FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
Annual Report
Annual Report
September 30, 1995
September 30, 1995
Printed on recycled paper
6i
FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
George A. Vanderheiden, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTION AGENT
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
DES-ANN-1195
5105
6i
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS IN THE FUNDS
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY,
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL
AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
AN INTERVIEW WITH
GEORGE A. VANDERHEIDEN,
PORTFOLIO MANAGER OF
FIDELITY DESTINY PORTFOLIOS
We've provided the following market recap as context for the manager's
interview:
Strong corporate earnings and a favorable interest rate environment helped
the U.S. stock market post strong returns for the 12 months ended September
30, 1995. The Standard & Poor's Composite Index of 500 Stocks finished the
12-month period with a total return of 29.75% - well above its historical
annual average of roughly 12%. With inflation posing little threat,
interest rates fell during the first half of 1995. The Federal Reserve
Board cut the federal funds rate - the rate banks charge each other for
overnight loans - by 0.25% on July 6 to 5.75%. Large-capitalization stocks
led the rally. Technology companies - whose goods and services benefited
from both corporate and consumer demand - posted the strongest earnings
growth and stock price gains. Lower interest rates and continued merger and
acquisition activity helped financial stocks perform especially well. In
June, the Dow Jones Industrial Average closed above 4500 for the first
time. Returns from foreign markets suffered as investors brought capital
back to the U.S. The Morgan Stanley Emerging Markets Free Index was down
17.73% for the 12 months ended September 30. The Morgan Stanley EAFE
(Europe, Australia, Far East) Index returned 5.79% for the year ended
September 30. European markets have fared well through the first nine
months of 1995, while the Japanese market has struggled through much of the
year.
Q. HOW HAVE THE FUNDS PERFORMED, GEORGE?
A. For the 12 months ended September 30, 1995, Destiny I was up 27.49% and
Destiny II was up 26.98% while the S&P returned 29.75% for the same time
period. You know it's been quite a year when fund returns like these lag
the overall market.
Q. DESPITE THE STRONG RESULTS, THE FUNDS UNDERPERFORMED THE MARKET. WHY?
A. At the risk of oversimplifying, much of the large return in the market
last year came from the phenomenal performance of the technology sector.
The semiconductor group was up 96% in the past 12 months and other
technology sectors also had spectacular gains. These were on top of
impressive gains in 1992 and 1993. Although I generally find technology
stocks attractive,
I have not made the weighting as large as some other growth funds because
of my risk-adverse discipline. My investment approach over the past 15
years has been to try to identify and invest in themes and trends early and
stay with them as long as I feel comfortable. When they become very
extended, I begin to sell. Sometimes I may sell too early and the stocks
may continue to make spectacular gains, but I'm willing to sacrifice that
if I feel as though bone-crushing declines are on the other side of those
gains.
Q. HOW HAS THIS STRATEGY WORKED IN THE PAST?
A. Very well. If the groups that were sold keep going up, the funds
underperform. However, when the group corrects, I'm protected by being
either out of the sector entirely, or by being underweighted. The last time
the funds lagged the latter stages of a bull market was in 1989 when the
funds were five or six percentage points behind the S&P 500. Over the next
five years, however, the funds beat the market by a wide margin, not once
underperforming in any year. So while the portfolios may not show some of
the spectacular gains of other growth funds this year, the risk level going
into the inevitable correction is also less.
Q. WHAT INVESTMENTS CONTRIBUTED TO THE FUNDS' PERFORMANCE?
A. The funds were modestly overweighted in technology and holdings in
Intel, Compaq, IBM, Microsoft, Solectron, Hewlett-Packard, Motorola and SCI
Systems helped the funds. Another important area was financial stocks,
which benefited from the decline in long-term interest rates. The
mortgage-related sector, including the funds' holdings of Fannie Mae and
Freddie Mac, was up 30% during the past 12 months. Banks, in which the
funds have important holdings in the regionals and money centers, were up
in excess of 30%. Aerospace and defense was also very strong with a gain of
47%. This group is represented by the funds' holdings in Boeing, Raytheon
and Loral. Philip Morris, the second largest position in the funds, also
had a good year with a gain in excess of 36%.
Q. IT LOOKS LIKE YOU'VE CONTINUED TO HOLD ON TO TREASURY BONDS . . .
A. Yes. The move in bonds has been spectacular this year, but the equity
market put on a better show. Since the beginning of 1995, Treasury bonds
returned 21% on a total return basis while the S&P 500 returned nearly 30%.
Looking forward, bonds should continue to benefit from a slowing economy.
The three pillars of this economy over the past year have been inventory
accumulation, capital spending, and the export market, and each of these
sectors is now in a slowing mode. This is positive for inflation, for
further declines in long term interest rates and for a healthy bond market.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The two fundamental factors driving this bull market since it started in
October 1990 have been rising earnings and falling interest rates. Treasury
bonds were yielding 9% when this bull move started five years ago. At the
current level of 6.5%, I think yields still have room to move lower given
the sluggish domestic and international economies and the current low
inflation rates. This is bullish for equities, especially interest rate
sensitive stocks. The outlook for earnings, however, is not as hopeful. The
past five years have seen one of the strongest earnings gains in the post
World War II period. However, profit margins and return on equity are back
to record levels and industrial capacity is being added so rapidly that it
is forcing down operating rates. This means that profit margins should
contract and earnings growth should come to a screeching halt by the first
quarter of 1996. My opinion is that the economic slowdown will last into
the first quarter of 1996, the earnings slowdown will last longer and that
the market will show no net gain over the next six months. I expect growth
to resume in the second half of 1996. As always, remember that it is a
market of stocks rather than a stock market and all of our resources at
Fidelity are geared to finding and investing in the best stocks for
whatever market lies ahead.
DISTRIBUTIONS
Totals of 8.0% and 6.9% of the dividends distributed during the fiscal year
were derived from interest on U.S. Government securities which are
generally exempt from state income tax for Destiny I and Destiny II,
respectively.
Totals of 35% and 31% of the dividends distributed during the fiscal year
qualifiy for the dividends-received deductions for corporate shareholders
for Destiny I and Destiny II, respectively.
The fund will notify shareholders in January 1996 of the percentages for
use
in preparing 1995 income tax returns.
