Commis s ions Total A mount
B rokerage Firms Providing Paid Paid o f
Commissions Paid Rese a rch To FBSI To F B S Trans a ctions
F YE 9/30/95 $ $ $ $ $
FYE 9/30/94 $1,688,528 $ $ 617,397 $ $
7/1/93-9/30/93 $ 525,505 $ $ 159,489 $ $
FYE 6/30/93 $1,507,367 $ $ 439,041 $ $
</TABLE>
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds 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 each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
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
or account.
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
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. 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
FSC normally determines each fund's net asset value (NAV) as of the
close of the NYSE (normally 4:00 p.m. Eastern time). The valuation of
portfolio securities is determined as of this time for the purpose of
computing each fund's NAV.
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 in which they are traded. If the last sale price (on the
local exchange) is unavailable, the last evaluated quote or last bid price
normally is used.
Fixed-income securities and other assets for which market quotations are
readily available may be valued at market values determined by such
securities' most recent bid prices (sales prices if the principal market is
an exchange) in the principal market in which they normally are traded, as
furnished by recognized dealers in such securities or assets. Fixed-income
securities and convertible securities may also be valued on the basis of
information furnished by a pricing service that uses a valuation matrix
which incorporates both dealer-supplied valuations and electronic data
processing techniques. Use of pricing services has been approved by the
Board of Trustees. A number of pricing services are available, and the
Trustees, on the basis of an evaluation of these services, may use various
pricing services or discontinue the use of any pricing service.
Short-term securities are valued either at amortized cost or at original
cost plus accrued interest, both of which approximate current value.
Futures contracts and options are valued on the basis of market quotations,
if available.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC 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 currencies 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 that security will be valued as
determined in good faith by a committee appointed by the Board of Trustees.
Securities and other assets for which there is no readily available market
value 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 a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more accurately
reflect the fair market value of such securities.
PERFORMANCE
The funds may quote 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, yield and
total return fluctuate in response to market conditions and other factors,
and the value of fund 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 a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Total returns quoted by each fund 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 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 a
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 total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cum ulative 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, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of inco me 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. Total returns may be
quoted on a before-tax or after-tax basis. Total returns, yields, and other
performance information may be quoted numerically or in a table, graph, or
similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's 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. A fund 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 30, 1995, the 13-week and 39-week
moving averages were $____ and $____ for Destiny I, respectively, and $____
and $____ for Destiny II, respectively.
The following table shows the income and capital elements of each fund's
cumulative total return. The table compares each fund's return to the
record of the S&P 500, the Dow Jones Industrial Average (DJIA), and the
cost of living (measured by the Consumer Price Index, or CPI) over the same
period. The CPI information is as of the month end closest to the initial
investment date for each fund. The S&P 500 and the DJIA comparisons are
provided to show how each fund's total return compared to the record of a
broad average of common stock prices and a narrower set of stocks of major
industrial companies, respectively, over the same period. Each fund has the
ability to invest in securities not included in either index, and its
investment portfolio may or may not be similar in composition to the
indices. Figures for the S&P 500 and DJIA are based on the prices of
unmanaged groups of stocks and, unlike the funds' returns, do not include
the effect of paying brokerage commissions and other costs of investing.
During the period from September 30, 1980 to September 30, 1995, 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 (commencement of operations) to September 30, 1995, a
hypothetical $10,000 investment in Destiny II would have grown to
$____, assuming all distributions were reinvested. These were periods
of fluctuating stock prices and the figures below should not be considered
representative of the dividend 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 VALUE OF
YEAR INITIAL REINVESTED REINVESTED
ENDED $10,000 DIVIDEND CAPITAL GAIN TOTAL
SEPTEMBER 30 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P DJIA CPI
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1981 $8,560 $ 769 $2,291 $11,620 $11,799 $10,902 $12,49
3
1982 9,177 1,374 2,944 13,495 12,970 12,275
13,123
1983 13,385 2,517 7,592 23,494 18,723 17,701
13,499
1984 11,337 2,817 9,875 24,029 19,608 18,178
14,075
1985 11,111 3,727 12,073 26,911 22,457 20,992
14,517
1986 12,233 4,874 19,414 36,521 29,587 28,973
14,772
1987 15,278 6,896 31,166 53,340 42,442 43,859
15,416
1988 12,263 6,532 28,711 47,506 37,196 36,999
16,059
1989 15,278 9,452 38,086 62,815 49,471 48,929
16,756
1990 11,389 8,239 32,261 51,889 44,896 46,309
17,788
1991 16,193 13,278 47,907 77,378 58,894 59,008
18,391
1992 15,473 14,344 57,961 87,778 65,407 65,901
18,941
1993 17,346 17,892 76,131 111,369 73,917 73,742
19,450
1994 18,210 19,562 87,294 125,066 76,641 81,909
20,027
199 5
</TABLE>
EXPLANATORY NOTES: With an initial investment of $10,000 ma de on
September 30, 1980, the net amou nt 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 (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
cash payments for the period would have amounted to $ ______ for
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>
VALUE OF VALUE OF VALUE OF
YEAR INITIAL REINVESTED REINVESTED
ENDED $10,000 DIVIDEND CAPITAL GAIN TOTAL
SEPTEMBER 30 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P DJIA CPI**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1986* $14,780 $ 0 $ 285 $ 15,065 $ 11,333 $ 11,769 $ 10,082
1987 20,860 0 2,267 23,127 16,257 17,816 10,522
1988 18,220 127 2,953 21,300 14,247 15,029 10,961
1989 21,480 517 5,408 27,405 18,949 19,875 11,436
1990 16,490 919 5,277 22,686 17,196 18,811 12,141
1991 23,600 1,818 10,214 35,632 22,558 23,970 12,553
1992 22,750 2,327 14,747 39,823 25,053 26,769 12,928
1993 26,680 3,340 20,831 50,851 28,312 29,955 13,275
1994 28,550 3,820 24,927 57,297 29,356 33,272 13,669
199 5
</TABLE>
* December 30, 1985 (commencement of operations) to September 30, 1986.
** From month-end closest to initial investment.
EXPLANATORY NOTES: With an initial investment of $10,000 made on December
3 0 , 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 (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
cash payments for the period would have amounted to $______ for
dividends and $ _____ for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
PERFORMANCE COMPARISONS. A 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 that 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, a fund's performance may be compared to stock, bond, and money
market mutual fund performance indices prepared by Lipper or other
organizations. When comparing these indices, it is important to remember
the risk and return characteristics of each type of investment. For
example, while stock mutual funds may offer higher potential returns, they
also carry the highest degree of share price volatility. Likewise, money
market funds may offer greater stability of principal, but generally do not
offer the higher potential returns available from stock mutual funds.
From time to time, a 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.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a
fund may offer greater liquidity or higher potential returns than CDs, a
fund does not guarantee your principal or your return, a nd fund shares
are not FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to to help create a personal
financial profile; worksheets used to project savings needs based on
assumed rates of inflation and hypothetical rates of return; and action
plans offering investment alternatives. Materials may also include
discussions of Fidelity's asset allocation funds and other Fidelity funds,
products and services.
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; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, including the desirability of owning a
particular mutual fund, and Fidelity products and services. Fidelity may
also reprint, and use as advertising and sales literature, articles from
Fidelity Focus, a quarterly magazine provided free of charge to Fidelity
fund shareholders.
A fund may present its fund number, Quotron(trademark) number, CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, a fund may compare these measures
to those of other funds. Measures of volatility seek to compare a 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 a 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.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar-cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and 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
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
willingness to continue purchasing shares during periods of low price
levels.
A fund 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 ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred inves tment 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
inve stment would have an after-tax value of $2,100 after ten years,
assuming tax was deducted at a 31% rate from the tax-deferred earnings at
the end of the ten-year period.
As of September 30, 1995, FMR advised over $___ billion in tax-free fund
assets, $___ billion in money market fund assets, $___ billion in equity
fund assets, $___ billion in international fund assets, and $___ billion in
Spartan fund assets. The funds may reference the growth and variety of
money market mutual funds and the adviser's innovation and participation in
the industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates maintain
a worldwide information and communications network for the purpose of
researching and managing investments abroad.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
Each fund is open for business and its NAV is calculated each day the NYSE
is open for trading. The NYSE has designated the following holiday
closings for 199 6 : New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. 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. In addition,
trading in some of a fund's portfolio securities may not occur on days when
the fund is open for business.
If the Trustees determine that existing conditions make cash payments
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 a fund's NAV. Shareholders receiving securities or other
property on redemption may realize 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 an 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, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund 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 fund that qualifies
for the deduction generally will be less than 100%. Each fund will notify
corporate shareholders annually of the percentage of fund dividends that
qualifies for the dividends-received deduction. A portion of each
fund's dividends derived from certain U.S. government obligations may be
exempt from state and local taxatio n. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary income, and
therefore will increase (decreas e) dividend distributions. Short-term
capital gains are distributed as dividend income. 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 earned by each fund
on the sale o f securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time
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 six
months or less 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.
As of fiscal year end 1995, Destiny I and Destiny II hereby designate
approximately $___ and $___, respectively, as a capital gain dividend for
the purpose of the dividend-paid deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total a ssets are invested in securities of foreign issuers, the fund
may elect to pass through foreign taxes paid and thereby allow shareholders
to take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment co mpany" 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 at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. Each fund intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held less than three months must
constitute less than 30% of the 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 a fund's investments
in such instruments.
If a fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal
Revenue Code, 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 a fund with respect to deferred
taxes arising from such distributions or gains. Generally, each fund will
elect to mark-to-market any PFIC shares. Unrealized gains will be
recognized as income for tax purposes and must be distributed to
shareholders as dividends.
Each fund is treated as a separate entity from the other funds of Fidelity
Destiny Portfolios for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to 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: FSC, 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 institutional customers and funds sold
through intermediaries; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust 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. The
business address of each Trustee and officer who is an "interested person"
(as defined in the 1940 Act) is 82 Devonshire Street, Boston ,
Massachusetts 02109, which is also the address of FMR. The business address
of all the other Trustees is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons"
by virtue of their affiliation with either the trust or FMR are indicated
by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), 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., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Tru stee and Senior Vice President, is
President of FMR; and President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. CO X (63), Tr ustee (1991), 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 (63), Tru stee (1992). 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 she previously
served as a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco
Brands, Inc. In addition, she is a member of the President's Advisory
Council of The University of Vermont School of Business Administration.
RICHARD J. FLYNN (71) , 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 Trustee of
College of the Holy Cross and Old Sturbridge Village, Inc, and he
previously served as a Director of Mechanics Bank (1971-1995).
E. BRADLEY JONES (67), Trust ee (1990). Prior to his retirement in
1984, Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and replacement
products), Cleveland-Cliffs Inc (mining), Consolidated Rail Corporation,
Birmingham Steel Corporation, and RPM, Inc. (manufacturer of chemical
products, 1990), and he previously served as a Director of NACCO
Industries, Inc. (mining and marketing, 1985-1995) and Hyster-Yale
Materials Handling, Inc.(1985-1995). In addition, he serves as a Trustee
of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (62), Tr ustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Vice Chairman of the Board of Directors of the
National Arts Stabilization fund, Vice Chairman of the Board of Trustees of
the Greenwich Hospital Association, and as a Member of the Public Oversight
Board of the American Institute of Certified Public Accountants' SEC
Practice Section (1995).
