FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
Semiannual Report
Annual Report
March 31, 1996
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
State Street Bank and Trust Company
Boston, MA
DES-SANN-0596
12443
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
Q. HOW DID THE FUNDS PERFORM, GEORGE?
A. For the six months ended March 31, 1996, Destiny I returned 7.85% and
Destiny II gained 7.55%, while the S&P 500 was up 11.71%. For the same
period, the Lipper growth funds average was up 7.92%.
Q. WHY HAVE THE FUNDS UNDERPERFORMED THE S&P 500 AND THE LIPPER AVERAGE?
A. The funds had a 15% position in U.S. Treasury bonds at the end of the
period because I felt that bonds would do better than stocks. In fact, the
reverse has happened and that hurt the performance of the funds over the
past six months. In that period, bonds were up 0.9%, while stocks advanced
11.7%.
Q. WHAT WAS YOUR RATIONALE FOR BONDS?
A. Over the long term, stocks have fairly consistently appreciated faster
than bonds. Bonds pay a fixed rate of return, whereas stocks' performance
is a function of corporate earnings and dividend growth, which,
historically, have grown faster than the yield on Treasury Bonds.
So why own bonds at all? There are times when corporate earnings decline
due to a weak economy. When this happens, bonds typically outperform
stocks. In a Salomon Brothers study that looked at the period from 1960 to
1995, it was shown that when economic growth was below the median and
inflation was low, bonds outperformed stocks 76% of the time.
Q. SO, THEN, WHAT'S YOUR OUTLOOK FOR THE ECONOMY AND CORPORATE PROFITS?
A. I don't expect the economy to enter a recession in the foreseeable
future, but I do expect it to remain sluggish. The consumer is spent out
and leveraged to the max with debt. As pressures continue to build for the
government to downsize, fiscal policy has become a drag on the economy.
Additionally, the two engines of growth for the economy in the past year -
exports and capital spending - are slowing rapidly. The latest surveys show
capital spending only growing 1.5% this year, while export growth is only
up 9% in the latest month, down from a gain of 20% last year. Corporate
profit margins peaked in the second quarter of 1995, after reaching the
highest level in nearly 30 years. In addition, more excess capacity has
been built into the system since last year and this will put further
pressure on margins. In summary, I expect a slow-growing economy and a
modest decline in earnings.
Q. MANY GROWTH AREAS OF THE STOCK MARKET SEEM PICKED OVER. WHERE DO YOU SEE
OPPORTUNITIES OVER THE LONGER TERM?
A. One area of opportunity arises from the aging of the Baby Boom
generation. About 77 million Baby Boomers were born between 1946 and 1964.
As this demographic bulge has bulldozed its way through the economy over
the decades, it has caused massive shifts and opportunities, including the
rise and fall of housing inflation during the 1970s and 1980s, the
consumption bonanza of the 1980s, and more recently the focus on healthier
living - benefiting health clubs, exercise equipment companies and food
nutrition chains. Three million Boomers turn 50 in 1996 and they will act
and spend a lot differently at 50 than they did at 25. Anticipating the
Boomers' needs and desires as they age will open and close numerous
investment opportunities, from health care companies to recreation and
leisure sectors to financial service companies, to name a few.
Another sector with a favorable outlook is emerging countries. I have
traveled to China and seen first-hand the impact of granting personal and
economic freedom to over one billion people. As these new consumers and
laborers enter the world economy, it will have enormously positive
implications for world trade and for those companies that can satisfy this
new source of demand.
Q. WHAT ARE SOME OTHER AREAS OF OPPORTUNITY?
A. Telecommunications. The price of cellular service continues to drop
thanks to semiconductor technology and, in some parts of the world,
wireless telephone service is cheaper than land line. Penetration levels in
the United States (about 13%) are far below the 20% to 25% levels in the
high-growth Scandinavian countries. The number of cellular users worldwide
could grow several fold beyond the current 80 million users over the coming
years.