PERFORMANCE UPDATE - DESTINY I
$10,000 OVER 10 YEARS
Destiny I (006) Standard & Poor's
09/30/85 10000.00 10000.00
10/31/85 10490.74 10462.00
11/30/85 11351.85 11179.69
12/31/85 11962.96 11720.79
01/31/86 12259.26 11786.43
02/28/86 13490.74 12668.05
03/31/86 14379.63 13374.93
04/30/86 14333.33 13223.79
05/31/86 14759.26 13927.30
06/30/86 14851.85 14162.67
07/31/86 13768.52 13370.98
08/31/86 14712.62 14363.10
09/30/86 13571.22 13175.27
10/31/86 14233.23 13935.49
11/30/86 14461.51 14274.12
12/31/86 14187.57 13910.13
01/31/87 16070.88 15783.82
02/28/87 17143.79 16407.28
03/31/87 17337.83 16881.46
04/30/87 17326.42 16731.21
05/31/87 17451.97 16876.77
06/30/87 18182.47 17729.05
07/31/87 19278.21 18627.91
08/31/87 20301.60 19322.73
09/30/87 19821.09 18899.56
10/31/87 14789.07 14828.60
11/30/87 13521.05 13606.72
12/31/87 15024.17 14642.19
01/31/88 15571.55 15258.63
02/29/88 16666.31 15969.68
03/31/88 16277.38 15476.22
04/30/88 16637.50 15648.01
05/31/88 16709.53 15784.14
06/30/88 17919.53 16508.63
07/31/88 17746.67 16445.90
08/31/88 16986.86 15886.74
09/30/88 17653.30 16563.52
10/31/88 17890.26 17023.98
11/30/88 17475.59 16780.54
12/31/88 17950.25 17074.20
01/31/89 19471.20 18324.03
02/28/89 19034.49 17867.76
03/31/89 19471.20 18284.08
04/30/89 20359.68 19233.02
05/31/89 21609.57 20011.96
06/30/89 21127.68 19897.89
07/31/89 22543.22 21694.67
08/31/89 23153.49 22119.89
09/30/89 23342.12 22029.20
10/31/89 22556.19 21518.12
11/30/89 22666.22 21957.09
12/31/89 22534.92 22484.06
01/31/90 21186.82 20975.38
02/28/90 21636.19 21245.96
03/31/90 22102.20 21808.98
04/30/90 21386.54 21263.76
05/31/90 23749.88 23336.97
06/30/90 23699.95 23178.28
07/31/90 23034.22 23104.11
08/31/90 20675.45 21015.50
09/30/90 19281.99 19992.04
10/31/90 19142.65 19906.08
11/30/90 20779.96 21192.01
12/31/90 21825.06 21783.27
01/31/91 24176.52 22733.02
02/28/91 25848.67 24358.43
03/31/91 26458.31 24947.90
04/30/91 26789.26 25007.78
05/31/91 28391.73 26088.11
06/30/91 26527.98 24893.28
07/31/91 28287.22 26053.30
08/31/91 29246.93 26670.77
09/30/91 28753.69 26225.37
10/31/91 28625.82 26576.79
11/30/91 26872.10 25505.74
12/31/91 30319.58 28423.60
01/31/92 30647.26 27894.92
02/29/92 31765.21 28257.55
03/31/92 31052.03 27706.53
04/30/92 32169.98 28521.10
05/31/92 32439.83 28660.86
06/30/92 31880.86 28233.81
07/31/92 33172.28 29388.57
08/31/92 32292.82 28786.11
09/30/92 32618.13 29125.78
10/31/92 32422.95 29227.72
11/30/92 33984.45 30224.39
12/31/92 34913.70 30596.15
01/31/93 35991.85 30853.16
02/28/93 36106.55 31272.76
03/31/93 37895.82 31932.61
04/30/93 38125.21 31159.85
05/31/93 39203.36 31994.93
06/30/93 39501.57 32087.71
07/31/93 40006.24 31959.36
08/31/93 41384.47 33170.62
09/30/93 41384.47 32915.21
10/31/93 42906.32 33596.55
11/30/93 42636.31 33277.39
12/31/93 44137.56 33680.04
01/31/94 46947.03 34825.16
02/28/94 46238.10 33881.40
03/31/94 44058.79 32404.17
04/30/94 45371.62 32818.95
05/31/94 45712.96 33357.18
06/30/94 44426.38 32539.93
07/31/94 45896.76 33607.24
08/31/94 47971.04 34985.13
09/30/94 46474.41 34128.00
10/31/94 47498.42 34895.88
11/30/94 45870.50 33624.97
12/31/94 46092.56 34123.63
01/31/95 46534.24 35008.45
02/28/95 48111.67 36372.73
03/31/95 49468.26 37446.09
04/30/95 51329.63 38548.88
05/31/95 53727.33 40089.68
06/30/95 55557.15 41020.96
07/31/95 57544.72 42381.22
08/31/95 58049.49 42487.59
09/29/95 59248.34 44280.57
$10,000 OVER 10 YEARS: LET'S SAY YOU INVESTED $10,000 IN DESTINY I FUND ON
SEPTEMBER 30, 1985. BY SEPTEMBER 30, 1995, THE VALUE OF YOUR INVESTMENT
WOULD HAVE GROWN TO $59,248 - A 492.48% INCREASE ON YOUR INITIAL
INVESTMENT. FOR COMPARISON LOOK AT HOW A $10,000 INVESTMENT IN THE S&P 500
(WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN
TO $44,281 - A 342.81% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
One Five Ten
Year Years Years
DESTINY I FUND 27.49 207.27 492.48
% % %
S&P 500(registered trademark) 29.75 121.49 342.81
% % %
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
One Year Five Ten
Years Years
DESTINY I 27.49% 25.17% 19.47%
FUND
$50/MONTH
15-YEAR PLAN -39.06% 20.66% 17.91%
THE CHARTS ABOVE SHOW DESTINY I FUND'S TOTAL RETURNS WHICH INCLUDE CHANGES
IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE FUND'S
CUMULATIVE TOTAL RETURNS AND AVERAGE ANNUAL TOTAL RETURNS DO NOT INCLUDE
THE EFFECTS OF THE SEPARATE SALES CHARGES AND CUSTODIAN FEES ASSESSED
THROUGH FIDELITY SYSTEMATIC INVESTMENT PLANS (THE PLANS); AVERAGE ANNUAL
TOTAL RETURNS FOR A $50/MONTH 15-YEAR PLAN INCLUDE THE EFFECTS OF THE
SEPARATE CREATION AND SALES CHARGES AND CUSTODIAN FEES ASSESSED THROUGH
DESTINY I'S $50/MONTH 15-YEAR PLAN. AS SHARES OF THE FUNDS MAY BE ACQUIRED
ONLY THROUGH THE PLANS, INVESTORS SHOULD CONSULT THE PLANS' PROSPECTUS FOR
MORE COMPLETE INFORMATION ON THE IMPACT OF THE SEPARATE CHARGES AND FEES
APPLICABLE TO EACH PLAN. THE RATE (%) OF DEDUCTIONS DECREASES
PROPORTIONATELY AS PLAN SIZES INCREASE. FIGURES FOR THE S&P 500, AN
UNMANAGED INDEX OF COMMON STOCK PRICES, INCLUDE REINVESTMENT OF DIVIDENDS.
THE S&P 500 FIGURE FOR ONE YEAR IS PUBLISHED BY S&P. THE S&P 500 IS A
REGISTERED TRADEMARK OF STANDARD & POOR'S CORPORATION.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
PERFORMANCE UPDATE - DESTINY II
$10,000 OVER LIFE OF FUND
Destiny II (210)Standard & Poor's
12/30/85 10000.00 10000.00
12/31/85 10130.00 10081.75
01/31/86 11240.00 10138.21
02/28/86 12320.00 10896.55
03/31/86 14600.00 11504.57
04/30/86 15280.00 11374.57
05/31/86 16140.00 11979.70
06/30/86 16530.00 12182.15
07/31/86 15620.00 11501.17
08/31/86 16003.11 12354.56
09/30/86 15065.35 11332.84
10/31/86 15972.53 11986.74
11/30/86 16288.51 12278.02
12/31/86 16237.55 11964.93
01/31/87 18215.00 13576.61
02/28/87 20141.49 14112.88
03/31/87 20335.16 14520.74
04/30/87 20365.74 14391.51
05/31/87 20508.44 14516.72
06/30/87 21385.05 15249.81
07/31/87 22628.60 16022.98
08/31/87 23791.87 16620.63
09/30/87 23126.67 16256.64
10/31/87 16884.91 12754.96
11/30/87 15499.08 11703.95
12/31/87 17383.76 12594.62
01/31/88 17898.14 13124.86
02/29/88 19476.36 13736.47
03/31/88 19359.45 13312.02
04/30/88 19862.14 13459.78
05/31/88 19663.40 13576.88
06/30/88 21335.14 14200.06
07/31/88 21218.24 14146.10
08/31/88 20470.05 13665.13
09/30/88 21300.07 14247.27
10/31/88 21346.84 14643.34
11/30/88 20680.48 14433.94
12/31/88 21350.62 14686.53
01/31/89 23136.88 15761.59
02/28/89 22678.25 15369.13
03/31/89 22967.91 15727.23
04/30/89 24295.54 16543.47
05/31/89 25828.34 17213.48
06/30/89 24911.07 17115.36
07/31/89 26407.67 18660.88
08/31/89 27251.47 19026.63
09/30/89 27404.57 18948.62
10/31/89 26511.50 18509.02
11/30/89 26766.66 18886.60
12/31/89 26990.13 19339.88
01/31/90 25234.89 18042.17
02/28/90 25707.45 18274.92
03/31/90 26342.04 18759.20
04/30/90 25531.93 18290.22
05/31/90 28448.32 20073.52
06/30/90 28502.33 19937.02
07/31/90 27489.69 19873.22