GERALD C. McDONOUGH ( 66), T rustee, 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), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (70), 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. MA NN (62), 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. WILLIAM S (67), 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., and
AppleSouth, Inc. (restaurants, 1992).
WILLIAM J. HAYES (61), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
GEORGE A. VANDERHEIDE N (49), V ice President, is Managing Director of
FMR Co. and Leader of the Growth Group of mutual funds managed by Fidelity.
ARTHUR S. LORING (47) , Secretary, is Senior Vice President (1993)
and General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the
Fidelity funds and is an employee of FMR (1995). Before joining FMR, Mr.
Rathgeber was a Vice President of Goldman Sachs & Co. (1978-1995), where he
served in various positions, including Vice President of Proprietary
Accounting (1988-1992), Global Co-Controller (1992-1994), and Chief
Operations Officer of Goldman Sachs (Asia) LLC (1994-1995).
ROBERT H. MORRISON (55) , Manager of Security Transactions of
Fidelity's equity funds, is Vice President of FMR.
JOHN H. COSTELLO (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49) , Assistant Treasurer (1994), is an employee
of FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994);
Chief Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993);
and Vice President, Assistant Controller, and Director of the Accounting
Department - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended September 30, 1995.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Gerald C. Edward H. Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk McDonough Malone Mann R.
Davis Jones Williams
Destiny I $ $ $ $ $ $ $ $ $ $ $
Destiny II
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gar y Burkhead** $ 0 $ 0 $ 0
Ralph F . Cox 5,200 52,000 125,000
Phylli s Burke Davis 5,200 52,000 122,000
Richa r d J. Flynn 0 52,000 154,500
Edwa r d C. Johnson 3d** 0 0 0
E. B r adley Jones 5,200 49,400 123,500
Dona l d J. Kirk 5,200 52,000 125,000
Geral d C. McDonough 5,200 52,000 125,000
Edwa r d H. Malone 5,200 44,200 128,000
Marv i n L. Mann 5,200 52,000 125,000
Tho m as R. Williams 5,200 52,000 126,500
</TABLE>
* Information is as December 31, 1994 for 206 funds in the complex.
** Interested trustees of the funds are compensated by FMR.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
On September 30, 1995, the Trustees and officers of each fund owned, in
the aggregate, less than ___% of each fund's total outstanding shares.
As of September 30, 1995, the following owned of record beneficially 5% or
more of outstanding shares of the funds:
A shareholder owning of record or beneficially more than 25% of a fund's
outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
MANAGEMENT CONTRACTS
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 each fund in accordance with its investment objective,
policies and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the Trust o r of FMR, and all personnel of each fund or FMR
performing se rvices 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 each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with each fund; preparing all general
shareho lder communications and conducting shareholder relations;
maintaining each fund's records and the registration of each fund's shares
under federal and state laws; devel oping management and shareholder
services for each fund; and furnishing reports, evaluations, and analyses
on a variety of subjects to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pays for the typesetting, printing and
mailing of its proxy materials to shareholders, legal expenses, and the
fees of the custodian, auditor, and non-interested Trustees. Although each
fund's current management contract provides that the fund will pay for
typesetting, printing, and mailing of prospectuses, statements of
additional information, notices, and reports to shareholders, the trust, on
behalf of each fund, has entered into a revised transfer agent agreement
with FSC, with respect only to those accounts not associated with the
Plans, pursuant to which FSC bears the cost of providing these services to
existing shareholders. Other expen ses paid by each fund include
interest, taxes, brokerage commissions, each fund's proportionate share of
insurance premiums and Investmen t Company Institute dues. Each fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which each fund may be a party, and any obligation it may
have to indemnify its officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated November
1, 1993, which were approved by shareholders on October 20, 1993.
For the services of FMR under the contract, each fund pays FMR 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 the graduated fee rate
schedule shown below on the left. The schedule below on the right shows
the effective annual group fee rate at various asset levels, which are the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $___ billion of group net assets
- their approximate level for September 1995 - 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>
Average Annualized Group Effective Annual
Group Assets Rate Net Assets Fee Rates
$ 0 - 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
</TABLE>
Under each 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 was based on a schedule with breakpoints ending at .3100% for average
group assets in excess of $102 billion. The group fee rate breakpoints
shown above for average group assets in excess of $138 billion and under
$228 billion were vo luntarily adopted by FMR 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
Average Annualized Group Effective Annual
Group Assets Rate Net Assets Fee Rates
$ 138 - 174 billion .3050% $150 billion .3371%
174 - 210 .3000 175 .3325
210 - 246 .2950 200 .3284
246 - 282 .2900 225 .3249
282 - 318 .2850 250 .3219
318 - 354 .2800 275 .3190
354 - 390 .2750 300 .3163
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 1995, the annual basic fee rates would be
calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE
Destiny I ._____ % + .17%* = .____ %
Destiny II ._____ % + .30% = .____ %
* On October 20, 1993, shareholders of Destiny I approved an increase
for the individual fund fee rate from 0.12% to 0.17% effective November 1,
1993.
One-twelfth (1/12) of this annual basic fee rate is then applied to each
fund's net 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 is subject to upward
or downward adjustment, depending upon whether, and to what extent, each
fund's investment performance for the performance period exceeds, or is
exceeded by, the record of the S&P 500 (the Index) over the same period.
The performance period consists of the most recent month plus the previous
35 months. Each percentage point of difference, calculated to the nearest
1.0% (up to a maximum difference of +10.00) 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 each 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.
Each fund's performance is calculated based on change in NAV. For purposes
of calculating the performance adjustment, any dividends or capital gains
distributions pai d by each fund are treated as if reinvested in fund
shares at the NAV as of the record date for payment. The record of the
Inde x is based on change in value and is adjusted for any cash
distributions from the companies whose securities compose the Index.
Because the adjustment to the basic fee is based on each fund's performance
compared to the investment record of the Index, the controlling factor is
not whether each fund's performance is up or down per se, but whether it is
up or down more or less than the record of the Index. Moreover, the
comparative investment performance of each fund is based solely on the
relevant performance period without regard to the cumulative performance
over a longer or shorter period of time.
The table below shows the management fees paid to FMR (including the
amount of the performance adjustment); the dollar amount of negative or
positive performance adjustments; and the net management fee as a
percentage of each fund's average net assets for the last three fiscal
periods.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MANAGEMENT FEE MANAGEMENT FEE
FISCAL PERIODS INCLUDING PERFORMANCE AS A % OF
FUND NAME ENDED PERFORMANCE ADJUSTMENT ADJUSTMENT AVERAGE NET ASSETS
Destiny I 9/30/9 5 $ $ .__ %
9/30/94 $20,816,212 $5,165,391 .65%
7/1/93 - 9/30/93 4,412,827 1,149,524 .60%*
6/30/93 15,770,970 4,110,266 .61%*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Destiny II 9/30/9 5 $ $ .__ %
9/30/94 $9,701,148 $1,447,673 .73%
7/1/93 - 9/30/93 1,982,470 257,067 .71%*
6/30/93 4,984,918 779,084 .75%
</TABLE>
* Annualized
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and repayment of the
reimbursement by each fund will lower its total returns.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its custodian fees attributable to
investments in foreign securities.
SUB-ADVISERS. On behalf of Destiny I an d Destiny II, 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 Eas t 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, which were organized in 1986, 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 on behalf of Destiny
I and Destiny II, the fees paid to the sub-advisers during each fund's last
three fiscal periods were as follows:
FMR U.K. FMR FAR EAST
DESTINY I
Fiscal Year End 199 5 $ $
Fiscal Year End 1994 80,505 107,706
July 1 - September 30, 1993 NA NA
Period Ended June 30, 1993 NA NA
DESTINY II
Fiscal Year End 199 5 $ $
Fiscal Year End 1994 31,206 41,006
July 1 - September 30, 1993 NA NA
Period Ended June 30, 1993 NA NA
CONTRACTS WITH FMR AFFILIATES
FSC is transfer, dividend disbursing, and shareholder servicing agent
for each fund. FSC receives annual account fees and asset-based fees for
each retail account and certain institutional accounts based on account
size. In addition, the fees for retail accounts are subject to increase
based on postal rate changes. With respect to certain institutional
retirement accounts, FSCreceives asset-based fees only. The asset-based
fees are subject to adjustment if the year-to-date total return of the S&P
500 is greater than positive or negative 15%.
FSC pays out-of-pocket expenses associated with providing transfer agent
services. In addition, FSC bears the expense of typesetting, printing, and
mailing prospectuses, statements of additional information, and all other
reports, notices, and statements to shareholders, with the exception of
proxy statements.
FSC also performs the calculations necessary to determine each fund's NAV
and dividends and maintains each fund's accounting records. The annual fee
rates for these pricing and bookkeeping services are based on each fund's
average net assets, specifically 0.06% for the first $500 million of
average net assets and 0.03% 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 FSC 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 FISCAL YEAR ENDED PERIOD JULY 1 THROUGH
SEPTEMBER 30, 199 5 SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
</TABLE>
DESTINY I $ $761,590 $191,621
DESTINY II $ $551,751 $120,980
FSC 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 securities lending
fees paid to FSC during each fund's last three fiscal periods:
SECURITIES LENDING FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL YEAR ENDED FISCAL YEAR ENDED PERIOD JULY 1 THROUGH
SEPTEMBER 30, 199 5 SEPTEMBER 30, 1994 SEPTEMBER 30, 1993*
</TABLE>
DESTINY I $ $0 $0
DESTINY II $ $0 $0
*The funds' fiscal year changed from June 30 to September 30.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act,
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and financial institutions may be required to register as
dealers pursuant to state law.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Destiny I and Destiny II are funds of Fidelity Destiny
Portfolios, 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 20, 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 funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the trust or 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
shareholders 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 the 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 Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their 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 trust or a 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 . If not so
terminated, the trust and the funds will continue indefinitely.
CUSTODIAN. The Chase Manhattan Bank, N.A., 1 Chase Manhattan Plaza, New
York, NY 10081, is custodian of the assets of each fund. The custodian is
r esponsible for the safekeeping of a fund's assets and the appointment
of subcustodian banks and clearing agencies. The custodian takes no part
in determining the investment policies of a fund or in deciding which
securities are purchased or sold by a fund. However, a fund may invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian. Morgan Guaranty Trust Company of New York,
The Bank of New York, and Chemical Bank, each headquartered in New
York, also may serve as a special purpose custodian of certain assets in
connection with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain 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. _____________________ serves as th e trust's independent
accountant. The auditor examines financial statements for the funds and
provides other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund ' s financial statements and financial highlights for
the fiscal year ended September 30, 1995 are included in the fund 's
Annual Report, which is a separate report supplied with this SAI.
Each fund' s financial statements and financial highlights are
incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds which are 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 edged." 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 which are 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 the Aaa securities.
A - Bonds which are 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 which are 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 which are 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 which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
CAA - Bonds which are 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 which are 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 which are 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 than debt in higher
rated categories.
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 rate 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.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
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 or 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. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
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 upo n 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.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Not applicable.
(b) Exhibits:
1.(a) Declaration of Trust of Registrant, dated June 20, 1984, is
electronically filed herein as Exhibit 1(a).
(b) Supplement to Declaration of Trust, dated January 14, 1985, is
electronically filed herein as Exhibit 1(b).
(c) Supplement to Declaration of Trust, dated January 8, 1986, is
electronically filed herein as Exhibit 1(c).