Another sector is technology - both the companies that develop it and the
companies that benefit from it. We are in the early stages of becoming a
society where the basic economic resource is knowledge rather than land,
labor or capital. Carnegie and Rockefeller built great companies based on
natural resources 100 years ago. Today, Bill Gates of Microsoft and Gordon
Moore of Intel are building great companies based on knowledge. Not only
will companies that develop useful technologies prosper, but companies that
find ways of applying this technology better than anyone else will also
benefit. I have seen first-hand how Fannie Mae - the largest long-term
position in the funds - has used technology to drive down costs and
increase efficiency. It has the unique distinction of being the company
with the highest sales per employee, highest assets per employee, and
highest profits per employee on the New York Stock Exchange.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. My disappointments have been a combination of being underweighted in
some seemingly expensive stocks that have performed well (such as
healthcare, drugs and blue chip growth stocks like Coke and Gillette) and
being overweighted in some sectors that appeared cheap, but did not perform
well (such as autos, retailers and railroads).
Q. WITH YOUR EXPECTATION OF A SLOW-GROWING ECONOMY AND LOWER EARNINGS,
WHERE DOES THAT LEAVE THE STOCK MARKET FOR THE REMAINDER OF 1996?
A. The stock market is clearly ahead of itself on a short-term basis and
has been driven by the tremendous inflows into mutual funds over the past
year. Normally, the stock market would react to slowing and/or declining
corporate earnings with a 10% to 15% correction, if not something worse. I
suspect this will be postponed to a time when we least expect it.
Besides earnings, the other critical determinant to the market is
inflation, and the outlook here remains positive. Low inflation means low
interest rates and thus the high price-to-earnings ratios which contribute
to the high valuation of the market. While we are currently witnessing a
slight rise in food and energy inflation, these increases will only serve
to bring on higher supplies which, in turn, will drive prices down again.
By far, the major part of inflation - unit labor costs and industrial
prices - remains subdued.
In conclusion, while the outlook isn't as rosy as it was a few years ago,
there will always be opportunities for appreciation in individual sectors
and stocks. If the road to successful investing was always a sunny walk in
the park, everyone would be a successful investor. There will be stormy
periods and those who are prepared to take advantage of them will be
rewarded in the long-term. This strategy has made successful long-term
investors out of Destiny shareholders in the past and may do so in the
future.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
PERFORMANCE UPDATE - DESTINY I
$10,000 OVER 10 YEARS
19860331 10000.00 10000.00
19860430 9967.80 9887.00
19860531 10264.01 10412.99
19860630 10328.40 10588.97
19860731 9575.02 9997.04
19860831 10231.57 10738.83
19860930 9437.81 9850.72
19861031 9898.19 10419.11
19861130 10056.94 10672.30
19861231 9866.44 10400.15
19870131 11176.14 11801.05
19870228 11922.28 12267.19
19870331 12057.22 12621.72
19870430 12049.28 12509.38
19870531 12136.59 12618.21
19870630 12644.60 13255.43
19870731 13406.61 13927.48
19870831 14118.30 14446.98
19870930 13784.14 14130.59
19871031 10284.73 11086.86