08/31/90 24515.39 18076.68
09/30/90 22685.68 17196.35
10/31/90 22520.59 17122.40
11/30/90 24831.81 18228.51
12/31/90 26309.30 18737.08
01/31/91 29263.38 19554.02
02/28/91 31551.75 20952.13
03/31/91 32550.31 21459.18
04/30/91 33188.28 21510.68
05/31/91 35074.45 22439.94
06/30/91 32591.92 21412.19
07/31/91 34880.29 22410.00
08/31/91 36250.88 22941.12
09/30/91 35631.86 22558.00
10/31/91 35480.87 22860.28
11/30/91 33185.94 21939.01
12/31/91 37207.75 24448.83
01/31/92 37924.51 23994.08
02/29/92 39517.30 24306.00
03/31/92 38306.78 23832.04
04/30/92 39596.94 24532.70
05/31/92 40202.21 24652.91
06/30/92 39310.24 24285.58
07/31/92 40887.11 25278.86
08/31/92 39700.87 24760.64
09/30/92 39823.41 25052.82
10/31/92 39805.90 25140.50
11/30/92 41801.45 25997.80
12/31/92 42968.79 26317.57
01/31/93 44452.37 26538.64
02/28/93 44562.26 26899.56
03/31/93 46430.47 27467.14
04/30/93 46430.47 26802.44
05/31/93 48042.26 27520.74
06/30/93 48463.52 27600.55
07/31/93 48921.42 27490.15
08/31/93 50717.96 28532.03
09/30/93 50851.37 28312.33
10/31/93 52757.35 28898.40
11/30/93 52547.69 28623.86
12/31/93 54487.08 28970.21
01/31/94 57918.86 29955.20
02/28/94 57216.45 29143.41
03/31/94 54426.88 27872.76
04/30/94 56052.46 28229.53
05/31/94 56453.83 28692.49
06/30/94 54788.12 27989.53
07/31/94 56574.25 28907.58
08/31/94 59163.14 30092.80
09/30/94 57296.73 29355.52
10/31/94 58541.00 30016.02
11/30/94 56674.59 28922.84
12/31/94 56926.89 29351.76
01/31/95 57523.22 30112.85
02/28/95 59403.96 31286.35
03/31/95 61009.48 32209.61
04/30/95 63234.26 33158.19
05/31/95 66078.31 34483.52
06/30/95 68303.09 35284.57
07/31/95 70642.55 36454.61
08/31/95 71261.82 36546.11
09/29/95 72752.65 38088.35
$10,000 OVER LIFE OF FUND: LET'S SAY YOU INVESTED $10,000 IN DESTINY II
FUND ON DECEMBER 30, 1985, WHEN THE FUND STARTED. BY SEPTEMBER 30, 1995,
THE VALUE OF YOUR INVESTMENT WOULD HAVE GROWN TO $72,753 - A 627.53%
INCREASE ON YOUR INITIAL INVESTMENT. FOR COMPARISON LOOK AT HOW A $10,000
INVESTMENT IN THE S&P 500 (WITH DIVIDENDS REINVESTED) DID OVER THE SAME
PERIOD. IT WOULD HAVE GROWN TO $38,088 - A 280.88% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
One Five Life of
Year Years Fund*
DESTINY II FUND 26.98 220.70 627.53
% % %
S&P 500(registered trademark) 29.75 121.49 280.88
% % %
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
Life of
One Year Five Fund/Pla
Years n*
DESTINY II 26.98% 26.25% 22.55%
FUND
$50/MONTH
15-YEAR PLAN -39.31% 21.69% 20.90%
THE CHARTS ABOVE SHOW DESTINY II FUND'S TOTAL RETURNS WHICH INCLUDE CHANGES
IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE FUND'S
CUMULATIVE TOTAL RETURNS AND AVERAGE ANNUAL TOTAL RETURNS DO NOT INCLUDE
THE EFFECTS OF THE SEPARATE SALES CHARGES AND CUSTODIAN FEES ASSESSED
THROUGH FIDELITY SYSTEMATIC INVESTMENT PLANS (THE PLANS); AVERAGE ANNUAL
TOTAL RETURNS FOR A $50/MONTH 15-YEAR PLAN INCLUDE THE EFFECTS OF THE
SEPARATE CREATION AND SALES CHARGES AND CUSTODIAN FEES ASSESSED THROUGH
DESTINY II'S $50/MONTH 15-YEAR PLAN. AS SHARES OF THE FUNDS MAY BE ACQUIRED
ONLY THROUGH THE PLANS, INVESTORS SHOULD CONSULT THE PLANS' PROSPECTUS FOR
MORE COMPLETE INFORMATION ON THE IMPACT OF THE SEPARATE CHARGES AND FEES
APPLICABLE TO EACH PLAN. THE RATE (%) OF DEDUCTIONS DECREASES
PROPORTIONATELY AS PLAN SIZES INCREASE. FIGURES FOR THE S&P 500, AN
UNMANAGED INDEX OF COMMON STOCK PRICES, INCLUDE REINVESTMENT OF DIVIDENDS.
THE S&P 500 FIGURE FOR ONE YEAR IS PUBLISHED BY S&P. THE S&P 500 IS A
REGISTERED TRADEMARK OF STANDARD & POOR'S CORPORATION.
* THE LIFE OF FUND AND LIFE OF PLAN FIGURES ARE FROM COMMENCEMENT OF
OPERATIONS, DECEMBER 30, 1985, TO THE PERIOD ENDED SEPTEMBER 30, 1995.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
TOP TEN EQUITY HOLDINGS - DESTINY I
Federal National Mortgage Association
Philip Morris Companies, Inc.
General Motors Corp.
Compaq Computer Corp.
Intel Corp.
Chrysler Corp.
Vodafone Group PLC sponsored ADR
International Business Machines Corp.
Shawmut National Corp.
Fleet Financial Group, Inc.
Federal National Mortgage Association
Philip Morris Companies, Inc.
Chrysler Corp.
Intel Corp.
Compaq Computer Corp.
General Motors Corp.
International Business Machines Corp.
Vodafone Group PLC sponsored ADR
Fleet Financial Group, Inc.
Shawmut National Corp.
TOP TEN EQUITY HOLDINGS - DESTINY II
Federal National Mortgage Association
Philip Morris Companies, Inc.
General Motors Corp.
Compaq Computer Corp.
Intel Corp.
Chrysler Corp.
Vodafone Group PLC sponsored ADR
International Business Machines Corp.
Fleet Financial Group, Inc.
Shawmut National Corp.
Federal National Mortgage Association
Philip Morris Companies, Inc.
Chrysler Corp.
Intel Corp.
Compaq Computer Corp.
General Motors Corp.
International Business Machines Corp.
Vodafone Group PLC sponsored ADR
Fleet Financial Group, Inc.
Shawmut National Corp.
TOP FIVE MARKET SECTORS - DESTINY I
Finance 17.9%
Technology 16.8%
Durables 9.5%
Nondurables 7.1%
Utilities 6.8%
Finance 17.7%
Technology 14.0%
Energy 8.9%
Utilities 8.3%
Durables 7.4%
TOP FIVE MARKET SECTORS - DESTINY II
Finance 17.6%
Technology 15.8%
Durables 9.3%
Nondurables 7.0%
Utilities 6.6%
Finance 17.4%
Technology 13.3%
Energy 8.2%
Utilities 8.0%
Durables 7.2%
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS/SEPTEMBER 30, 1995
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENT IN SECURITIES)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 85.3%
AEROSPACE & DEFENSE - 1.5%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. 291,200 $ 19,874,666
DEFENSE ELECTRONICS - 1.0%
Loral Corp. 290,600 8,282,100
Raytheon Co. 380,500 32,342,500
40,624,600
TOTAL AEROSPACE & DEFENSE 60,499,266
BASIC INDUSTRIES - 2.8%
CHEMICALS & PLASTICS - 0.9%
Betz Laboratories, Inc. 39,800 1,626,825
Carbide/Graphite Group, Inc. (a) 4,300 60,738
Raychem Corp. 583,600 26,262,000
Union Carbide Corp. 177,300 7,047,675
34,997,238
IRON & STEEL - 0.1%
Nucor Corp. 92,100 4,121,475
METALS & MINING - 1.0%
Aluminum Co. of America 107,800 5,699,925
Reynolds Metals Co. 583,200 33,679,800
39,379,725
PACKAGING & CONTAINERS - 0.6%
Corning, Inc. 176,000 5,038,000
Owens-Illinois, Inc. (a) 1,640,000 20,705,000
25,743,000
PAPER & FOREST PRODUCTS - 0.2%
Crown Vantage, Inc. (a) 5,980 133,055
James River Corp. of Virginia 258,500 8,272,000
8,405,055
TOTAL BASIC INDUSTRIES 112,646,493
CONSTRUCTION & REAL ESTATE - 1.2%
BUILDING MATERIALS - 0.5%
Armstrong World Industries, Inc. 146,800 8,147,400
Masco Corp. 210,900 5,799,750
Tecumseh Products Co. Class A 118,300 5,678,400
19,625,550
CONSTRUCTION - 0.4%
Centex Corp. 73,100 2,119,900
Daito Trust Construction 312,700 3,605,966
Kaufman & Broad Home Corp. 228,400 2,883,550
Ryland Group, Inc. 19,200 297,600
Schuler Homes, Inc. (a) 231,100 2,686,538
Sekisui House Ltd. 355,000 4,378,542
15,972,096
ENGINEERING - 0.3%
Fluor Corp. 220,900 $ 12,370,400