(d) Supplement to Declaration of Trust, dated January 9, 1987, is
electronically filed herein as Exhibit 1(d).
(e) Supplement to Declaration of Trust, dated December 30, 1988, is
electronically filed herein as Exhibit 1(e).
(f) Supplement to Declaration of Trust, dated January 31, 1994, is
electronically filed herein as Exhibit 1(f).
2. Bylaws of Registrant are electronically filed herein as Exhibit 2(a).
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 was
electronically filed and is incorporated herein by reference to Exhibit
5(a) to Post-Effective No. 57.
(b) Management Contract between Registrant, on behalf of Destiny II and
Fidelity Management & Research Company dated November 1, 1993 was
electronically filed and is incorporated herein by reference to Exhibit
5(b) to Post-Effective No. 57.
(c) Sub-Advisory Agreement between Destiny I and FMR U.K. and Fidelity
Management & Research Company dated November 1, 1993 ) was electronically
filed and is incorporated herein by reference to Exhibit 5(c) to
Post-Effective No. 57.
(d) Sub-Advisory Agreement between Destiny II and FMR U.K. and Fidelity
Management & Research Company dated November 1, 1993 was electronically
filed and is incorporated herein by reference to Exhibit 5(d) to
Post-Effective No. 57.
(e) Sub-Advisory Agreement between Destiny I and FMR Far East and Fidelity
Management & Research Company dated November 1, 1993 was electronically
filed and is incorporated herein by reference to Exhibit 5(e) to
Post-Effective No. 57.
(f) Sub-Advisory Agreement between Destiny II and FMR Far East and Fidelity
Management & Research Company dated November 1, 1993 was electronically
filed and is incorporated herein by reference to Exhibit 5(f) to
Post-Effective No. 57.
6. (a) Franchise Agreement dated August 2, 1984, between Registrant, on
behalf of Destiny I, and Fidelity Distributors Corporation is
electronically filed herein as Exhibit 6(a).
(b) Franchise Agreement dated December 30, 1985, between Registrant, on
behalf of Destiny II, and Fidelity Distributors Corporation, is
electronically filed herein as Exhibit 6(b).
7. Retirement Plan for Non- Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, was electronically filed and
is incorporated herein by reference to Exhibit 7 to Union Street Trust's
Post-Effective Amendment No. 87.
8. (a) Custodian Agreement, Appendix A, and Appendix C, dated August 1,
1994, between The Chase Manhattan Bank, N.A. and the Registrant, is
incorporated herein by reference to Exhibit 8(a) to Fidelity Investment
Trust's Post-Effective Amendment No. 59 (File No. 2-90649).
(b) Appendix B, dated April 20, 1995, to the Custodian Agreement, dated
August 1, 1994, between The Chase Manhatten Bank, N.A. and the Registrant
is incorporated herein by reference to Exhibit 8(b) to Fidelity Hereford
Street Trust's Post-Effective Amendment No. 59 (file No. 2-90649).
9. Not applicable.
10. Not applicable.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14.(a) Fidelity Individual Retirement Account, as currently in effect, was
electronically filed and is incorporated herein by reference as Exhibit
14(a) to Union Street Trust's Post-Effective Amendment No. 87.
(b) Forms of Pension Plan and Trust Agreement and Profit-Sharing Plan and
Trust Agreement, as amended and as currently in effect, was electronically
filed and is incorporated herein by reference as Exhibit 14(b) to Union
Street Trust's Post-Effective Amendment No. 87.
(c) Form of Destiny Individual Retirement Account Plan was electronically
filed and is incorporated herein by reference as Exhibit 14(c) to
Post-Effective Amendment No. 58.
(d) Portfolio Advisory Services Individual Retirement Account, as currently
in effect, was electronically filed and is incorporated herein by reference
as Exhibit 14(i) to Union Street Trust's Post-Effective Amendment No. 87.
(e) National Financial Services Corporation Individual Retirement Account,
as currently in effect, was electronically filed and is incorporated herein
by reference to Exhibit 14(h) to Union Street Trust's Post-Effective
Amendment No. 87.
(f) National Financial Services Defined Contribution Plan, as currently in
effect, was electronically filed and is incorporated herein by reference to
Exhibit 14(k) to Union Street's Trust Post-Effective Amendment No. 87.
(g) Fidelity Institutional Individual Retirement Account Custodian
Agreement and Disclosure Statement, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(d) to Union Street Trust's Post-Effective Amendment No. 87.
(h) Plymouth Defined Contribution Plan, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(o) to Commonwealth Trust's Post-Effective Amendment No. 57.
15. Not applicable.
16. Not applicable.
17. Not applicable.
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, 1995
Title of Class Number of Record Holders
Shares of Beneficial Interest
Destiny I 177,049
Destiny II 104,194
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 and Director of FMR.
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).
William 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.
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; Director of Technical Research.
Stephen P. 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); 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. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR; 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 advised by
FMR.
Thomas T. Soviero Vice President of FMR (1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR;
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; 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.; 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 P. 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 P. 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:
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 to deliver
to each person who has received the prospectus or annual or semiannual
financial report for a fund in an electronic format, upon his or her
request and without charge, a paper copy of the prospectus or annual or
semiannual report for the fund.
The Registrant on behalf of Destiny I and Destiny II undertakes, provided
the information required by Item 5A is contained in the annual report,
undertakes to furnish each person to whom a prospectus has been delivered,
upon their request and without charge, a copy of the Registrant's latest
annual report to shareholders.
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. 59 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 13th day of September
1995.
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 13, 1995
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth Rathgeber Treasurer September 13, 1995
Kenneth Rathgeber
/s/J. Gary Burkhead Trustee September 13, 1995
J. Gary Burkhead
/s/Ralph F. Cox * Trustee September 13, 1995
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee September 13, 1995
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee September 13, 1995
Richard J. Flynn
/s/E. Bradley Jones * Trustee September 13, 1995
E. Bradley Jones
/s/Donald J. Kirk * Trustee September 13, 1995
Donald J. Kirk
/s/Edward H. Malone * Trustee September 13, 1995
Edward H. Malone
/s/Marvin L. Mann * Trustee September 13, 1995
Marvin L. Mann
/s/Gerald C. McDonough* Trustee September 13, 1995
Gerald C. McDonough
/s/Thomas R. Williams * Trustee September 13, 1995
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment company:
Fidelity Destiny Portfolios
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.
Djinis, 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 fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead
J. Gary Burkhead /s/Marvin L. Mann
Marvin L. Mann
/s/Ralph F. Cox /s/Edward H. Malone
Ralph F. Cox Edward H. Malone
/s/Gerald C. McDonough
/s/Phyllis Burke Davis Gerald C. McDonough
Phyllis Burke Davis
/s/Thomas R. Williams
Thomas R. Williams
/s/Richard J. Flynn
Richard J. Flynn
/s/E. Bradley Jones
E. Bradley Jones
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 Annuity Fund Fidelity Institutional Trust
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series II Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
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 Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Exchange Fund Fund
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund
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 December 15, 1994
Edward C. Johnson 3d
Exhibit 1(a)
DECLARATION OF TRUST
DATED JUNE 20, 1984
DECLARATION OF TRUST, made June 20, 1984 by Edward C. Johnson 3d, Caleb
Loring, Jr., and Frank Nesvet (the "Trustees").
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Fidelity Destiny Fund".
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The Terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Majority Shareholder Vote" (the 67% or 50% requirement of the
third sentence of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given them
in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to Fidelity Destiny Fund and reference to the
Trust, when applicable to one or more Series of the Trust, shall refer to
any such Series;
(c) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article X, Section 3;
(d) "Shareholder" means a record owner of Shares of the Trust;
(e) The "Trustees" refer to the individual trustees in their capacity as
trustees hereunder of the Trust and their successor or successors for the
time being in office as such trustee or trustees;
(f) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of each Series shall be divided from
time to time, and includes fractions of shares as well as whole shares
consistent with the requirements of Federal and/or other securities laws;
and
(g) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time.
(h) "Series" refers to series of Shares of the Trust established in
accordance with the provisions of Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into such
transferable Shares of one or more separate and distinct Series as the
Trustees shall from time to time create and establish. The number of
Shares is unlimited and each Share shall be without par value and shall be
fully paid and nonassessable. The Trustees shall have full power and
authority, in their sole discretion and without obtaining any prior
authorization or vote of the Shareholders of the Trust to create and
establish (and to change in any manner) Shares with such preferences,
voting powers, rights and privileges as the Trustees may from time to time
determine, to divide or combine the Shares into one or more Series of
Shares, to abolish any one or more Series of Shares, and to take such other
action with respect to the Shares as the Trustees may deem desirable.
ESTABLISHMENT OF SERIES
Section 2. The establishment of any Series shall be effective upon the
adoption of a resolution by a majority of the then Trustees setting forth
such establishment and designation and the relative rights and preferences
of the Shares of such Series. At any time that there are no Shares
outstanding of any particular Series previously established and designated,
the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of the
Trust. The Trustees may make such rules as they consider appropriate for
the transfer of Shares and similar matters. The record books of the Trust
shall be conclusive as to who are the holders of Shares and as to the
number of Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. Such
investments may be in the form of cash or securities in which the
appropriate Series is authorized to invest, valued as provided in Article
X, Section 3. After the date of the initial contribution of capital, the
number of Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding and the amount received by the
Trustees on account of the contribution shall be treated as an asset of the
Trust. Subsequent investments in the Trust shall be credited to each
Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge
upon investments in the Trust and (b) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES
Section 5. All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in
such manner as they, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders
of all Series for all purposes, and shall be referred to as assets
belonging to that Series. The assets belonging to a particular Series
shall be so recorded upon the books of the Trust, and shall be held by the
Trustees in Trust for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees between or among any one or more of the Series in such manner as
the Trustees in their sole discretion deem fair and equitable, and shall be
referred to as "liabilities belonging to" that Series. Each such
allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes. Any creditor of any Series may look only to the
assets of that Series to satisfy such creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust
or the Trustees.
LIMITATION OF PERSONAL LIABILITY
Section 7. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by or on
behalf of the Trust or the Trustees relating to the Trust shall include a
recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
ELECTION: INITIAL TRUSTEES
Section 2. On a date fixed by the Trustees, the Shareholders shall elect
not less than three Trustees. A Trustee shall not be required to be a
Shareholder of the Trust. The initial Trustees shall be Edward C. Johnson
3d, Caleb Loring, Jr. and Frank Nesvet and such other individuals as the
Board of Trustees shall appoint pursuant to Section 4 of the Article IV.
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that
any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery
or upon such later date as is specified therein; (b) that any Trustee may
be removed at any time by written instrument, signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the date when
such removal shall become effective; (c) that any Trustee who requests in
writing to be retired or who has become incapacitated by illness or injury
may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may be
removed at any Special Meeting of the Trust by a vote of two-thirds of the
outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing such
other person as they in their discretion shall see fit consistent with the
limitations under the Investment Company Act of 1940. Such appointment
shall be evidenced by a written instrument signed by a majority of the
Trustees in office or by recording in the records of the Trust, whereupon
the appointment shall take effect. Within three months of such appointment
the Trustees shall cause notice of such appointment to be mailed to each
Shareholder at his address as recorded on the books of the Trust. An
appointment of a Trustee may be made by the Trustees then in office and
notice thereof mailed to Shareholders as aforesaid in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number
of Trustees effective at a later date, provided that said appointment shall
become effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this trust, the trust estate shall vest in
the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed as Trustee hereunder.