19871130 9402.92 10173.30
19871231 10448.23 10947.49
19880131 10828.89 11408.38
19880229 11590.22 11940.01
19880331 11319.75 11571.07
19880430 11570.19 11699.51
19880531 11620.28 11801.29
19880630 12461.74 12342.97
19880731 12341.53 12296.07
19880831 11813.14 11878.00
19880930 12276.61 12384.00
19881031 12441.39 12728.28
19881130 12153.02 12546.26
19881231 12483.11 12765.82
19890131 13540.82 13700.28
19890228 13237.12 13359.15
19890331 13540.82 13670.41
19890430 14158.69 14379.91
19890531 15027.90 14962.29
19890630 14692.79 14877.01
19890731 15677.19 16220.40
19890831 16101.59 16538.32
19890930 16232.77 16470.52
19891031 15686.21 16088.40
19891130 15762.73 16416.60
19891231 15671.42 16810.60
19900131 14733.91 15682.61
19900228 15046.42 15884.92
19900331 15370.49 16305.87
19900430 14872.80 15898.22
19900531 16516.33 17448.30
19900630 16481.61 17329.65
19900731 16018.65 17274.19
19900831 14378.29 15712.61
19900930 13409.24 14947.40
19901031 13312.34 14883.13
19901130 14450.97 15844.58
19901231 15177.76 16286.64
19910131 16813.03 16996.74
19910228 17975.89 18212.01
19910331 18399.85 18652.74
19910430 18630.00 18697.50
19910531 19744.41 19505.24
19910630 18448.31 18611.90
19910731 19671.73 19479.21
19910831 20339.14 19940.87
19910930 19996.13 19607.85
19911031 19907.20 19870.60
19911130 18687.61 19069.81
19911231 21085.09 21251.40
19920131 21312.97 20856.13
19920229 22090.42 21127.26
19920331 21594.46 20715.27
19920430 22371.91 21324.30
19920531 22559.58 21428.79
19920630 22170.85 21109.50
19920731 23068.94 21972.88
19920831 22457.34 21522.44
19920930 22683.57 21776.40
19921031 22547.83 21852.62
19921130 23633.75 22597.79
19921231 24279.97 22875.75
19930131 25029.75 23067.90
19930228 25109.51 23381.63
19930331 26353.82 23874.98
19930430 26513.35 23297.20
19930531 27263.12 23921.57
19930630 27470.51 23990.94
19930731 27821.47 23894.98
19930831 28779.93 24800.60
19930930 28779.93 24609.63
19931031 29838.26 25119.05
19931130 29650.49 24880.42
19931231 30694.50 25181.48
19940131 32648.29 26037.65
19940228 32155.28 25332.02
19940331 30639.72 24227.55
19940430 31552.71 24537.66
19940531 31790.08 24940.08
19940630 30895.36 24329.05
19940731 31917.90 25127.04
19940831 33360.41 26157.25
19940930 32319.61 25516.40
19941031 33031.74 26090.51
19941130 31899.64 25140.30
19941231 32054.07 25513.13
19950131 32361.22 26174.68
19950228 33458.21 27194.71
19950331 34401.63 27997.23
19950430 35696.07 28821.75
19950531 37363.50 29973.75
19950630 38636.01 30670.04
19950731 40018.22 31687.06
19950831 40369.26 31766.59
19950930 41202.97 33107.14
19951031 41532.07 32988.95
19951130 42716.81 34437.17
19951231 43898.12 35100.43
19960131 44717.98 36295.25
19960229 44554.01 36631.70
19960329 44436.89 36984.47
$10,000 OVER 10 YEARS: LET'S SAY YOU INVESTED $10,000 IN DESTINY I FUND ON
MARCH 31, 1986. BY MARCH 31, 1996, THE VALUE OF YOUR INVESTMENT WOULD HAVE
GROWN TO $44,437 - A 344.37% 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 $36,984 - A
269.84% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1996
Past 6 One Five Ten
month Year Years Years
s
DESTINY I FUND 7.85% 29.17 141.51 344.37
% % %
S&P 500(registered trademark) 11.71 32.10 98.28 269.84
% % % %
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1996
One Year Five Ten
Years Years
DESTINY I 29.17% 19.29% 16.08%
FUND
$50/MONTH
15-YEAR PLAN -38.26% 14.98% 14.56%
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.
THE DESTINY FUNDS SEEK CAPITAL GROWTH PRIMARILY FROM EQUITY SECURITIES.