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Crown American Realty Trust (SBI) 44,000 363,000
Patriot American Hospitality, Inc. 13,500 345,938
708,938
TOTAL CONSTRUCTION & REAL ESTATE 48,676,984
DURABLES - 9.5%
AUTOS, TIRES, & ACCESSORIES - 8.4%
Chrysler Corp. 2,154,900 114,209,700
Cummins Engine Co., Inc. 20,900 804,650
Dana Corp. 394,800 11,399,850
Discount Auto Parts, Inc. (a) 243,500 7,365,875
Eaton Corp. 49,300 2,612,900
Ford Motor Co. 10,300 320,588
General Motors Corp. 3,575,307 167,592,516
Gentex Corp. (a) 86,500 2,076,000
Magna International, Inc. Class A 615,600 27,876,486
Superior Industries International, Inc. 53,200 1,429,750
335,688,315
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 164,200 5,603,325
Matsushita Electric Industrial Co. Ltd. 648,000 9,876,764
Whirlpool Corp. 218,900 12,641,475
28,121,564
HOME FURNISHINGS - 0.1%
Haverty Furniture Companies, Inc. 193,800 2,640,525
TEXTILES & APPAREL - 0.3%
Burlington Industries, Inc. (a) 840,400 10,610,050
Fruit of the Loom, Inc. Class A (a) 136,300 2,811,188
13,421,238
TOTAL DURABLES 379,871,642
ENERGY - 5.8%
ENERGY SERVICES - 0.5%
Baker Hughes, Inc. 188,600 3,842,725
Dresser Industries, Inc. 37,100 885,763
Schlumberger Ltd. 249,700 16,292,925
21,021,413
OIL & GAS - 5.3%
Amerada Hess Corp. 354,400 17,232,700
Amoco Corp. 188,600 12,093,975
Apache Corp. 106,400 2,793,000
Atlantic Richfield Co. 119,800 12,863,525
British Petroleum PLC ADR 534,559 48,043,490
Burlington Resources, Inc. 608,000 23,560,000
Canada Occidental Petroleum Ltd. 212,800 6,761,284
Elf Aquitaine sponsored ADR 112,564 3,784,965
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Kerr-McGee Corp. 321,200 $ 17,826,600
Louisiana Land & Exploration Co. 410,700 14,631,188
Mobil Corp. 36,700 3,656,238
Murphy Oil Corp. 86,100 3,444,000
Noble Affiliates, Inc. 143,100 3,774,263
Santa Fe Energy Resources, Inc. (a) 360,000 3,420,000
Texaco, Inc. 102,200 6,604,675
Tosco Corp. 365,200 12,599,400
Unocal Corp. 640,608 18,257,328
YPF Sociedad Anonima sponsored ADR
representing Class D shares 12,000 216,000
211,562,631
TOTAL ENERGY 232,584,044
FINANCE - 17.9%
BANKS - 5.7%
AmSouth Bancorporation 43,700 1,660,600
Bank of Boston Corp. 176,582 8,409,718
Bank of New York Co., Inc. 60,500 2,813,250
Barnett Banks, Inc. 261,400 14,801,775
BayBanks, Inc. 27,400 2,078,975
Chemical Banking Corp. 293,900 17,891,163
Comerica, Inc. 144,700 5,263,463
First Interstate Bancorp 74,200 7,475,650
First Union Corp. 394 19,564
Fleet Financial Group, Inc. 1,705,426 64,379,832
KeyCorp 285,081 9,764,024
NationsBank Corp. 333,977 22,459,953
Shawmut National Corp. 1,966,829 66,134,625
State Street Boston Corp. 171,900 6,876,000
230,028,592
FEDERAL SPONSORED CREDIT - 7.2%
Federal Home Loan Mortgage Corporation 681,300 47,094,863
Federal National Mortgage Association 2,320,900 240,213,150
287,308,013
INSURANCE - 2.3%
Allstate Corp. 1,099,190 38,883,846
American International Group, Inc. 77,100 6,553,500
CIGNA Corp. 28,300 2,946,738
Chubb Corp. (The) 4,500 432,000
General Re Corp. 174,400 26,334,400
Providian Corp. 204,300 8,478,450
Torchmark Corp. 187,400 7,894,225
91,523,159
SAVINGS & LOANS - 0.9%
Ahmanson (H.F.) & Co. 580,300 $ 14,725,113
Golden West Financial Corp. 438,450 22,141,725
36,866,838
SECURITIES INDUSTRY - 1.8%
Lehman Brothers Holdings, Inc. 63,600 1,470,750
Merrill Lynch & Co., Inc. 297,301 18,581,313
Morgan Stanley Group, Inc. 153,900 14,793,638
Nomura Securities Co. Ltd. 1,466,000 28,518,831
Salomon, Inc. 13,300 508,725
United Asset Management Corp. 152,900 6,135,113
70,008,370
TOTAL FINANCE 715,734,972
HEALTH - 2.5%
DRUGS & PHARMACEUTICALS - 0.6%
Allergan, Inc. 92,800 3,097,200
Carter-Wallace, Inc. 210,500 2,631,250
Depotech Corp. 2,900 34,800
Elan Corp. PLC ADR (a) 55,200 2,290,800
Pharmacia AB, Series A:
sponsored ADR 134,100 4,010,428
Free shares 166,000 4,983,191
Schering-Plough Corp. 143,200 7,374,800
24,422,469
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Acuson Corp. (a) 85,600 1,144,900
Baxter International, Inc. 392,000 16,121,000
17,265,900
MEDICAL FACILITIES MANAGEMENT - 1.5%
American Medical Response (a) 195,400 5,544,475
Columbia/HCA Healthcare Corp. 1,114,125 54,174,328
Pediatrix Medical Group 4,100 84,050
59,802,853
TOTAL HEALTH 101,491,222
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 512,800 7,948,400
INDUSTRIAL MACHINERY & EQUIPMENT - 3.0%
ELECTRICAL EQUIPMENT - 1.0%
Emerson Electric Co. 44,900 3,210,350
General Electric Co. 187,700 11,965,875
Mitsubishi Electric Co. Ord. 2,550,000 19,816,994
Omron Corp. 198,000 4,566,557
Westinghouse Electric Corp. 59,400 891,000
40,450,776
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Caterpillar, Inc. 530,600 $ 30,177,875
Deere & Co. 579,800 47,181,225
Exide Corp. 87,200 4,360,000
81,719,100
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 122,169,876
MEDIA & LEISURE - 2.1%
BROADCASTING - 0.2%
Liberty Media Group, Series A (a) 87,325 2,335,944
People's Choice TV Corp. (a) 35,100 859,950
TCI Group Class A 332,400 5,817,000
9,012,894
ENTERTAINMENT - 0.4%
Royal Caribbean Cruises Ltd. 569,500 13,810,375
LEISURE DURABLES & TOYS - 0.6%
Fleetwood Enterprises, Inc. 942,100 18,724,238
Outboard Marine Corp. 256,900 5,523,350
24,247,588
LODGING & GAMING - 0.2%
Circus Circus Enterprises, Inc. (a) 328,100 9,186,800
PUBLISHING - 0.1%
American Media, Inc. Class A 83,000 477,250
Gannett Co., Inc. 40,200 2,195,925
2,673,175
RESTAURANTS - 0.6%
Bertucci's, Inc. (a) 158,000 1,125,750
Brinker International, Inc. (a) 229,700 3,416,788
Cracker Barrel Old Country Store, Inc. 165,000 3,320,625
Darden Restaurants, Inc. (a) 199,100 2,289,650
McDonald's Corp. 399,700 15,288,525
25,441,338
TOTAL MEDIA & LEISURE 84,372,170
NONDURABLES - 7.1%
BEVERAGES - 0.2%
Kirin Brewery Co. Ltd. 868,000 9,052,094
HOUSEHOLD PRODUCTS - 0.3%
Kao Corp. 503,000 6,203,962
Tambrands, Inc. 103,400 4,536,675
10,740,637
TOBACCO - 6.6%
Philip Morris Companies, Inc. 2,525,700 210,895,950
RJR Nabisco Holdings Corp. 1,613,798 52,246,710
263,142,660
TOTAL NONDURABLES 282,935,391
PRECIOUS METALS - 0.2%
Homestake Mining Co. 115,100 $ 1,956,700
Santa Fe Pacific Gold Corp. 456,975 5,769,309
7,726,009
RETAIL & WHOLESALE - 5.5%
APPAREL STORES - 0.0%
TJX Companies, Inc. 164,325 1,951,359
GENERAL MERCHANDISE STORES - 3.0%
Aoyama Trading Co. Ord. 257,300 7,017,860
Federated Department Stores, Inc. (a) 1,563,173 44,355,034
Sears, Roebuck & Co. 229,700 8,470,188
Value City Department Stores, Inc. (a) 201,700 1,487,538
Wal-Mart Stores, Inc. 2,350,800 58,476,150
119,806,770
GROCERY STORES - 0.1%
Stop & Shop Companies, Inc. (a) 124,900 2,919,538
RETAIL & WHOLESALE, MISCELLANEOUS - 2.4%
Best Buy Co., Inc. (a) 325,800 8,552,250
Circuit City Stores, Inc. 949,100 30,015,288
Good Guys, Inc. (a) 211,500 2,405,813
Home Depot, Inc. (The) 550,900 21,967,138