The power of appointment is subject to the provisions of Section 16(a) of
the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 5. Any Trustee may, by power of attorney, delegate his power for
a period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees, not less than three (3) nor more than
twelve (12), serving hereunder at any time shall be determined by the
Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is physically or mentally incapacitated by reason of
disease or otherwise, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy,
absence or incapacity, shall be conclusive, provided, however, that no
vacancy shall remain unfilled for a period longer than six calendar months.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets of
the Trust shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or any right of partition or possession thereof, but
each Shareholder shall have a proportionate undivided beneficial interest
in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
The Trustees shall not in any way be bound or limited by present or future
laws or customs in regard to trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Subject to any applicable limitation in the Declaration of
Trust or by the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by
any present or future law or custom in regard to investments by Trustees,
and to sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent that they do not reserve that right to the
Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ a bank or trust company as custodian of any assets of the
Trust subject to any conditions set forth in this Declaration of Trust or
in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or
by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, custodian or underwriter.
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XII, Section 4(b) hereof.
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form; or either in its
own name or in the name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies.
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III.
(n) To allocate assets, liabilities and expenses of the Trust to a
particular Series or to apportion the same between or among two or more
Series, provided that any liabilities or expenses incurred by a particular
Series shall be payable solely out of the assets belonging to that Series
as provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(q) To make distributions of income and of capital gains to Shareholders
in the manner hereinafter provided for.
(r) To borrow money from a bank for temporary or emergency purposes and
not for investment purposes. The Trustees shall not pledge, mortgage or
hypothecate the assets of the Trust except that, to secure borrowings, the
Trustees may pledge securities.
(s) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued
and sold Shares to and buy such Shares from any such person of any firm or
company in which he is interested, subject only to the general limitations
herein contained as to the sale and purchase of such Shares; and all
subject to any restrictions which may be contained in the Bylaws.
ACTION BY THE TRUSTEES
Section 3. The Trustees shall act by majority vote at a meeting duly
called or by unanimous written consent without a meeting or by telephone
consent provided a quorum of Trustees participate in any such telephonic
meeting, unless the 1940 Act requires that a particular action be taken
only at a meeting of the Trustees. At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the Trustees
or by any two other Trustees. Notice of the time, date and place of all
meetings of the Trustees shall be given by the party calling the meeting to
each Trustee by telephone or telegram sent to his home or business address
at least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustees who
attends the meeting without objecting to the lack of notice or who executes
a written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to
any one of their number their authority to approve particular matters or
take particular actions on behalf of the Trust.
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by
the Trustees and the administration of the Trust, and may be the chief
executive, financial and accounting officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging
to the appropriate Series for their expenses and disbursements, including,
without limitation, fees and expenses of Trustees who are not Interested
Persons of the Trust, interest, expense, taxes, fees and commissions of
every kind, expenses of pricing Trust portfolio securities, expenses of
issue, repurchase and redemption of shares including expenses attributable
to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and State
laws and regulations, charges of the custodians, transfer agents, and
registrars, expenses of preparing and setting up in type Prospectuses and
Statements of Additional Information, expenses of printing and distributing
prospectuses sent to existing Shareholders, auditing and legal expenses,
reports to Shareholders, expenses of meetings of Shareholders and proxy
solicitations therefor, insurance expense, association membership dues and
for such non-recurring items as may arise, including litigation to which
the Trust is a party, and for all losses and liabilities by them incurred
in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series prior to any rights or interests
of the Shareholders thereto. This section shall not preclude the Trust
from directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a Majority Shareholder Vote, the Trustees may in
their discretion from time to time enter into an investment advisory or
management contract(s) with respect to the Trust or any Series thereof
whereby the other party(ies) to such contract(s) shall undertake to furnish
the Trustees such management, investment advisory, statistical and research
facilities and services and such other facilities and services, if any, and
all upon such terms and conditions, as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration of Trust,
the Trustees may authorize the investment adviser(s) (subject to such
general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales or exchanges of portfolio securities and
other investment instruments of the Trust on behalf of the Trustees or may
authorize any officer, agent, or Trustee to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the investment
adviser to employ one or more sub-advisers from time to time to perform
such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser
and sub-adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may in their discretion from time to time enter
into (a) contract(s) providing for the sale of the Shares, whereby the
Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In
either case, the contract shall be on such terms and conditions as may be
prescribed in the Bylaws, if any, and such further terms and conditions as
the Trustees may in their discretion determine not inconsistent with the
provisions of this Article VII, or of the Bylaws, if any; and such contract
may also provide for the repurchase or sale of Shares by such other party
as principal or as agent of the Trust.
TRANSFER AGENT
Section 3. The Trustees may in their discretion from time to time enter
into a transfer agency and Shareholder service contract whereby the other
party shall undertake to furnish the Trustees with transfer agency and
Shareholder services. The contract shall be on such terms and conditions
as the Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the Bylaws, if any. Such
services may be provided by one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more
of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no
such contract shall be invalidated or rendered voidable by reason of the
existence of any relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable
for any profit realized directly or indirectly therefrom, provided that the
contract when entered into was reasonable and fair and not inconsistent
with the provisions of this Article VII or the Bylaws, if any. The same
person (including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections 1, 2
and 3 above or Article IX, and any individual may be financially interested
or otherwise affiliated with persons who are parties to any or all of the
contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of
Section 15 of the 1940 Act (including any amendments thereof or other
applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any
contract, entered into pursuant to Section 1 shall be effective unless
assented to by a Majority Shareholder Vote.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the election
of Trustees as provided in Article IV, Section 2, (ii) for the removal of
Trustees as provided in Article IV, Section 3(d), (iii) with respect to any
investment advisory or management contract as provided in Article VII,
Section 1, (iv) with respect to the amendment of this Declaration of Trust
as provided in Article XII, Section 7, (v) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or not
a court action, proceeding or claim should be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, provided, however, that a Shareholder of a particular Series
shall not be entitled to bring any derivative or class action on behalf of
any other Series of the Trust, and (vi) with respect to such additional
matters relating to the Trust as may be required or authorized by law, by
this Declaration of Trust, or the Bylaws of the Trust, if any, or any
registration of the Trust with the Securities and Exchange Commission (the
"Commission") or any State, as the Trustees may consider desirable. On any
matter submitted to a vote of the Shareholders, all shares shall be voted
by individual Series, except (i) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual Series; and (ii) when
the Trustees have determined that the matter affects only the interests of
one or more Series, then only the Shareholders of such Series shall be
entitled to vote thereon. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote, and each fractional Share
shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in
person or by proxy. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required or permitted by
law, this Declaration of Trust or any Bylaws of the Trust to be taken by
Shareholders.
MEETINGS
Section 2. The first Shareholders' meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other
place as the Trustees may designate. Special meetings of the Shareholders
of any Series may be called by the Trustees and shall be called by the
Trustees upon the written request of Shareholders owning at least one-tenth
of the outstanding Shares entitled to vote. Whenever ten or more
Shareholders meeting the qualification set forth in Section 16(c) of the
1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a view
to obtaining signatures on such a request for a meeting, the Trustees shall
comply with the provisions of said Section 16(c) with respect to providing
such Shareholders access to the list of the Shareholders of record of the
Trust or the mailing of such materials to such Shareholders of record.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of
Trust permits or requires that holders of any Series shall vote as a
Series, then a majority of the aggregate number of Shares of that Series
entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series. Any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be
held, within a reasonable time after the date set for the original meeting,
without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the Bylaws, a
majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that
the holders of any Series shall vote as a Series, then a majority of the
Shares of that Series voted on the matter shall decide that matter insofar
as that Series is concerned.
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. The Trustees shall at all times employ a bank or trust company
having capital, surplus and undivided profits of at least two million
dollars ($2,000,000) as custodian with authority as its agent, but subject
to such restrictions, limitations and other requirements, if any, as may be
contained in the Bylaws of the Trust:
(1) to hold the securities owned by the Trust and deliver the same upon
written order;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustee may direct;
and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(2) to compute, if authorized to do so by the Trustees, the Net Asset Value
of any Series in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company organized under the laws of the United States or one of the states
thereof and having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act as from time
to time amended.
CENTRAL CERTIFICATE SYSTEM
Section 2. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit all
or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities
exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person
as may be permitted by the Commission, or otherwise in accordance with the
1940 Act as from time to time amended, pursuant to which system all
securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided
that all such deposits shall be subject to withdrawal only upon the order
of the Trust.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in the
discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by the
laws of Massachusetts, at any time to declare and cause to be paid
dividends on Shares of a particular Series, from the assets belonging to
that Series, which dividends, at the election of the Trustees, may be paid
daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, and may be
payable in Shares of that Series at the election of each Shareholder of
that Series.
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute pro rata among the
Shareholders of a particular Series as of the record date of that Series
fixed as provided in Section 3 hereof a "stock dividend".
REDEMPTIONS
Section 2. In case any holder of record of Shares of a particular Series
desires to dispose of his Shares, he may deposit at the office of the
transfer agent or other authorized agent of that Series a written request
or such other form of request as the Trustees may from time to time
authorize, requesting that the Series purchase the Shares in accordance
with this Section 2; and the Shareholder so requesting shall be entitled to
require the Series to purchase, and the Series or the principal underwriter
of the Series shall purchase his said Shares, but only at the Net Asset
Value thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash from the
assets of that Series and payment for such Shares shall be made by the
Series or the principal underwriter of the Series to the Shareholder of
record within seven (7) days after the date upon which the request is
effective.
DETERMINATION OF NET ASSET VALUE AND
VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series shall mean that
amount by which the assets of that Series, exceed its liabilities, all as
determined by or under the direction of the Trustees. Such value per Share
shall be determined separately for each Series of Shares and shall be
determined on such days and at such times as the Trustees may determine.
Such determination shall be made with respect to securities for which
market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees, provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act and
the rules, regulations and interpretations thereof promulgated or issued by
the Commission or insofar as permitted by any Order of the Commission
applicable to the Series. The Trustees may delegate any of its powers and
duties under this Section 3 with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the value per Share last
determined to be determined again in similar manner and may fix the time
when such redetermined value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940 Act.
Such suspension shall take effect at such time as the Trustees shall
specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no
right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset Value per Share existing after the
termination of the suspension.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of
the Trust, the Trustees shall not be responsible for or liable in any event
for neglect or wrongdoing of them or any officer, agent, employee or
investment adviser of the Trust, but nothing contained herein shall protect
any Trustee against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
INDEMNIFICATION
Section 2.
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) every person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as "Covered Person") shall be indemnified by the
appropriate Series to the fullest extent permitted by law against liability
and against all expenses reasonably incurred or paid by him in connection
with any claim, action, suit or proceeding in which he becomes involved as
a party or otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and
the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office or (B) not to
have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither interested
persons of the Trust nor are parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review
of readily available facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein
shall affect any rights to indemnification to which Trust personnel, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 2 may be paid by the applicable Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the applicable Series if it is ultimately determined
that he is not entitled to indemnification under this Section 2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured against
losses arising out of any such advance payments or (c) either a majority of
the Trustees who are who are neither interested persons of the Trust nor
parties to the matter, or independent legal counsel in a written opinion,
shall have determined, based upon a review of readily available facts (as
opposed to a trial-type inquiry or full investigation), that there is
reason to believe that such Covered Person will be found entitled to
indemnification under this Section 2.