PERFORMANCE UPDATE - DESTINY II
$10,000 OVER 10 YEARS
19860331 10000.00 10000.00
19860430 10465.75 9887.00
19860531 11054.79 10412.99
19860630 11321.92 10588.97
19860731 10698.63 9997.04
19860831 10961.03 10738.83
19860930 10318.73 9850.72
19861031 10940.09 10419.11
19861130 11156.52 10672.30
19861231 11121.61 10400.15
19870131 12476.03 11801.05
19870228 13795.54 12267.19
19870331 13928.19 12621.72
19870430 13949.14 12509.38
19870531 14046.88 12618.21
19870630 14647.29 13255.43
19870731 15499.04 13927.48
19870831 16295.80 14446.98
19870930 15840.18 14130.59
19871031 11565.01 11086.86
19871130 10615.81 10173.30
19871231 11906.68 10947.49
19880131 12259.00 11408.38
19880229 13339.97 11940.01
19880331 13259.90 11571.07
19880430 13604.21 11699.51
19880531 13468.09 11801.29
19880630 14613.11 12342.97
19880731 14533.04 12296.07
19880831 14020.58 11878.00
19880930 14589.09 12384.00
19881031 14621.12 12728.28
19881130 14164.71 12546.26
19881231 14623.71 12765.82
19890131 15847.18 13700.28
19890228 15533.05 13359.15
19890331 15731.45 13670.41
19890430 16640.78 14379.91
19890531 17690.64 14962.29
19890630 17062.38 14877.01
19890731 18087.44 16220.40
19890831 18665.39 16538.32
19890930 18770.25 16470.52
19891031 18158.56 16088.40
19891130 18333.33 16416.60
19891231 18486.39 16810.60
19900131 17284.17 15682.61
19900228 17607.85 15884.92
19900331 18042.49 16305.87
19900430 17487.62 15898.22
19900531 19485.15 17448.30
19900630 19522.14 17329.65
19900731 18828.56 17274.19
19900831 16791.36 15712.61
19900930 15538.14 14947.40
19901031 15425.06 14883.13
19901130 17008.09 15844.58
19901231 18020.07 16286.64
19910131 20043.41 16996.74
19910228 21610.79 18212.01
19910331 22294.73 18652.74
19910430 22731.70 18697.50
19910531 24023.60 19505.24
19910630 22323.23 18611.90
19910731 23890.61 19479.21
19910831 24829.37 19940.87
19910930 24405.38 19607.85
19911031 24301.97 19870.60
19911130 22730.10 19069.81
19911231 25484.76 21251.40
19920131 25975.69 20856.13
19920229 27066.65 21127.26
19920331 26237.52 20715.27
19920430 27121.19 21324.30
19920531 27535.76 21428.79
19920630 26924.82 21109.50
19920731 28004.87 21972.88
19920831 27192.38 21522.44
19920930 27276.31 21776.40
19921031 27264.32 21852.62
19921130 28631.13 22597.79
19921231 29430.68 22875.75
19930131 30446.83 23067.90
19930228 30522.10 23381.63
19930331 31801.69 23874.98
19930430 31801.69 23297.20
19930531 32905.66 23921.57
19930630 33194.19 23990.94
19930731 33507.82 23894.98
19930831 34738.33 24800.60
19930930 34829.71 24609.63
19931031 36135.17 25119.05
19931130 35991.57 24880.42
19931231 37319.92 25181.48
19940131 39670.46 26037.65
19940228 39189.35 25332.02
19940331 37278.68 24227.55
19940430 38392.09 24537.66
19940531 38667.01 24940.08
19940630 37526.11 24329.05
19940731 38749.48 25127.04
19940831 40522.70 26157.25
19940930 39244.33 25516.40
19941031 40096.58 26090.51
19941130 38818.21 25140.30
19941231 38991.02 25513.13
19950131 39399.47 26174.68
19950228 40687.65 27194.71
19950331 41787.31 27997.23
19950430 43311.14 28821.75
19950531 45259.12 29973.75
19950630 46782.94 30670.04
19950731 48385.31 31687.06
19950831 48809.47 31766.59
19950930 49830.58 33107.14
19951031 50239.03 32988.95
19951130 51605.76 34437.17
19951231 53012.34 35100.43
19960131 54003.22 36295.25
19960229 53772.02 36631.70
19960329 53590.36 36984.47
$10,000 OVER 10 YEARS: LET'S SAY YOU INVESTED $10,000 IN DESTINY II FUND
ON MARCH 31, 1986. BY MARCH 31, 1996, THE VALUE OF YOUR INVESTMENT WOULD
HAVE GROWN TO $53,590 - A 435.90% 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 $36,984 - A
269.84% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1996
Past 6 One Five Ten
month Year Years Years
s
DESTINY II FUND 7.55% 28.25 140.37 435.90
% % %
S&P 500(registered trademark) 11.71 32.10 98.28 269.84
% % % %
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED MARCH 31, 1996
One Year Five Ten
Years Years
DESTINY II 28.25% 19.17% 18.28%
FUND
$50/MONTH
15-YEAR PLAN -38.70% 14.87% 16.73%
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.