Lowe's Companies, Inc. 269,400 8,082,000
Officemax, Inc. (a) 404,100 9,799,425
Office Depot, Inc. (a) 246,800 7,434,850
Petsmart, Inc. 53,000 1,788,750
Rex Stores Corp. (a) 149,000 2,793,750
Staples, Inc. (a) 60,425 1,707,006
Waban, Inc. (a) 82,200 1,551,525
96,097,795
TOTAL RETAIL & WHOLESALE 220,775,462
SERVICES - 0.0%
Supercuts, Inc. (a) 149,400 1,269,900
TECHNOLOGY - 16.8%
COMMUNICATIONS EQUIPMENT - 0.4%
Cisco Systems, Inc. (a) 250,200 17,263,800
COMPUTER SERVICES & SOFTWARE - 0.8%
Automatic Data Processing, Inc. 60,900 4,148,813
Checkfree Corp. 6,300 126,000
Computer Management Sciences, Inc. 2,100 29,400
General Motors Corp. Class E 30,600 1,392,300
MicroAge, Inc. (a) 194,900 2,168,263
Microsoft Corp. (a) 275,400 24,923,700
Smith Micro Software, Inc. 2,100 20,738
32,809,214
COMPUTERS & OFFICE EQUIPMENT - 9.1%
Bay Networks, Inc. (a) 254,400 13,578,600
Canon, Inc. 819,000 14,536,275
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Compaq Computer Corp. (a) 3,344,000 $ 161,766,000
Digital Equipment Corp. (a) 324,000 14,782,500
Hewlett-Packard Co. 449,900 37,510,413
International Business Machines Corp. 731,800 69,063,625
SCI Systems, Inc. (a) 787,000 27,151,500
Silicon Graphics, Inc. (a) 129,000 4,434,375
Sun Microsystems, Inc. (a) 159,900 10,073,700
Tech Data Corp. (a) 564,100 7,967,913
Xerox Corp. 24,500 3,292,188
364,157,089
ELECTRONICS - 6.5%
Hitachi Ltd. 2,318,000 25,103,430
Intel Corp. 2,325,000 139,790,625
Kyocera Corp. 40,000 3,264,979
Methode Electronics, Inc. Class A (b) 1,254,000 28,842,000
Molex, Inc. 110,468 3,700,678
Motorola, Inc. 155,500 11,876,313
Nitto Denko Corp. 554,000 8,388,469
Rohm Co. Ltd. 25,000 1,569,316
Solectron Corp. (a) 937,800 37,043,100
Zycon Corp. 12,700 152,400
259,731,310
TOTAL TECHNOLOGY 673,961,413
TRANSPORTATION - 2.4%
AIR TRANSPORTATION - 0.1%
Midwest Express Holdings, Inc. 3,700 83,250
Southwest Airlines Co. 108,700 2,744,675
2,827,925
RAILROADS - 2.2%
Burlington Northern Sante Fe Corp. 319,400 23,156,500
CSX Corp. 500,200 42,079,325
Canadian Pacific Ltd. Ord. 114,800 1,839,812
Southern Pacific Rail Corp. (a) 937,822 22,742,184
89,817,821
TRUCKING & FREIGHT - 0.1%
Roadway Services, Inc. 36,800 1,830,800
TOTAL TRANSPORTATION 94,476,546
UTILITIES - 6.8%
CELLULAR - 2.9%
AirTouch Communications, Inc. (a) 403,200 12,348,000
Vodafone Group PLC sponsored ADR 2,541,300 104,193,300
116,541,300
ELECTRIC UTILITY - 0.1%
Southern Co. 130,800 $ 3,090,150
GAS - 0.0%
Seagull Energy Corp. (a) 41,100 832,275
TELEPHONE SERVICES - 3.8%
Ameritech Corp. 608,300 31,707,638
Bell Atlantic Corp. 309,100 18,971,013
BellSouth Corp. 296,900 21,710,813
NYNEX Corp. 438,300 20,928,825
SBC Communications, Inc. 714,400 39,292,000
Tel-Save Holdings, Inc. 3,900 59,963
Telebras PN (Pfd. Reg.) 71,527,400 3,411,142
Telecom Argentina Class B sponsored ADR 7,000 293,125
Telefonica de Argentina SA sponsored ADR 45,300 1,081,538
Telefonos de Mexico SA sponsored ADR
representing shares Ord., Class L 456,800 14,503,400
151,959,457
TOTAL UTILITIES 272,423,182
TOTAL COMMON STOCKS
(Cost $2,416,674,803) 3,419,562,972
MOODY'S PRINCIPAL
RATINGS AMOUNT
U.S. TREASURY OBLIGATIONS - 10.4%
8 1/8%, 8/15/19
(Cost $374,333,594) Aaa $ 355,000,000 416,457,600
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 4.3%
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.46% dated 9/29/95
due 10/2/95 173,327,258 173,234,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,964,242,397) $ 4,009,254,572
LEGEND:
1. Non-income producing
2. Affiliated company (see Note 5 of Notes to Financial Statements).
OTHER INFORMATION:
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 10.4% AAA, AA, A 10.4%
Baa 0.0% BBB 0.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.0%.
INCOME TAX INFORMATION:
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $2,966,257,824. Net unrealized appreciation
aggregated $1,042,996,748, of which $1,075,683,499 related to appreciated
investment securities and $32,686,751 related to depreciated investment
securities.
The fund hereby designates $4,198,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, 1995
ASSETS
Investment in securities, at $ 4,009,254,572
value (including repurchase agreements of $173,234,000) (cost $2,964,242,397) - See accompanying
schedule
Cash 201
Receivable for investments sold 59,459,446
Receivable for fund shares sold 526,957
Dividends receivable 8,623,100
Interest receivable 3,567,436
Other receivables 410,116
Total assets 4,081,841,828
LIABILITIES
Payable for investments purchased $ 24,832,354
Payable for fund shares redeemed 1,266,247
Accrued management fee 2,154,747
Other payables and accrued expenses 199,036
Total liabilities 28,452,384
NET ASSETS $ 4,053,389,444
Net Assets consist of:
Paid in capital $ 2,803,784,039
Undistributed net investment income 67,129,385
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 137,498,749
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 1,044,977,271
NET ASSETS, for 215,781,124 shares outstanding $ 4,053,389,444
NET ASSET VALUE, offering price and redemption price per share ($4,053,389,444 (divided by) 215,781,124 shares) $18.78
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended September 30, 1995
INVESTMENT INCOME $ 68,076,004
Dividends (including $222,288 received from affiliated issuers)
Interest 39,213,950
Total income 107,289,954
EXPENSES
Management fee $ 17,193,293
Basic fee
Performance adjustment 5,930,876
Transfer agent fees 165,807
Accounting fees and expenses 761,640
Non-interested trustees' compensation 63,350
Custodian fees and expenses 27,546
Registration fees 14,551
Audit 24,000
Total expenses 24,181,063
Net investment income 83,108,891
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of $5,128,303 on sales of investments in
affiliated 158,713,526
issuers)
Foreign currency transactions 4,501,060 163,214,586
Change in net unrealized appreciation (depreciation) on:
Investment securities 634,819,046
Assets and liabilities in foreign currencies (61,939) 634,757,107
Net gain (loss) 797,971,693
Net increase (decrease) in $ 881,080,584
net assets resulting from operations
</TABLE>
Statement of Changes in Net Assets
DRAFT
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 83,108,891 $ 54,130,953
Net investment income
Net realized gain (loss) 163,214,586 513,831,921
Change in net unrealized appreciation (depreciation) 634,757,107 (203,630,214)
Net increase (decrease) in net assets resulting from operations 881,080,584 364,332,660
Distributions to shareholders (62,951,723) (19,385,874)
From net investment income
From net realized gain (468,451,357) (183,280,710)
Total distributions (531,403,080) (202,666,584)
Share transactions 137,291,888 138,945,156
Net proceeds from sales of shares
Reinvestment of distributions 502,563,938 193,082,050
Cost of shares redeemed (209,384,277) (193,677,416)