SHAREHOLDERS
Section 3. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his
being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the applicable
Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Series shall, upon request by the
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power
to bind personally either the Trust's officers or any Shareholder. All
persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the appropriate
Series for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past,
present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect a Trustee against any liability to which
the Trustee would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee hereunder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to the
provisions of Section 1 of this Article XII and to Article XI, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust, and subject to the
provisions of Section 1 of this Article XII and to Article XI, shall be
under no liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividends, or
the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect; or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in
advance a date, not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion
or exchange of Shares shall go into effect, as a record date for the
determination of the Shareholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record
on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such dividend, or to receive such
allotment or rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed or aforesaid.
TERMINATION OF TRUST
Section 4.
(a) This Trust shall continue without limitation of time but subject to
the provisions of sub-section (b) of this Section 4.
(b) Subject to a Majority Shareholder Vote of each Series affected by the
matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may
(i) sell and convey the assets of the Trust or any affected Series to
another trust, partnership, association or corporation organized under the
laws of any state which is a diversified open-end management investment
company as defined in the 1940 Act, for adequate consideration which may
include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected Series,
and which may include shares of beneficial interest or stock of such trust,
partnership, association or corporation; or
(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.
Upon making provision for the payment of all such liabilities in either
(i) or (ii), by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or assets (as the case may be) ratably among the
holders of the Shares of the Trust or any affected Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest
of all parties shall be cancelled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental declaration of trust shall be filed by
the Trustees with the Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust
may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such supplemental declarations of trust have been made
and as to any matters in connection with the Trust hereunder, and with the
same effect as if it were the original, may rely on a copy certified by an
officer or Trustee of the Trust to be a copy of this instrument or of any
such supplemental declaration of trust. In this instrument or in any such
supplemental declaration of trust, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to
refer to this instrument as amended or affected by any such supplemental
declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be executed
in any number of counterparts each of which shall be deemed an original.
APPLICABLE LAW
Section 6. The trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
trust.
AMENDMENTS
Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable
law or this Declaration of Trust in any particular case, the Trustees shall
amend or otherwise supplement this instrument, by making a declaration of
trust supplemental hereto, which thereafter shall form a part hereof,
except that an amendment which shall affect the Shareholders of one or more
Series but not the Shareholders of all outstanding Series shall be
authorized by vote of the Shareholders holding a majority of the Shares
entitled to vote of each Series affected and no vote of Shareholders of a
Series not affected shall be required. Amendments having the purpose of
changing the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require authorization by
Shareholder vote. Copies of the supplemental declaration of trust shall be
filed as specified in Section 5 of this Article XII.
FISCAL YEAR
Section 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, provided, however, that the Trustees may, without
Shareholder approval, change the fiscal year of the Trust.
USE OF THE WORD "FIDELITY"
Section 9. Fidelity Management & Research Company ("FMR") has consented
to the use by any Series of the Trust of the identifying word "Fidelity" in
the name of any Series of the Trust at some future date. Such consent is
conditioned upon the employment of FMR as investment adviser of each Series
of the Trust. As between the Trust and itself, FMR controls the use of the
name of the Trust insofar as such name contains the identifying word
"Fidelity". FMR may from time to time use the identifying word "Fidelity"
in other connections and for other purposes, including, without limitation,
in the names of other investment companies, corporations or businesses
which it may manage, advise, sponsor or own or in which it may have a
financial interest. FMR may require the Trust or any Series thereof to
cease using the identifying word "Fidelity" in the name of the Trust or any
Series thereof if the Trust or any Series thereof ceases to employ FMR or a
subsidiary or affiliate thereof as investment adviser.
IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument this 20th day of June, 1984.
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
/s/Caleb Loring, Jr.
Caleb Loring, Jr.
/s/Frank Nesvet
Frank Nesvet
Exhibit 1(b)
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of the Commonwealth
STATE HOUSE - BOSTON, MA
SUPPLEMENT OF DECLARATION OF TRUST
We, Caleb Loring, Jr., Vice President, and Arthur S. Loring, Secretary of
FIDELITY DESTINY FUND
82 Devonshire Street
Boston, Massachusetts 02109
do hereby certify that, in accordance with ARTICLE XII, SECTION 7 of the
Declaration of Trust of Fidelity Destiny Fund, the following Supplement to
said Declaration of Trust was duly adopted by vote of the Board of Trustees
on December 14, 1984.
VOTED: That the Declaration of Trust dated June 20, 1984 be and it hereby
is supplemented
as follows:
1. That Article III, Section 5 of the Declaration of Trust of this Trust
shall be amended
to read as follows:
"All consideration received by the Trust for the issue or sale of Shares of
a particular Series, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in
such manner as they, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders
of all Series for all purposes, and shall be referred to as assets
belonging to that Series. The assets belonging to a particular Series
shall be so recorded upon the books of the Trust, and shall be held by the
Trustees in trust for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees between or among any one or more of the Series in such manner as
the Trustees in their sole discretion deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes. Any creditor of any Series may look only to the
assets of that Series to satisfy such creditor's debt."
2. That Article IX Section 2 of the Declaration of Trust shall be amended
to read
as follows:
"In case any holder of record of Shares of a particular Series desires to
dispose of his Shares, he may deposit at the office of the transfer agent
or other authorized agent of that Series a written request or such other
form of request as the Trustees may from time to time authorize, requesting
that the Series purchase the Shares in accordance with this Section 2; and
the Shareholder so requesting shall be entitled to require the Series to
purchase, and the Series or the principal underwriter of the Series shall
purchase his said Shares, but only at the Net Asset Value thereof (as
described in Section 3 hereof). The Series shall make payment for any such
Shares to be redeemed, as aforesaid, in cash or property from the assets of
that Series or the principal underwriter of the Series to the Shareholder
of record within seven (7) days after the date upon which the request is
effective."
The foregoing Supplement to the Declaration of Trust will become effective
provided this supplement is filed with the Secretary of the Commonwealth of
Massachusetts and the Clerk of the City of Boston, Massachusetts.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 14th day of January in the year 1985.
/s/Caleb Loring, Jr., /s/Arthur S. Loring
Caleb Loring, Jr., Vice President Arthur S. Loring, Secretary
Exhibit 1(c)
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
SECRETARY OF THE COMMONWEALTH
STATE HOUSE - BOSTON, MA
SUPPLEMENT TO DECLARATION OF TRUST
We, Caleb Loring, Jr., Vice President and Arthur S. Loring, Secretary of
FIDELITY DESTINY FUND
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
do hereby certify that, in accordance with ARTICLE XII, SECTION 7 of the
Declaration of Trust of FIDELITY DESTINY FUND, the following Supplement to
said Declaration of Trust was duly adopted by vote of a majority vote of
the Board of Trustees at a meeting duly called and held on December 20,
1985:
VOTED: That the Declaration of Trust dated August 2, 1984, be and it hereby
is, amended as
follows:
That Article 1, Section 1 of the Declaration of Trust of this Trust shall
be amended
to read as follows:
"This Trust shall be known as `Fidelity Destiny Portfolios'."
The `Trust' refers to `Fidelity Destiny Portfolios'.
The foregoing Supplement to the Declaration of Trust will become effective
December 30, 1985 so long as this Supplement is filed in accordance with
Chapter 182, Section 2, of the General Laws.
IN WITNESS whereof and under the penalties of perjury, we have hereunto
signed our names this 8th day of January in the year 1986.
/s/Caleb Loring, Jr. /s/Arthur S. Loring
Caleb Loring, Jr. Arthur S. Loring
Vice President Secretary
Exhibit 1(d)
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of the Commonwealth
STATE HOUSE - BOSTON, MASSACHUSETTS
SUPPLEMENT TO DECLARATION OF TRUST
We, J. Gary Burkhead, Senior Vice President, and Arthur S. Loring,
Secretary of
Fidelity Destiny Portfolios
82 Devonshire Street
Boston, Massachusetts 02109
do hereby certify that, in accordance with Article XII, Section 7 of the
Declaration of Trust of FIDELITY DESTINY PORTFOLIOS, the following
Supplement to said Declaration of Trust was duly adopted by a majority
shareholder vote at a meeting held on December 23, 1986:
VOTED: That the Declaration of Trust dated January 16, 1986, as amended, be
and it
hereby is, further amended as follows:
By amending Article V, Section 1(r) to read as follows:
"To borrow money, and to pledge, mortgage and hypothecate the
assets of the the Trust, subject to applicable requirements of the
1940 Act."
This Supplement to the Declaration of Trust will become effective January
2,
1987 so long as this is filed in accordance with Chapter 182, Section 2
of the
Massachusetts General Laws.
IN WITNESS whereof and under the penalties of perjury, we have hereunto
executed this Supplement this 9th day of January, 1987.
/s/J. Gary Burkhead
J. Gary Burkhead, Senior Vice President
/s/Arthur S. Loring
Arthur S. Loring, Secretary
Exhibit 1(e)
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
SECRETARY OF THE COMMONWEALTH
SUPPLEMENT TO THE DECLARATION OF TRUST
We, J. Gary Burkhead, Senior Vice President, and Arthur S. Loring,
Secretary of
FIDELITY DESTINY PORTFOLIOS
82 Devonshire Street
Boston, Massachusetts 02109
do hereby certify that, in accordance with Article XII, Section 7 of the
Declaration of Trust of FIDELITY DESTINY PORTFOLIOS, the following
Supplement to said Declaration of Trust was duly adopted by a majority of
shareholders of the Trust at a meeting held on December 14, 1988.
VOTED: That Article IX, Section 1 of the Declaration of Trust dated January
26, 1987,
as amended, be and it hereby is amended as follows:
"The Trustees shall at all times employ a bank or trust company having
capital,
surplus and undivided profits of at least two million dollars
($2,000,000), or such
other amount or such other entity as shall be allowed by the Commission
or by the
1940 Act, as custodian with authority as its agent, but subject to such
restrictions,
limitations or other requirements, if any, as may be contained in the
Bylaws of the
Trust:
(1) to hold the securities owned by the Trust and deliver the same upon
written order
or oral order, if confirmed in writing, or by such electro-mechanical or
electronic
devices as are agreed to by the Trust and the custodian, if such
procedures have been
authorized in writing by the Trust;
(2) to receive and receipt for any moneys due to the Trust and deposit
the same in
its own banking department or elsewhere as the Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting
services; and
(2) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any
Series in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the
Trustees and the
custodian. If so directed by a Majority Shareholder Vote, the custodian
shall deliver and pay
over all property of the Trust held by it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company organized under the laws of the United States or one of the states
thereof and having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act as from time
to time amended."
The foregoing supplement to the Declaration will become effective January
1, 1988 so long as this is filed in accordance with Chapter 182, Section 2,
of the General Laws.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 30th day of December, 1988.
/s/J. Gary Burkhead /s/Arthur S. Loring
J. Gary Burkhead Arthur S. Loring
Senior Vice President Secretary
Exhibit 1(f)
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
SECRETARY OF THE COMMONWEALTH
SUPPLEMENT TO THE DECLARATION OF TRUST
We, J. Gary Burkhead, Senior Vice President, and Arthur S. Loring,
Secretary of
FIDELITY DESTINY PORTFOLIOS
82 Devonshire Street
Boston, Massachusetts 02109
do hereby certify that, in accordance with Article XII, Section 7 of the
Declaration of Trust of FIDELITY DESTINY PORTFOLIOS, the following
Supplement to said Declaration of Trust was duly adopted by a majority of
shareholders of the Trust at a meeting held on October 20, 1993.