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.
THE DESTINY FUNDS SEEK CAPITAL GROWTH PRIMARILY FROM EQUITY SECURITIES.
TOP TEN EQUITY HOLDINGS - DESTINY I
Federal National Mortgage Association
Philip Morris Companies, Inc.
General Motors Corp.
Fleet Financial Group, Inc.
Compaq Computer Corp.
Royal Dutch Petroleum Co.
Vodafone Group PLC sponsored ADR
Federal Home Loan Mortgage Corp.
Columbia/HCA Healthcare Corp.
du Pont (E.I.) de Nemours & Co.
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.
TOP TEN EQUITY HOLDINGS - DESTINY II
Federal National Mortgage Association
Philip Morris Companies, Inc.
General Motors Corp.
Fleet Financial Group, Inc.
Compaq Computer Corp.
Royal Dutch Petroleum Co.
Vodafone Group PLC sponsored ADR
Federal Home Loan Mortgage Corp.
Columbia/HCA Healthcare Corp.
du Pont (E.I.) de Nemours & Co.
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.
TOP FIVE MARKET SECTORS - DESTINY I
Finance 17.4%
Technology 9.7%
Durables 8.5%
Energy 7.8%
Nondurables 7.5%
Finance 17.9%
Technology 16.8%
Durables 9.5%
Nondurables 7.1%
Utilities 6.8%
TOP FIVE MARKET SECTORS - DESTINY II
Finance 16.6%
Technology 9.1%
Durables 8.4%
Energy 7.5%
Nondurables 7.4%
Finance 17.6%
Technology 15.8%
Durables 9.3%
Nondurables 7.0%
Utilities 6.6%
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS/MARCH 31, 1996 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENT IN SECURITIES)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 80.9%
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.3%
Boeing Co. 132,500 $ 11,477,813
C A E Industries Ltd. 175,000 1,512,783
12,990,596
DEFENSE ELECTRONICS - 0.8%
Loral Corp. 244,200 11,965,800
Raytheon Co. 429,200 21,996,500
33,962,300
TOTAL AEROSPACE & DEFENSE 46,952,896
BASIC INDUSTRIES - 5.1%
CHEMICALS & PLASTICS - 2.8%
Air Products & Chemicals, Inc. 61,300 3,348,513
Betz Laboratories, Inc. 39,800 1,850,700
Dow Chemical Co. 27,500 2,389,063
du Pont (E.I.) de Nemours & Co. 795,000 65,985,000
Raychem Corp. 368,600 23,774,700
Rohm & Haas Co. 21,600 1,436,400
Union Carbide Corp. 386,300 19,170,138
117,954,514
IRON & STEEL - 0.0%
Bethlehem Steel Corp. (a) 93,200 1,223,250
METALS & MINING - 0.7%
Aluminum Co. of America 42,600 2,667,825
Reynolds Metals Co. 479,600 28,356,350
31,024,175
PACKAGING & CONTAINERS - 0.7%
Corning, Inc. 93,700 3,279,500
Owens-Illinois, Inc. (a) 1,640,000 26,445,000
29,724,500
PAPER & FOREST PRODUCTS - 0.9%
Champion International Corp. 320,700 14,511,675
Georgia-Pacific Corp. 46,900 3,253,688
International Paper Co. 330,000 12,993,750
Temple-Inland, Inc. 75,100 3,520,313
Willamette Industries, Inc. 88,000 5,302,000
39,581,426
TOTAL BASIC INDUSTRIES 219,507,865
CONSTRUCTION & REAL ESTATE - 1.1%
BUILDING MATERIALS - 0.4%
Armstrong World Industries, Inc. 146,800 9,119,950
Masco Corp. 131,900 3,825,100
Tecumseh Products Co. Class A 80,100 4,715,888
17,660,938
CONSTRUCTION - 0.4%
Centex Corp. 114,500 $ 3,549,500
Daito Trust Construction 270,100 3,247,998
Kaufman & Broad Home Corp. 271,300 4,340,800