Net increase (decrease) in net assets resulting from share transactions 430,471,549 138,349,790
Total increase (decrease) in net assets 780,149,053 300,015,866
NET ASSETS
Beginning of period 3,273,240,391 2,973,224,525
End of period (including undistributed net investment income of $67,129,385 and $43,805,352, $ 4,053,389,444 $ 3,273,240,391
respectively)
OTHER INFORMATION
Shares
Sold 8,281,603 7,991,172
Issued in reinvestment of distributions 35,292,414 11,701,953
Redeemed (12,689,491) (11,149,412)
Net increase (decrease) 30,884,526 8,543,713
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED THREE MONTHS YEARS ENDED JUNE 30,
SEPTEMBER 30, ENDED
SEPTEMBER 30,
1995 1994 C 1993 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24
Income from Investment Operations
Net investment income .41 .30 .04 .26 .31 .33
Net realized and unrealized gain
(loss) 3.54 1.69 .75 3.16 2.55 1.25
Total from investment operations 3.95 1.99 .79 3.42 2.86 1.58
Less Distributions (.34) (.11) (.14) (.30) (.49) (.10)
From net investment income
From net realized gain (2.53) (1.04) (1.01) (2.44) (1.06) (.49)
Total distributions (2.87) (1.15) (1.15) (2.74) (1.55) (.59)
Net asset value, end of period $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23
TOTAL RETURN B 27.49% 12.30% 4.77% 23.90% 20.18% 11.93%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $ 4,053 $ 3,273 $ 2,973 $ 2,869 $ 2,373 $ 2,023
Ratio of expenses to average net
assets .68% .70% .65% .66% .61% .50%
A
Ratio of net investment income
to average net assets 2.35% 1.69% 1.11% 1.83% 2.00% 2.45%
A
Portfolio turnover rate 55% 77% 82% 75% 75% 84%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS/SEPTEMBER 30, 1995
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENT IN SECURITIES)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 82.5%
AEROSPACE & DEFENSE - 1.5%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. 154,800 $ 10,565,100
DEFENSE ELECTRONICS - 1.0%
Loral Corp. 144,400 4,115,400
Raytheon Co. 179,200 15,232,000
19,347,400
TOTAL AEROSPACE & DEFENSE 29,912,500
BASIC INDUSTRIES - 2.7%
CHEMICALS & PLASTICS - 0.9%
Betz Laboratories, Inc. 19,300 788,888
Carbide/Graphite Group, Inc. (a) 2,200 31,075
Raychem Corp. 285,400 12,843,000
Union Carbide Corp. 88,900 3,533,775
17,196,738
IRON & STEEL - 0.1%
Nucor Corp. 45,800 2,049,550
METALS & MINING - 0.9%
Aluminum Co. of America 54,000 2,855,250
Reynolds Metals Co. 268,200 15,488,550
18,343,800
PACKAGING & CONTAINERS - 0.6%
Corning, Inc. 88,200 2,524,725
Owens-Illinois, Inc. (a) 759,900 9,593,738
12,118,463
PAPER & FOREST PRODUCTS - 0.2%
Crown Vantage, Inc. (a) 3,060 68,085
James River Corp. of Virginia 129,500 4,144,000
4,212,085
TOTAL BASIC INDUSTRIES 53,920,636
CONSTRUCTION & REAL ESTATE - 1.2%
BUILDING MATERIALS - 0.5%
Armstrong World Industries, Inc. 70,300 3,901,650
Masco Corp. 104,000 2,860,000
Tecumseh Products Co. Class A 59,200 2,841,600
9,603,250
CONSTRUCTION - 0.4%
Centex Corp. 36,700 1,064,300
Daito Trust Construction 156,600 1,805,866
Kaufman & Broad Home Corp. 114,500 1,445,563
Ryland Group, Inc. 9,500 147,250
Schuler Homes, Inc. (a) 111,600 1,297,350
Sekisui House Ltd. 177,000 2,183,104
7,943,433
ENGINEERING - 0.3%
Fluor Corp. 110,700 $ 6,199,200
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Patriot American Hospitality, Inc. 6,700 171,688
TOTAL CONSTRUCTION & REAL ESTATE 23,917,571
DURABLES - 9.3%
AUTOS, TIRES, & ACCESSORIES - 8.2%
Chrysler Corp. 1,060,700 56,217,100
Cummins Engine Co., Inc. 10,300 396,550
Dana Corp. 198,000 5,717,250
Discount Auto Parts, Inc. (a) 121,200 3,666,300
Eaton Corp. 24,700 1,309,100
Ford Motor Co. 5,200 161,850
General Motors Corp. 1,762,021 82,594,734
Gentex Corp. (a) 43,300 1,039,200
Magna International, Inc. Class A 308,400 13,965,413
Superior Industries International, Inc. 29,800 800,875
165,868,372
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 84,700 2,890,388
Matsushita Electric Industrial Co. Ltd. 323,000 4,923,140
Whirlpool Corp. 107,200 6,190,800
14,004,328
HOME FURNISHINGS - 0.1%
Haverty Furniture Companies, Inc. 93,900 1,279,388
TEXTILES & APPAREL - 0.3%
Burlington Industries, Inc. (a) 370,100 4,672,513
Fruit of the Loom, Inc. Class A (a) 67,700 1,396,313
6,068,826
TOTAL DURABLES 187,220,914
ENERGY - 5.4%
ENERGY SERVICES - 0.5%
Baker Hughes, Inc. 92,200 1,878,575
Dresser Industries, Inc. 18,500 441,688
Schlumberger Ltd. 124,800 8,143,200
10,463,463
OIL & GAS - 4.9%
Amerada Hess Corp. 168,500 8,193,313
Amoco Corp. 87,300 5,598,113
Apache Corp. 52,900 1,388,625
Atlantic Richfield Co. 57,600 6,184,800
British Petroleum PLC ADR 260,798 23,439,220
Burlington Resources, Inc. 304,800 11,811,000
Canada Occidental Petroleum Ltd. 101,700 3,231,309
Elf Aquitaine sponsored ADR 53,444 1,797,055
Kerr-McGee Corp. 95,300 5,289,150
Louisiana Land & Exploration Co. 164,900 5,874,563
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Mobil Corp. 18,400 $ 1,833,100
Murphy Oil Corp. 41,600 1,664,000
Noble Affiliates, Inc. 66,300 1,748,663
Santa Fe Energy Resources, Inc. (a) 174,500 1,657,750
Texaco, Inc. 51,200 3,308,800
Tosco Corp. 184,500 6,365,250
Unocal Corp. 312,964 8,919,474
YPF Sociedad Anonima sponsored ADR
representing Class D shares 6,000 108,000
98,412,185
TOTAL ENERGY 108,875,648
FINANCE - 17.6%
BANKS - 5.7%
AmSouth Bancorporation 30,700 1,166,600
Bank of Boston Corp. 88,462 4,213,003
Bank of New York Co., Inc. 29,200 1,357,800
Barnett Banks, Inc. 131,000 7,417,875
BayBanks, Inc. 13,800 1,047,075
Chemical Banking Corp. 147,000 8,948,625
Comerica, Inc. 72,600 2,640,825
First Interstate Bancorp 37,300 3,757,975
First Union Corp. 213 10,577
Fleet Financial Group, Inc. 891,836 33,666,809
KeyCorp 142,509 4,880,933
NationsBank Corp. 176,085 11,841,716
Shawmut National Corp. 917,822 30,861,765
State Street Boston Corp. 86,200 3,448,000
115,259,578
FEDERAL SPONSORED CREDIT - 7.0%
Federal Home Loan Mortgage Corporation 335,700 23,205,263
Federal National Mortgage Association 1,143,900 118,393,650
141,598,913
INSURANCE - 2.3%
Allstate Corp. 546,645 19,337,567
American International Group, Inc. 38,650 3,285,250
CIGNA Corp. 14,200 1,478,575
Chubb Corp. (The) 2,300 220,800
General Re Corp. 87,400 13,197,400
Providian Corp. 101,600 4,216,400
Torchmark Corp. 93,700 3,947,113
45,683,105
SAVINGS & LOANS - 0.9%
Ahmanson (H.F.) & Co. 290,600 $ 7,373,975
Golden West Financial Corp. 201,300 10,165,650
17,539,625
SECURITIES INDUSTRY - 1.7%
Lehman Brothers Holdings, Inc. 31,600 730,750
Merrill Lynch & Co., Inc. 149,099 9,318,688
Morgan Stanley Group, Inc. 77,100 7,411,238
Nomura Securities Co. Ltd. 732,000 14,239,962
Salomon, Inc. 6,700 256,275
United Asset Management Corp. 74,900 3,005,363
34,962,276
TOTAL FINANCE 355,043,497
HEALTH - 2.5%
DRUGS & PHARMACEUTICALS - 0.6%
Allergan, Inc. 46,200 1,541,925