VOTED: That Article VIII, Section 1 of the Declaration of Trust dated
January 26, 1987,
as amended, be and it hereby is amended as follows:
"On any matter submitted to a vote of the Shareholders, all shares shall be
voted by Individual Series, except (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects only the
interests of one or more Series, then only the Shareholders of such Series
shall be entitled to vote thereon. A shareholder of each series shall be
entitled to one vote for each dollar of net asset value (number of Shares
owned times net asset value per Share) share of such series, on any matter
on which such Shareholder is entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. There shall be
no cumulative voting in the election of Trustees. Shares may be voted in
person or by proxy. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required or permitted by
law, this Declaration of Trust or any Bylaws of Trust to be taken by
Shareholders."
The foregoing supplement to the Declaration will become effective November
1, 1993 so long as this is filed in accordance with Chapter 182, Section 2,
of the General Laws.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 31st day of January, 1994.
/s/J. Gary Burkhead /s/Arthur S. Loring
J. Gary Burkhead Arthur S. Loring
Senior Vice President Secretary
Exhibit 2(a)
BYLAWS
of
FIDELITY DESTINY FUND
ARTICLE I
Officers and Their Election
SECTION 1. Officers. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may from
time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of shares in the Trust.
SECTION 2. Election of Officers. The Treasurer and Secretary shall be
chosen annually by the Trustees. The President shall be chosen annually by
and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. The officers shall hold office until their
successors are chosen and qualified.
SECTION 3. Resignations and Removals. Any officer of the Trust may resign
by filing a written resignation with the President or with the Trustees or
with the Secretary, which shall take effect on being so filed at such time
as may be therein specified. The Trustees may at any meeting remove any
officer.
ARTICLE II
Powers and Duties of Officers and Trustees
SECTION 1. Trustees. The business and affairs of the Trust shall be
managed by the Trustees, and they shall have all powers necessary and
desirable to carry out the responsibility, so far as such powers are not
inconsistent with the laws of the Commonwealth of Massachusetts, the
Declaration of Trust, or with these By-Laws.
SECTION 2. Executive and other Committees. The Trustees may elect from
their own number an executive committee to consist of not less than three
nor more than five members, which shall have the power and duty to conduct
the current and ordinary business of the Trust, including the purchase and
sale of securities, while the Trustees are not in session, and such other
powers and duties as the Trustees may from time to time delegate to such
committee. The Trustees may also elect from their own number other
committees from time to time, the number composing such committees and the
powers conferred upon the same to be determined by vote of the Trustees.
SECTION 3. Chairman of the Trustees. The Trustees may, but need not
appoint from among their number a Chairman. He shall perform any such
duties as the Trustees may from time to time designate.
SECTION 4. President. The President shall be the chief executive officer
of the Trust and, subject to the Trustees, shall have general supervision
over the business and policies of the Trust. When present, he shall
preside at all meetings of the shareholders and the Trustees, and he may,
subject to the approval of the Trustees, appoint a Trustee to preside at
such meetings in his absence. The President shall perform such duties
additional to all of the foregoing as the Trustees may from time to time
designate.
SECTION 5. Treasurer. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and securities
of the Trust which may come into his hands to such bank or trust company as
the Trustees shall employ as Custodian in accordance with Article IX of the
Declaration of Trust. He shall have the custody of the seal of the Trust.
He shall make annual reports in writing of the business conditions of the
Trust, which reports shall be preserved upon its records, and he shall
furnish such other reports regarding the business and condition as the
Trustees may from time to time require. The Treasurer shall perform such
duties additional to foregoing as the Trustees may from time to time
designate.
SECTION 6. Secretary. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the shareholders at
their respective meetings.
The Secretary shall perform such duties additional to the foregoing as the
Trustees may from time to time designate.
SECTION 7. Vice President. Each Vice President of the Trust shall perform
such duties as the Trustees may from time to time designate.
SECTION 8. Assistant Treasurer. The Assistant Treasurer of the Trust shall
perform such duties as the Trustees may from time to time designate.
ARTICLE III
Shareholders' Meetings
SECTION 1. Special Meetings. A special meeting of the shareholders shall
be called by the Secretary whenever ordered by the Trustees or requested in
writing by the holder or holders of at least one-tenth of the outstanding
shares entitled to vote. If the Secretary, when so ordered or requested,
refuses or neglects for more than two days to call such special meeting,
the Trustees or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required
when notice is given by the Secretary.
SECTION 2. Notices. Except as above provided, notices of any special
meeting of the shareholders shall be given by the Secretary by delivering
or mailing, postage prepaid, to each shareholder entitled to vote at said
meeting, a written or printed notification of such meeting, at least
fifteen days before the meeting, to such address as may be registered with
the Trust by the shareholder.
SECTION 3. Place of Meeting. All special meetings of the shareholders
shall be held at the principal place of business of the Trust in Boston,
Massachusetts or at such other place in the United States as the Trustees
may designate.
ARTICLE IV
Trustees' Meetings
SECTION 1. Special Meetings. Special meetings of the Trustees, shall be
called by the Secretary at the written request of the President, the
Treasurer, or any two Trustees, and if the Secretary when so requested
refuses or fails for more than twenty-four hours to call such meeting, the
President, the Treasurer, or such two Trustees, may in the name of the
Secretary call such meeting by giving due notice in the manner requested
when notice is given by the Secretary.
SECTION 2. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may
from time to time determine, provided that any Trustee who is absent when
such determination is made shall be given notice of the determination.
SECTION 3. Quorum. A majority of the Trustees shall constitute a quorum
for the transaction of business.
SECTION 4. Notices. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the Secretary to each Trustee, by
mailing to him, postage prepaid, addressed to him at his address as
registered on the books of the Trust or, if not so registered, at his last
known address, a written or printed notification of such meeting at least
three days before the meeting or by delivering such notice to him at least
two days before the meeting, or by sending to him at least 24 hours before
the meeting, by prepaid telegram, addressed to him at his said registered
address, if any, or if he has no such registered address, at his last known
address, notice of such meeting.
SECTION 5. Place of Meeting. All special meetings of the Trustees shall be
held at the principal place of business of the Trustees in Boston,
Massachusetts, or such other place within or without the Commonwealth as
the person or persons requesting said meeting to be called may designate,
but any meeting may adjourn to any other place.
SECTION 6. Special Action. When all the Trustees shall be present at any
meeting, however called, or wherever held, or shall assent to the holding
of the meeting without notice, or after the meeting shall sign a written
assent thereto on the record of such meeting, the acts of such meeting
shall be valid as if such meeting had been regularly held.
SECTION 7. Action by Consent. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the
Trustees and filed with the records of the Trustees meetings, or by
telephone consent provided a quorum of Trustees participate in any such
telephone meeting. Such consent shall be treated as a vote of the Trustees
for all purposes.
ARTICLE V
Shares of Beneficial Interest
SECTION 1. Beneficial Interest. The beneficial interest in the Trust shall
at all times be divided into an unlimited number of transferable Shares
without par value, each of which shall represent an equal proportionate
interest in the class with each other Share of the class outstanding, none
having priority or preference over another.
SECTION 2. Transfer of Stock. The Shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by transfer
recorded on the books of the Trust, in person or by attorney.
SECTION 3. Equitable Interest Not Recognized. The Trust shall be entitled
to treat the holder of record of any share or shares of stock as the holder
in fact thereof, and shall not be bound to recognize any equitable or other
claim or interest in such share or shares on the part of any other person
except as may be otherwise expressly provided by law.
ARTICLE VI
Inspection of Books
The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust or any of them shall be open to the
inspection of the shareholders; and no shareholder shall have any right to
inspecting any account or book or document of the Trust except as conferred
by law or otherwise by the Trustees or by resolution of the shareholders.
ARTICLE VII
Custodian
The Custodian employed by the Trust pursuant to Article IX to the
Declaration of Trust shall be required to enter into a contract with the
Trust which shall contain in substance the following provisions:
(a) The Trust will cause all securities and funds owned by the Trust to be
delivered or paid to the Custodian.
(b) The Custodian will receive and receipt for any moneys due to the Trust
and deposit the same in its own banking department and in such other
banking institutions, if any, as the Custodian and the Trustees may
approve. The Custodian shall have the sole power to draw upon any such
account.
(c) The Custodian shall release and deliver securities owned by the Trust
in the following cases only:
(1) Upon the sale of such securities for the account of the Trust and
receipt of payment therefor;
(2) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that in any such
case, the cash is to be delivered to the Custodian;
(3) To the issuer thereof or its agent for transfer into the name of the
Trust, the Custodian or a nominee of either, or for exchange for a
different number of bonds or certificates representing the same aggregate
face amount or number of units; provided that in any such case the new
securities are to be delivered to the custodian;
(4) To the broker selling the same for examination, in accord with the
"street delivery" custom;
(5) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities or pursuant to provisions to
any deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the custodian;
(6) In the case of warrants, rights, or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or
the surrender of interim receipts or temporary securities for definitive
securities;
(7) To any pledge by way of pledge or hypothecation to secure any loan, but
only within the limits permitted to the Trust by Article V, Section 1(p) of
the Declaration of Trust.
(8) For deposit in a system for the central handling of securities in
accordance with the provisions of Article IX, Section 2 of the Declaration
of Trust.
(d) The Custodian shall pay out moneys of the Trust only upon the purchase
of securities for the account of the Trust and the delivery in due course
of such securities to the Custodian, or in connection with the conversion,
exchange or surrender of securities owned by the Trust as set forth in (c),
or for the repurchase of shares issued by the Trust or for the making of
any disbursements authorized by the Trustees pursuant to the Declaration of
Trust or these By-laws, or for the payment of any expense or liability
incurred by the Trust; provided that, in every case where payment is made
by the Custodian in advance of receipt of the securities purchased, the
Custodian shall be absolutely liable to the Trust for such securities to
the same extent as if the securities had been received by the Custodian.
(e) The Custodian shall make deliveries of securities and payments of cash
only upon written instructions signed or initialled by such officer or
officers or other agents of the Trust as may be authorized to sign or
initial such instructions by resolution of the Trustees; it being
understood that the Trustees may from time to time authorize a different
person or persons to sign or initial instructions for different purposes.
The contract between the Trust and the Custodian may contain any such
other provisions not inconsistent with the provisions of Article IX of the
Declaration of Trust or with these By-laws as the Trustees may approve.
Such contract shall be terminable by either party upon written notice to
the other within such time not exceeding sixty (60) days as may be
specified in the contract; provided, however, that upon termination of the
contract or inability of the Custodian to continue to serve, the Custodian
shall, upon written notice of appointment of another bank or trust company
as custodian, deliver and pay over to such successor custodian all
securities and moneys held by it for account of the Trust. In such case,
the Trustees shall promptly appoint a successor custodian, but in the event
that no successor custodian can be found having the required qualifications
and willing to serve, it shall be the duty of the Trustees to call as
promptly as possible a special meeting of the shareholders to determine
whether the Trust shall function without a custodian or shall be
liquidated. If so directed by vote of the holders of a majority of the
outstanding shares, the Custodian shall deliver and pay over all property
of the Trust held by it as specified in such vote.