Ryland Group, Inc. 19,200 309,600
Sekisui House Ltd. 304,000 3,797,343
15,245,241
ENGINEERING - 0.3%
Fluor Corp. 195,500 13,342,875
TOTAL CONSTRUCTION & REAL ESTATE 46,249,054
DURABLES - 8.5%
AUTOS, TIRES, & ACCESSORIES - 7.7%
Chrysler Corp. 885,300 55,109,925
Cummins Engine Co., Inc. 275,500 11,123,313
Dana Corp. 323,400 10,793,475
Discount Auto Parts, Inc. (a) 143,700 4,005,638
Federal-Mogul Corp. 204,500 3,808,813
Ford Motor Co. 98,500 3,385,938
General Motors Corp. 3,379,707 179,969,398
Gentex Corp. (a) 36,500 1,085,875
Goodyear Tire & Rubber Co. 88,200 4,498,200
Magna International, Inc. Class A 878,000 40,694,501
Superior Industries International, Inc. 458,300 11,457,500
Volvo AB Class B 363,600 8,473,302
334,405,878
CONSUMER ELECTRONICS - 0.5%
Matsushita Electric Industrial Co. Ltd. 512,000 8,304,637
Whirlpool Corp. 218,900 12,094,225
20,398,862
HOME FURNISHINGS - 0.1%
Haverty Furniture Companies, Inc. 193,800 2,640,525
TEXTILES & APPAREL - 0.2%
Burlington Industries, Inc. (a) 840,400 10,610,050
TOTAL DURABLES 368,055,315
ENERGY - 7.8%
ENERGY SERVICES - 0.2%
McDermott International, Inc. 443,700 8,541,225
OIL & GAS - 7.6%
Amerada Hess Corp. 228,500 12,567,500
Amoco Corp. 53,400 3,858,150
Anadarko Petroleum Corp. 13,000 721,500
Apache Corp. 92,100 2,475,188
Atlantic Richfield Co. 306,000 36,414,000
Belco Oil & Gas Corp. 4,100 93,275
British Petroleum PLC ADR 420,406 44,668,138
Burlington Resources, Inc. 507,400 18,837,225
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Canada Occidental Petroleum Ltd. 246,300 $ 8,335,332
Elf Aquitaine sponsored ADR 77,164 2,613,931
Enron Oil & Gas Co. 38,900 1,025,988
Kerr-McGee Corp. 146,400 9,296,400
Louisiana Land & Exploration Co. 616,700 28,753,638
Noble Affiliates, Inc. 87,900 2,856,750
Occidental Petroleum Corp. 321,600 8,602,800
Royal Dutch Petroleum Co. 805,600 113,791,000
Santa Fe Energy Resources, Inc. (a) 360,000 3,780,000
Seagull Energy Corp. (a) 92,200 2,086,025
Sun Co., Inc. 271,900 7,851,113
Tosco Corp. 290,700 13,626,563
Union Pacific Resources Group, Inc. 93,900 2,488,350
Unocal Corp. 30,276 1,010,462
325,753,328
TOTAL ENERGY 334,294,553
FINANCE - 17.4%
BANKS - 3.3%
Fleet Financial Group, Inc. 3,363,730 136,231,065
State Street Boston Corp. 119,300 5,965,000
142,196,065
CREDIT & OTHER FINANCE - 0.0%
First USA Paymentech, Inc. 1,300 45,825
FEDERAL SPONSORED CREDIT - 8.8%
Federal Home Loan Mortgage Corp. 972,600 82,914,150
Federal National Mortgage Association 9,283,600 295,914,750
378,828,900
INSURANCE - 3.8%
AFLAC, Inc. 122,100 3,815,625
Allmerica Financial Corp. 228,600 6,029,325
Allstate Corp. 1,220,990 51,434,204
American International Group, Inc. 448,100 41,953,363
CIGNA Corp. 28,300 3,233,275
Chubb Corp. (The) 4,500 422,438
General Re Corp. 221,700 32,312,775
Providian Corp. 325,200 14,512,050
Prudential Reinsurance Holdings, Inc. 49,200 1,162,350
Torchmark Corp. 221,100 9,949,500
164,824,905
SAVINGS & LOANS - 0.6%
Ahmanson (H.F.) & Co. 108,900 2,640,825