Carter-Wallace, Inc. 105,200 1,315,000
Depotech Corp 1,500 18,000
Elan Corp. PLC ADR (a) 27,700 1,149,550
Pharmacia AB, Series A:
sponsored ADR 67,000 2,003,719
Free shares 83,000 2,491,595
Schering-Plough Corp. 70,400 3,625,600
12,145,389
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Acuson Corp. (a) 42,300 565,763
Baxter International, Inc. 184,100 7,571,113
8,136,876
MEDICAL FACILITIES MANAGEMENT - 1.5%
American Medical Response (a) 94,700 2,687,113
Columbia/HCA Healthcare Corp. 557,140 27,090,933
Pediatrix Medical Group 2,000 41,000
29,819,046
TOTAL HEALTH 50,101,311
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 250,800 3,887,400
INDUSTRIAL MACHINERY & EQUIPMENT - 2.9%
ELECTRICAL EQUIPMENT - 1.0%
Emerson Electric Co. 22,400 1,601,600
General Electric Co. 90,700 5,782,125
Mitsubishi Electric Co. Ord. 1,268,000 9,854,097
Omron Corp. 98,000 2,260,215
Westinghouse Electric Corp. 29,700 445,500
19,943,537
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
Caterpillar, Inc. 261,000 $ 14,844,375
Deere & Co. 262,500 21,360,938
Exide Corp. 42,600 2,130,000
Harnischfeger Industries, Inc. 3 100
38,335,413
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 58,278,950
MEDIA & LEISURE - 2.0%
BROADCASTING - 0.2%
Liberty Media Group, Series A (a) 43,025 1,150,919
People's Choice TV Corp. (a) 16,700 409,150
TCI Group Class A 166,400 2,912,000
4,472,069
ENTERTAINMENT - 0.3%
Royal Caribbean Cruises Ltd. 284,700 6,903,975
LEISURE DURABLES & TOYS - 0.6%
Fleetwood Enterprises, Inc. 472,300 9,386,963
Outboard Marine Corp. 128,700 2,767,050
12,154,013
LODGING & GAMING - 0.2%
Circus Circus Enterprises, Inc. (a) 164,500 4,606,000
PUBLISHING - 0.1%
American Media, Inc. Class A 41,600 239,200
Gannett Co., Inc. 20,200 1,103,425
1,342,625
RESTAURANTS - 0.6%
Bertucci's, Inc. (a) 67,100 478,088
Brinker International, Inc. (a) 112,300 1,670,463
Cracker Barrel Old Country Store, Inc. 79,100 1,591,888
Darden Restaurants, Inc. (a) 99,700 1,146,550
McDonald's Corp. 198,700 7,600,275
12,487,264
TOTAL MEDIA & LEISURE 41,965,946
NONDURABLES - 7.0%
BEVERAGES - 0.2%
Kirin Brewery Co. Ltd. 434,000 4,526,047
HOUSEHOLD PRODUCTS - 0.3%
Kao Corp. 251,000 3,095,814
Tambrands, Inc. 51,000 2,237,625
5,333,439
TOBACCO - 6.5%
Philip Morris Companies, Inc. 1,254,800 104,775,800
RJR Nabisco Holdings Corp. 788,154 25,516,486
130,292,286
TOTAL NONDURABLES 140,151,772
PRECIOUS METALS - 0.2%
Homestake Mining Co. 56,800 $ 965,600
Santa Fe Pacific Gold Corp. 225,647 2,848,793
3,814,393
RETAIL & WHOLESALE - 5.4%
APPAREL STORES - 0.0%
TJX Companies, Inc. 81,700 970,188
GENERAL MERCHANDISE STORES - 2.8%
Aoyama Trading Co. Ord. 128,600 3,507,566
Federated Department Stores, Inc. (a) 694,000 19,692,250
Sears, Roebuck & Co. 115,100 4,244,313
Value City Department Stores, Inc. (a) 101,100 745,613
Wal-Mart Stores, Inc. 1,174,800 29,223,150
57,412,892
GROCERY STORES - 0.1%
Food Lion Inc. Class B 120,000 727,500
Stop & Shop Companies, Inc. (a) 61,600 1,439,900
2,167,400
RETAIL & WHOLESALE, MISCELLANEOUS - 2.5%
Best Buy Co., Inc. (a) 163,300 4,286,625
Circuit City Stores, Inc. 509,900 16,125,588
Good Guys, Inc. (a) 88,900 1,011,238
Home Depot, Inc. (The) 275,300 10,977,588
Lowe's Companies, Inc. 170,000 5,100,000
Officemax, Inc. (a) 199,900 4,847,575
Office Depot, Inc. (a) 119,200 3,590,900
Petsmart, Inc. 26,600 897,750
Rex Stores Corp. (a) 63,500 1,190,625
Staples, Inc. (a) 30,225 853,856
Waban, Inc. (a) 41,100 775,763
49,657,508
TOTAL RETAIL & WHOLESALE 110,207,988
SERVICES - 0.0%
Supercuts, Inc. (a) 62,000 527,000
TECHNOLOGY - 15.8%
COMMUNICATIONS EQUIPMENT - 0.4%
Cisco Systems, Inc. (a) 125,400 8,652,600
COMPUTER SERVICES & SOFTWARE - 0.8%
Automatic Data Processing, Inc. 30,600 2,084,625
Checkfree Corp 2,600 52,113
Computer Management Sciences, Inc. 1,000 14,000
General Motors Corp. Class E 14,700 668,850
MicroAge, Inc. (a) 93,600 1,041,300
Microsoft Corp. (a) 143,100 12,950,550
Smith Micro Software, Inc. 1,000 9,875
16,821,313
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 9.0%
Bay Networks, Inc. (a) 127,600 $ 6,810,650
Canon, Inc. 410,000 7,277,012
Compaq Computer Corp. (a) 1,654,400 80,031,600
Digital Equipment Corp. (a) 164,700 7,514,438
Hewlett-Packard Co. 219,700 18,317,488
International Business Machines Corp. 366,800 34,616,750
SCI Systems, Inc. (a) 439,900 15,176,550
Silicon Graphics, Inc. (a) 57,100 1,962,813
Sun Microsystems, Inc. (a) 79,900 5,033,700
Tech Data Corp. (a) 261,300 3,690,863
Xerox Corp. 12,200 1,639,375
182,071,239
ELECTRONICS - 5.6%
Hitachi Ltd. 1,153,000 12,486,736
Intel Corp. 1,123,400 67,544,425
Kyocera Corp. 20,000 1,632,489
Methode Electronics, Inc. Class A 92,100 2,118,300
Molex, Inc. 43,906 1,470,851
Motorola, Inc. 77,900 5,949,613
Nitto Denko Corp. 276,000 4,179,093
Rohm Co. Ltd. 12,000 753,272
Solectron Corp. (a) 429,198 16,953,321
Zycon Corp 6,400 76,800
113,164,900
TOTAL TECHNOLOGY 320,710,052
TRANSPORTATION - 2.2%
AIR TRANSPORTATION - 0.1%
Midwest Express Holdings, Inc. 1,800 40,500
Southwest Airlines Co. 53,600 1,353,400
1,393,900
RAILROADS - 2.1%
Burlington Northern Sante Fe Corp. 148,900 10,795,250
CSX Corp. 239,700 20,164,763
Canadian Pacific Ltd. Ord. 57,500 921,509
Southern Pacific Rail Corp. (a) 459,287 11,137,710
43,019,232
TRUCKING & FREIGHT - 0.0%
Roadway Services, Inc. 18,100 900,475
TOTAL TRANSPORTATION 45,313,607
UTILITIES - 6.6%
CELLULAR - 2.8%
AirTouch Communications, Inc. (a) 201,600 6,174,000
Vodafone Group PLC sponsored ADR 1,253,200 51,381,200
57,555,200
ELECTRIC UTILITY - 0.1%
Southern Co. 65,500 $ 1,547,438
GAS - 0.0%
Seagull Energy Corp. (a) 20,600 417,150
TELEPHONE SERVICES - 3.7%
Ameritech Corp., 290,000 15,116,250
Bell Atlantic Corp. 142,200 8,727,525
BellSouth Corp. 148,900 10,888,313
NYNEX Corp. 216,500 10,337,875
SBC Communications, Inc. 356,600 19,613,000
Tel-Save Holdings, Inc. 1,900 29,213
Telebras PN (Pfd. Reg.) 33,831,300 1,613,415
Telecom Argentina Class B sponsored ADR 3,500 146,563
Telefonica de Argentina SA sponsored ADR 21,500 513,313
Telefonos de Mexico SA sponsored ADR
representing shares Ord., Class L 227,100 7,210,425
74,195,892
TOTAL UTILITIES 133,715,680
TOTAL COMMON STOCKS
(Cost $1,252,027,904) 1,667,564,865
MOODY'S PRINCIPAL
RATINGS AMOUNT
U.S. TREASURY OBLIGATIONS - 10.2%
8 1/8%, 8/15/19
(Cost $183,638,281) Aaa $175,000,000 205,296,000
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 7.3%
Investments in repurchase agreements
(U.S. Treasury obligations) in a
joint trading account at 6.46%,
dated 9/29/95 due 10/2/95 146,878,027 146,799,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,582,465,185) $ 2,019,659,865
LEGEND:
1. Non-income producing
OTHER INFORMATION:
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 10.2% AAA, AA, A 10.2%
Baa 0.0% BBB 0.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.0%.