Such contract shall also provide that, pending appointment of a successor
custodian or a vote of the shareholders specifying some other disposition
of the funds and property, the Custodian shall not deliver funds and
property of the Trust to the Trust, but may deliver them to a bank or trust
company doing business in Boston, Massachusetts, of its own selection
having an aggregate capital, surplus and undivided profits, as shown by its
last published report, of not less than $2,000,000 as the property of the
Trust to be held under terms similar to those on which they were held by
the retiring custodian.
Any sub-custodian employed by the Custodian pursuant to authorization to
do so granted by the Trust pursuant to Article IX of the Declaration of
Trust shall be required to enter into a contract with the Custodian
containing in substance the same provisions as those described in
paragraphs (a) through (e) above, except that any contract with a
sub-custodian performing its duties outside the United States and its
territories and possessions, may omit or limit any of such conditions,
provided that, any such omission or limitation shall be expressly approved
by a majority of the Trustees of the Trust.
ARTICLE VIII
Seal
The seal of the Trust shall be circular in form bearing the inscription:
"FIDELITY DESTINY FUND - 1984"
ARTICLE IX
Fiscal Year
The fiscal year of the Trust shall be the period of twelve months ending
on the 31st day of June in each calendar year.
ARTICLE X
Amendments
These By-laws may be amended at any meeting of the Trustees of the Trust
by a majority vote; provided, however, that any amendment which changes or
affects the provisions of Article VII, Article X, or Article XII shall be
approved by vote of a majority of the outstanding shares of the Trust
entitled to vote.
ARTICLE XI
Underwriting Arrangements
SECTION 1. Any contract entered into for the sale of shares of the Trust
pursuant to Article VII, Section 2 of the Declaration of Trust shall
require the other party thereto (hereinafter called the "underwriter")
whether acting as principal or as agent to use all reasonable efforts,
consistent with the other business of the underwriter, to secure purchasers
for the shares of the Trust. Such contract shall require the underwriter
to bear all expenses (a) of printing and distributing any Prospectus,
Statement of Additional Information or reports prepared for its use in
connection with the offering of the shares of the Trust for sale to the
public, other than the expenses of preparing, setting up in type, printing
and distributing (i) Prospectuses used in connection with the registration
and qualification of shares under the Securities Act of 1933 or various
state laws, (ii) any report or other communication to shareholders of the
Trust in their capacity as such and (iii) Prospectuses and Statements of
Additional Information sent to existing shareholders, (b) of any other
literature used by it in connection with such offering, and (c) advertising
in connection with such offering.
ARTICLE XII
Reports to Shareholders
The Trustees shall at least semi-annually submit to the shareholders a
written financial report of the transactions of the Trust including
financial statements which shall at least annually be certified by
independent public accountants.
Exhibit 6(a)
FRANCHISE AGREEMENT
between
Fidelity Destiny Portfolios:
Destiny I and Destiny II
Destiny I Portfolio
and
Fidelity Distributors Corporation
THIS AGREEMENT made this 2nd day of August, 1984 between FIDELITY DESTINY
PORTFOLIOS: DESTINY I AND DESTINY II, a Massachusetts business trust having
its principal office in Boston, Massachusetts which may issue one or more
series of beneficial interest (hereinafter called the "Issuer"), on behalf
of Destiny I Portfolio, (hereinafter called the "Portfolio"), and FIDELITY
DISTRIBUTORS CORPORATION, a Massachusetts corporation, having its principal
office in Boston, Massachusetts (hereinafter called "Distributors").
WITNESSETH:
WHEREAS Distributors has been formed for the purpose, inter alia, of
sponsoring Periodic Payment Plan Certificates based upon open-end
investment company shares and other securities, and is able and desirous of
sponsoring Periodic Payment Plan Certificates based upon Issuer shares as
hereinafter provided; and
WHEREAS Distributors desires to arrange for the acquisition of Issuer
shares for deposit and use under Systematic Investment Plans (hereinafter
sometimes collectively referred to as the "Plans"), of which the STATE
STREET BANK AND TRUST COMPANY will be the Custodian; and
WHEREAS Distributors represents it is a member in good standing of the
National Association of Securities Dealers, Inc.; and
WHEREAS the Issuer is registered under the Investment Company Act of 1940,
as amended (hereinafter called the "1940 Act"), Issuer shares are
registered under the Securities Act of 1933, as amended, (hereinafter
called the "1933 Act") and the Issuer is willing to take the necessary
steps, subject to approval of its shareholders to continue to register
Issuer shares under the 1933 Act to the end that there will be available
for sale such number of Issuer shares as Distributors may reasonably be
expected to sell.
NOW, THEREFORE in consideration of the sum of one dollar and other good
and valuable considerations by each of the parties hereto to the other in
hand paid, the receipt whereof is hereby acknowledged, and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. The Franchise Agreement, for Destiny I Portfolio, previously in effect
is hereby terminated, effective as of the opening of business this date,
and relations between the Issuer and Distributors thereafter will be
governed by the terms of this Agreement.
2. The Issuer agrees to sell upon demand at the net asset value,
determined as provided by the then current prospectus (as determined by
Fidelity Service Co., Boston, Massachusetts, as agent for the Issuer),
which is without imposition of any sales charge, to Distributors, or any
bank or banks acting as Custodian for the Plans sponsored and issued by
Distributors, a sufficient number of Issuer shares to meet the requirements
of all such Plans as are sold, distributed and/or issued by Distributors.
3. The Issuer agrees that it will comply to the best of its ability with
the federal securities laws, and the Issuer agrees it will use its best
efforts to maintain enough shares registered under the 1933 Act to permit
the continued sale of Issuer shares. The Issuer further agrees to make
readily available to Distributors any data, information or material in its
possession that may be necessary to the registration or qualification for
the Plans for sale under the federal securities laws, or the laws of any
state.
4. The Issuer agrees to supply to Distributors or the bank or banks acting
as Custodian for the Plans issued by Distributors a sufficient number of
copies of any and all general mailings, together with the necessary
envelopes, including without limitation, proxy material, proxies, annual,
semi-annual and quarterly reports, notices and prospectuses, sent from time
to time to the holders of Issuer shares so as to provide a single copy,
together with the necessary envelope and postage, to each Distributors'
Planholder. The Issuer agrees to furnish all the above mentioned material
at no cost to Distributors. Additional copies of any current prospectus
and any printed information issued as supplemental to such prospectus of
the Portfolio will be supplied by the Issuer at Distributors' expense in
sufficient quantities to accommodate Distributors in selling, distributing
and/or issuing the Plans. It is understood that Distributors is
wholly-owned by Fidelity Management & Research Company (hereinafter called
"FMR"), investment adviser of the Issuer and that the Issuer's agreement to
supply information and printed materials described in this agreement may be
fulfilled by FMR. Distributors agrees that it will furnish the Portfolio
for its files two copies of all material supplied to Planholders by
Distributors.
5. The Issuer shall indemnify and hold harmless Distributors and each
person, if any, subjected to liability because of connection with
Distributors and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability, claims,
damage or expense (including, unless the Issuer elects to assume the
defense, the reasonable cost of investigating and defending any alleged
liability, claim, damage, or expense and reasonable counsel fees in
connection therewith), joint or several, arising by reason of any person
acquiring any Plans for Issuer shares on the ground that the registration
statement or prospectus for shares of the Issuer includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make statements therein not
misleading, unless such statement or omission occurred by reason of a
variance in the prospectus prepared by Distributors from the prospectus as
contained in the composition, etc., supplied by the Issuer or was made in
reliance upon information furnished by Distributors for use therein. In no
case is the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any such person against
any liability to the Issuer or its security holders to which Distributors
or any controlling person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement. Upon the commencement of any suit against any
Defendant in respect of which indemnity may be sought as aforesaid, such
Defendant shall promptly notify the Issuer, but failure so to notify the
Issuer shall not relieve the Issuer from any liability the Issuer may have
to the Defendants otherwise than on account of said indemnity agreement.
6. Distributors shall indemnify and hold harmless the Issuer and each
person, if any, subjected to liability because of connection with the
Issuer and their respective successors (all hereinafter in this paragraph
referred to as the "Defendants") against any liability, claims, damages, or
expense (including, unless Distributors elects to assume the defense, the
reasonable cost of investigating and defending any alleged liability,
claim, damages or expense and reasonable counsel fees in connection
therewith), joint or several, arising by reason of the sponsorship or
distribution by Distributors of Plans based upon the Issuer shares unless
such liability, claim, damages or expense arise by reason of an untrue
statement of a material fact or omission to state a material fact required
to be stated in the prospectus or registration statement of the Issuer, or
necessary in order to make the statements therein not misleading. In no
case is the indemnity of Distributors in favor of the Issuer or any person
indemnified to be deemed to protect the Issuer or any such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Agreement. Upon the
commencement of any suit against any Defendant in respect of which
indemnity may be sought as aforesaid, such Defendant shall promptly notify
Distributors but failure to notify Distributors shall not relieve
Distributors from any liability Distributors may have to the Defendants
otherwise than on account of said indemnity agreement.
7. The Agreement on the part of the Issuer to sell Issuer shares upon
demand, at net asset value set forth in paragraph 2 hereof, is subject to
the following limitations:
(a) That the Plans are maintained in good standing as unit investment
trusts under the federal securities laws, provided, however, that
Distributors reserves the right to change the terms or conditions of, or
suspend or discontinue, any Plans at any time after notification thereof to
the Issuer by letter or prepaid telegram; and
(b) That the membership of Distributors in the National Association of
Securities Dealers, Inc. and its registration as a broker-dealer under the
Securities Exchange Act of 1934, as amended, have not been cancelled,
revoked or suspended; and
(c) That Distributors is not in violation of any of the federal or state
laws and regulations relating to the registration and sale of said Plans.
If Distributors shall, within thirty days after a default under any of the
provisions of this paragraph, cure such default to the reasonable
satisfaction of the Issuer, then the agreement of the Issuer to sell at the
net asset value Issuer shares in accordance with paragraph 2 hereof shall
remain unimpaired, anything in this paragraph 7 to the contrary
notwithstanding.
8. This Agreement shall have a term of two years from the effective date
of the registration of the Plans under the 1933 Act. Thereafter this
Agreement shall continue from year to year, unless either party shall serve
a notice upon the other by certified or registered mail, return receipt
requested, 120 days prior to the end of the year after which termination is
desired, cancelling this Agreement, provided that it shall be approved by
the directors or shareholders of the Issuer as required by Section 15 of
the 1940 Act. Notwithstanding to the termination of this Agreement, the
Issuer agrees to sell sufficient Issuer shares to Distributors or any bank
or banks acting as Custodian for the Plans to permit completion of all
Plans begun prior to such termination. Distributors represents and agrees
that it will use its best efforts to sell Plans based upon Issuer shares
throughout the term of this Agreement.
9. Distributors or any bank or banks acting as Custodian for the Plans may
from time to time substitute a new investment medium for the Issuer shares
in accordance with the provisions of the Plan certificate and prospectus in
effect at the time.
10. All communications provided for hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed by first
class mail prepaid (unless delivery by certified or registered mail, return
receipt requested, is provided for) to the respective parties as follows:
Fidelity Destiny Portfolios: Fidelity Distributors Corporation
Destiny I 82 Devonshire Street
82 Devonshire Street Boston, Massachusetts 02109
Boston, Massachusetts 02109
or to such other address as the Issuer or Distributors designates by
written notice to that effect to the other.