INCOME TAX INFORMATION:
At September 30, 1995, the aggregate cost of investment securities for
income tax purposes was $1,583,603,535. Net unrealized appreciation
aggregated $436,056,330, of which $453,778,442 related to appreciated
investment securities and $17,722,112 related to depreciated investment
securities.
The fund hereby designates $1,369,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $146,799,000) (cost $ 2,019,659,865
$1,582,465,185) - See accompanying schedule
Cash 124,498
Receivable for investments sold 23,619,206
Receivable for fund shares sold 298,699
Dividends receivable 4,202,841
Interest receivable 1,739,311
Other receivables 102,110
Total assets 2,049,746,530
LIABILITIES
Payable for investments purchased $ 16,093,112
Payable for fund shares redeemed 453,338
Accrued management fee 1,248,950
Other payables and accrued expenses 188,985
Total liabilities 17,984,385
NET ASSETS $ 2,031,762,145
Net Assets consist of:
Paid in capital $ 1,515,175,822
Undistributed net investment income 32,076,535
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 47,316,431
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 437,193,357
NET ASSETS, for 64,051,111 shares outstanding $ 2,031,762,145
NET ASSET VALUE, offering price and redemption price per share ($2,031,762,145 (divided by) 64,051,111 shares) $31.72
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended September 30, 1995
INVESTMENT INCOME $ 31,541,504
Dividends
Interest 21,093,340
Total income 52,634,844
EXPENSES
Management fee $ 10,351,262
Basic fee
Performance adjustment 2,182,118
Transfer agent fees 95,243
Accounting fees and expenses 657,465
Non-interested trustees' compensation 20,225
Custodian fees and expenses 25,534
Registration fees 70,787
Audit 41,026
Legal 6,509
Total expenses 13,450,169
Net investment income 39,184,675
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 57,436,919
Foreign currency transactions 2,185,594 59,622,513
Change in net unrealized appreciation (depreciation) on:
Investment securities 320,530,330
Assets and liabilities in foreign currencies (2,758) 320,527,572
Net gain (loss) 380,150,085
Net increase (decrease) in $ 419,334,760
net assets resulting from operations
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 39,184,675 $ 20,640,012
Net investment income
Net realized gain (loss) 59,622,513 172,578,769
Change in net unrealized appreciation (depreciation) 320,527,572 (43,203,503)
Net increase (decrease) in net assets resulting from operations 419,334,760 150,015,278
Distributions to shareholders (25,869,943) (5,278,879)
From net investment income
From net realized gain (153,114,736) (56,743,144)
Total distributions (178,984,679) (62,022,023)
Share transactions 261,682,843 246,738,564
Net proceeds from sales of shares
Reinvestment of distributions 177,278,996 61,856,536
Cost of shares redeemed (84,723,915) (102,420,292)
Net increase (decrease) in net assets resulting from share transactions 354,237,924 206,174,808
Total increase (decrease) in net assets 594,588,005 294,168,063
NET ASSETS
Beginning of period 1,437,174,140 1,143,006,077
End of period (including undistributed net investment income of $32,076,535 and $17,189,720, $ 2,031,762,145 $ 1,437,174,140
respectively)
OTHER INFORMATION
Shares
Sold 9,406,008 8,844,551
Issued in reinvestment of distributions 7,319,526 2,322,816
Redeemed (3,015,787) (3,672,057)
Net increase (decrease) 13,709,747 7,495,310
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED THREE MONTHS
SEPTEMBER 30, ENDED YEARS ENDED JUNE 30,
SEPTEMBER 30,
1995 1994 C 1993 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning of
period $ 28.55 $ 26.68 $ 26.46 $ 24.68 $ 23.50 $ 21.11
Income from Investment Operations
Net investment income .66 .42 .04 .26 .33 .29
Net realized and unrealized gain
(loss) 5.97 2.86 1.23 4.85 4.08 2.61
Total from investment operations 6.63 3.28 1.27 5.11 4.41 2.90
Less Distributions (.50) (.12) (.14) (.36) (.34) (.35)
From net investment income
From net realized gain (2.96) (1.29) (.91) (2.97) (2.89) (.16)
Total distributions (3.46) (1.41) (1.05) (3.33) (3.23) (.51)
Net asset value, end of period $ 31.72 $ 28.55 $ 26.68 $ 26.46 $ 24.68 $ 23.50
TOTAL RETURN B 26.98% 12.67% 4.93% 23.28% 20.61% 14.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $ 2,032 $ 1,437 $ 1,143 $ 1,061 $ 479 $ 326
Ratio of expenses to average net
assets .80% .80% .84% .84% .88% .84%
A
Ratio of net investment income to
average net assets 2.33% 1.56% .69% 1.41% 1.60% 1.70%
A
Portfolio turnover rate 52% 72% 80% 81% 113% 129%
A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Destiny Portfolios: Destiny I and Destiny II (the funds) are
authorized to issue an unlimited number of shares. Each fund is registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. Shares of each fund are offered publicly through Fidelity
Systematic Investment Plans: Destiny I and Destiny II (the Plans), a unit
investment trust with two series. The following summarizes the significant
accounting policies of the funds:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days of their purchase date are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses can be directly attributed to a fund. Expenses
which cannot be directly attributed are apportioned between the funds.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, foreign currency transactions, partnerships, non-taxable
dividends and losses deferred due to wash sales. The funds also utilized
earnings and profits distributed to shareholders on redemption of shares as
a part of the dividends paid deduction for income tax purposes. The funds
also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for income
tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The funds may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the funds' currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the funds' investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the funds' investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Destiny I: Purchases and sales of securities, other than short-term
securities, aggregated $1,840,629,485 and $1,872,464,992, respectively, of
which U.S. government and government agency obligations aggregated
$257,143,401 and $150,665,923, respectively.
Destiny II: Purchases and sales of securities, other than short-term
securities, aggregated $983,621,991 and $814,329,567, respectively, of
which U.S. government and government agency obligations aggregated
$152,854,844 and $85,725,918, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of each fund.
The group fee rate is the weighted average of a series of rates and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The rates ranged from .2700% to .5200% for the period for the funds.
In the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates, as
they resulted in the same or a lower management fee. The annual individual
fund fee rates for Destiny I and Destiny II are .17% and .30%,
respectively. The basic fees are subject to a performance adjustment (up to
a maximum of (plus/minus) .24%) based on each fund's investment performance
as compared to the appropriate index over a specified period of time. For
the period, the management fees were equivalent to annual rates of .65% and
.75% of average net assets after the performance adjustment for the Destiny
I and Destiny II funds, respectively.
Fidelity Distributors Corporation (FDC), an affiliate of FMR and sponsor of
the Plans, received $907,276 and $2,926,991 as its portion of the Creation
and Sales Charges of Destiny I and Destiny II funds, respectively, for the
period.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the funds' transfer, dividend disbursing and shareholder servicing agent.
During the period October 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent contract pursuant to which FSC receives
account fees and asset-based fees that vary according to account size and
type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the funds' accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. Each fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms for Destiny I and Destiny II
were $927,267 and $439,193, respectively.
5. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows for Destiny I:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
Purchase Sales Dividend Market
Affiliate Cost Cost Income Value
Methode Electronics, Inc. Class A $ -- $ 1,162,388 $ 222,288 $ 28,842,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Fidelity Destiny Portfolios: Destiny I
and Destiny II:
We have audited the accompanying statements of assets and liabilities of
Fidelity Destiny Portfolios: Destiny I and Destiny II, including the
schedules of portfolio investments, as of September 30, 1995, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the two years in the period then
ended, for the three month period ended September 30, 1993, and for each
of the three years in the period ended June 30, 1993. These financial
statements and financial highlights are the responsibility of the funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Destiny Portfolios: Destiny I and Destiny II as of September 30,
1995, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and
the financial highlights for each of the two years in the period then
ended, for the three month period ended September 30, 1993, and for each
of the three years in the period ended June 30, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 14, 1995