11. This Agreement contains the entire understanding between the parties
and any modification, alteration, change or subsequent agreement hereafter
made shall be ineffective to change, modify or discharge this Agreement in
whole or in part unless such modification, alteration, change or subsequent
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or alteration is sought.
12. This Agreement shall be construed in accordance with the laws of
Massachusetts.
13. This Agreement shall be binding upon and enforceable by and shall bind
and inures to the benefit of the Issuer and Distributors and their
respective heirs, executors, administrators, successors and assigns.
14. Distributors is expressly put on notice of the limitation of
shareholder liability as set forth in Article XI Section 3 of the
"Declaration of Trust" of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all cases to
the Issuer and its assets and Distributors shall not seek satisfaction of
any obligation from the shareholders or any shareholder of the Issuer. Nor
shall Distributors seek satisfaction of any obligations from the trustees
or any individual trustee of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
FIDELITY DESTINY PORTFOLIOS:
DESTINY I AND DESTINY II on behalf
of Destiny I Portfolio
By /s/J. Gary Burkhead
President
WITNESS:
/s/Arthur S. Loring FIDELITY DISTRIBUTORS CORPORATION
Secretary
By /s/John F. O'Brien
President
ATTEST:
/s/Arthur S. Loring
Clerk
Exhibit 6(b)
FRANCHISE AGREEMENT
between
Fidelity Destiny Portfolios:
Destiny I and Destiny II
Destiny II Portfolio
and
Fidelity Distributors Corporation
THIS AGREEMENT made this 30th day of December, 1985 between FIDELITY
DESTINY PORTFOLIOS: DESTINY I AND DESTINY II, a Massachusetts business
trust having its principal office in Boston, Massachusetts which may issue
one or more series of beneficial interest (hereinafter called the
"Issuer"), on behalf of Destiny II Portfolio, (hereinafter called the
"Portfolio"), and FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts
corporation, having its principal office in Boston, Massachusetts
(hereinafter called "Distributors").
WITNESSETH:
WHEREAS Distributors has been formed for the purpose, inter alia, of
sponsoring Periodic Payment Plan Certificates based upon open-end
investment company shares and other securities, and is able and desirous of
sponsoring Periodic Payment Plan Certificates based upon Issuer shares as
hereinafter provided; and
WHEREAS Distributors desires to arrange for the acquisition of Issuer
shares for deposit and use under Systematic Investment Plans (hereinafter
sometimes collectively referred to as the "Plans"), of which the STATE
STREET BANK AND TRUST COMPANY will be the Custodian; and
WHEREAS Distributors represents it is a member in good standing of the
National Association of Securities Dealers, Inc.; and
WHEREAS the Issuer is registered under the Investment Company Act of 1940,
as amended (hereinafter called the "1940 Act"), Issuer shares are
registered under the Securities Act of 1933, as amended, (hereinafter
called the "1933 Act") and the Issuer is willing to take the necessary
steps, subject to approval of its shareholders to continue to register
Issuer shares under the 1933 Act to the end that there will be available
for sale such number of Issuer shares as Distributors may reasonably be
expected to sell.
NOW, THEREFORE in consideration of the sum of one dollar and other good
and valuable considerations by each of the parties hereto to the other in
hand paid, the receipt whereof is hereby acknowledged, and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. The Franchise Agreement, for Destiny II Portfolio, is hereby effective
as of the opening of business this date, and relations between the Issuer
and Distributors thereafter will be governed by the terms of this
Agreement.
2. The Issuer agrees to sell upon demand at the net asset value,
determined as provided by the then current prospectus (as determined by
Fidelity Service Co., Boston, Massachusetts, as agent for the Issuer),
which is without imposition of any sales charge, to Distributors, or any
bank or banks acting as Custodian for the Plans sponsored and issued by
Distributors, a sufficient number of Issuer shares to meet the requirements
of all such Plans as are sold, distributed and/or issued by Distributors.
3. The Issuer agrees that it will comply to the best of its ability with
the federal securities laws, and the Issuer agrees it will use its best
efforts to maintain enough shares registered under the 1933 Act to permit
the continued sale of Issuer shares. The Issuer further agrees to make
readily available to Distributors any data, information or material in its
possession that may be necessary to the registration or qualification for
the Plans for sale under the federal securities laws, or the laws of any
state.
4. The Issuer agrees to supply to Distributors or the bank or banks acting
as Custodian for the Plans issued by Distributors a sufficient number of
copies of any and all general mailings, together with the necessary
envelopes, including without limitation, proxy material, proxies, annual,
semi-annual and quarterly reports, notices and prospectuses, sent from time
to time to the holders of Issuer shares so as to provide a single copy,
together with the necessary envelope and postage, to each Distributors'
Planholder. The Issuer agrees to furnish all the above mentioned material
at no cost to Distributors. Additional copies of any current prospectus
and any printed information issued as supplemental to such prospectus of
the Portfolio will be supplied by the Issuer at Distributors' expense in
sufficient quantities to accommodate Distributors in selling, distributing
and/or issuing the Plans. It is understood that Distributors is
wholly-owned by Fidelity Management & Research Company (hereinafter called
"FMR"), investment adviser of the Issuer and that the Issuer's agreement to
supply information and printed materials described in this agreement may be
fulfilled by FMR. Distributors agrees that it will furnish the Portfolio
for its files two copies of all material supplied to Planholders by
Distributors.
5. The Issuer shall indemnify and hold harmless Distributors and each
person, if any, subjected to liability because of connection with
Distributors and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability, claims,
damage or expense (including, unless the Issuer elects to assume the
defense, the reasonable cost of investigating and defending any alleged
liability, claim, damage, or expense and reasonable counsel fees in
connection therewith), joint or several, arising by reason of any person
acquiring any Plans for Issuer shares on the ground that the registration
statement or prospectus for shares of the Issuer includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make statements therein not
misleading, unless such statement or omission occurred by reason of a
variance in the prospectus prepared by Distributors from the prospectus as
contained in the composition, etc., supplied by the Issuer or was made in
reliance upon information furnished by Distributors for use therein. In no
case is the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any such person against
any liability to the Issuer or its security holders to which Distributors
or any controlling person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement. Upon the commencement of any suit against any
Defendant in respect of which indemnity may be sought as aforesaid, such
Defendant shall promptly notify the Issuer, but failure so to notify the
Issuer shall not relieve the Issuer from any liability the Issuer may have
to the Defendants otherwise than on account of said indemnity agreement.
6. Distributors shall indemnify and hold harmless the Issuer and each
person, if any, subjected to liability because of connection with the
Issuer and their respective successors (all hereinafter in this paragraph
referred to as the "Defendants") against any liability, claims, damages, or
expense (including, unless Distributors elects to assume the defense, the
reasonable cost of investigating and defending any alleged liability,
claim, damages or expense and reasonable counsel fees in connection
therewith), joint or several, arising by reason of the sponsorship or
distribution by Distributors of Plans based upon the Issuer shares unless
such liability, claim, damages or expense arise by reason of an untrue
statement of a material fact or omission to state a material fact required
to be stated in the prospectus or registration statement of the Issuer, or
necessary in order to make the statements therein not misleading. In no
case is the indemnity of Distributors in favor of the Issuer or any person
indemnified to be deemed to protect the Issuer or any such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Agreement. Upon the
commencement of any suit against any Defendant in respect of which
indemnity may be sought as aforesaid, such Defendant shall promptly notify
Distributors but failure to notify Distributors shall not relieve
Distributors from any liability Distributors may have to the Defendants
otherwise than on account of said indemnity agreement.
7. The Agreement on the part of the Issuer to sell Issuer shares upon
demand, at net asset value set forth in paragraph 2 hereof, is subject to
the following limitations:
(a) That the Plans are maintained in good standing as unit investment
trusts under the federal securities laws, provided, however, that
Distributors reserves the right to change the terms or conditions of, or
suspend or discontinue, any Plans at any time after notification thereof to
the Issuer by letter or prepaid telegram; and
(b) That the membership of Distributors in the National Association of
Securities Dealers, Inc. and its registration as a broker-dealer under the
Securities Exchange Act of 1934, as amended, have not been cancelled,
revoked or suspended; and
(c) That Distributors is not in violation of any of the federal or state
laws and regulations relating to the registration and sale of said Plans.
If Distributors shall, within thirty days after a default under any of the
provisions of this paragraph, cure such default to the reasonable
satisfaction of the Issuer, then the agreement of the Issuer to sell at the
net asset value Issuer shares in accordance with paragraph 2 hereof shall
remain unimpaired, anything in this paragraph 7 to the contrary
notwithstanding.
8. This Agreement shall have a term of two years from the effective date
of the registration of the Plans under the 1933 Act. Thereafter this
Agreement shall continue from year to year, unless either party shall serve
a notice upon the other by certified or registered mail, return receipt
requested, 120 days prior to the end of the year after which termination is
desired, cancelling this Agreement, provided that it shall be approved by
the directors or shareholders of the Issuer as required by Section 15 of
the 1940 Act. Notwithstanding to the termination of this Agreement, the
Issuer agrees to sell sufficient Issuer shares to Distributors or any bank
or banks acting as Custodian for the Plans to permit completion of all
Plans begun prior to such termination. Distributors represents and agrees
that it will use its best efforts to sell Plans based upon Issuer shares
throughout the term of this Agreement.
9. Distributors or any bank or banks acting as Custodian for the Plans may
from time to time substitute a new investment medium for the Issuer shares
in accordance with the provisions of the Plan certificate and prospectus in
effect at the time.
10. All communications provided for hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed by first
class mail prepaid (unless delivery by certified or registered mail, return
receipt requested, is provided for) to the respective parties as follows:
Fidelity Destiny Portfolios: Fidelity Distributors Corporation
Destiny II 82 Devonshire Street
82 Devonshire Street Boston, Massachusetts 02109
Boston, Massachusetts 02109
or to such other address as the Issuer or Distributors designates by
written notice to that effect to the other.
11. This Agreement contains the entire understanding between the parties
and any modification, alteration, change or subsequent agreement hereafter
made shall be ineffective to change, modify or discharge this Agreement in
whole or in part unless such modification, alteration, change or subsequent
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or alteration is sought.
12. This Agreement shall be construed in accordance with the laws of
Massachusetts.
13. This Agreement shall be binding upon and enforceable by and shall bind
and inures to the benefit of the Issuer and Distributors and their
respective heirs, executors, administrators, successors and assigns.
14. Distributors is expressly put on notice of the limitation of
shareholder liability as set forth in Article XI Section 3 of the
"Declaration of Trust" of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all cases to
the Issuer and its assets and Distributors shall not seek satisfaction of
any obligation from the shareholders or any shareholder of the Issuer. Nor
shall Distributors seek satisfaction of any obligations from the trustees
or any individual trustee of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
FIDELITY DESTINY PORTFOLIOS:
DESTINY I AND DESTINY II on behalf
of Destiny II Portfolio
By /s/J. Gary Burkhead
President
WITNESS:
/s/Arthur S. Loring FIDELITY DISTRIBUTORS CORPORATION
Secretary
By /s/John F. O'Brien
President
ATTEST:
/s/Arthur S. Loring
Clerk