Golden West Financial Corp. 438,450 23,511,881
26,152,706
SECURITIES INDUSTRY - 0.9%
Nomura Securities Co. Ltd. 1,216,000 $ 26,638,079
United Asset Management Corp. 237,900 11,032,613
37,670,692
TOTAL FINANCE 749,719,093
HEALTH - 2.9%
DRUGS & PHARMACEUTICALS - 0.6%
Carter-Wallace, Inc. 161,400 2,642,925
Pharmacia & Upjohn, Inc. 405,400 16,165,325
Schering-Plough Corp. 113,400 6,591,375
25,399,625
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Baxter International, Inc. 153,100 6,927,775
Biomet, Inc. 193,200 2,704,800
9,632,575
MEDICAL FACILITIES MANAGEMENT - 2.1%
American Medical Response (a) 195,400 6,936,700
Columbia/HCA Healthcare Corp. 1,425,225 82,306,744
89,243,444
TOTAL HEALTH 124,275,644
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 512,800 10,640,600
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
ELECTRICAL EQUIPMENT - 0.9%
Antec Corp. (a) 54,700 847,850
Emerson Electric Co. 44,900 3,625,675
General Electric Co. 187,700 14,617,138
Oak Industries, Inc. (a) 27,700 689,038
Omron Corp. 137,000 3,026,707
Scientific-Atlanta, Inc. 362,900 6,441,475
Sensormatic Electronics Corp. 491,300 9,948,825
39,196,708
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
Caterpillar, Inc. 395,200 26,873,600
Deere & Co. 787,800 32,890,650
59,764,250
POLLUTION CONTROL - 0.4%
Browning-Ferris Industries, Inc. 616,700 19,426,050
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 118,387,008
MEDIA & LEISURE - 2.3%
BROADCASTING - 0.1%
Comcast Corp.:
Class A 20,100 349,238
Class A special 256,300 4,533,306
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
People's Choice TV Corp. (a) 27,200 $ 496,400
TCI Group Class A 46,500 863,156
6,242,100
ENTERTAINMENT - 0.4%
Cedar Fair LP (depositary unit) 17,800 674,175
Royal Caribbean Cruises Ltd. 632,400 15,414,750
16,088,925
LEISURE DURABLES & TOYS - 0.8%
Brunswick Corp. 165,800 3,813,400
Fleetwood Enterprises, Inc. 1,002,100 24,801,975
Outboard Marine Corp. 196,200 3,752,325
32,367,700
LODGING & GAMING - 0.6%
Circus Circus Enterprises, Inc. (a) 701,400 23,584,575
Mirage Resorts, Inc. (a) 59,700 2,619,338
26,203,913
PUBLISHING - 0.1%
Knight-Ridder, Inc. 50,500 3,440,313
Times Mirror Co. Class A 35,700 1,405,688
4,846,001
RESTAURANTS - 0.3%
Applebee's International, Inc. 30,000 750,000
Bertucci's, Inc. (a) 158,000 760,375
Brinker International, Inc. (a) 229,700 3,847,475
Darden Restaurants, Inc. 243,400 3,285,900
McDonald's Corp. 111,100 5,332,800
13,976,550
TOTAL MEDIA & LEISURE 99,725,189
NONDURABLES - 7.5%
FOODS - 0.1%
General Mills, Inc. 106,500 6,216,938
HOUSEHOLD PRODUCTS - 0.1%
Kao Corp. 430,000 5,331,158
TOBACCO - 7.3%
American Brands, Inc. 11,700 495,788
Philip Morris Companies, Inc. 3,082,200 270,463,050
RJR Nabisco Holdings Corp. 1,319,198 39,905,740
UST, Inc. 46,800 1,491,750
312,356,328
TOTAL NONDURABLES 323,904,424
PRECIOUS METALS - 0.2%
Barrick Gold Corp. 45,800 $ 1,398,345
Santa Fe Pacific Gold Corp. 319,875 5,118,000
6,516,345
RETAIL & WHOLESALE - 7.0%
APPAREL STORES - 0.4%
Limited, Inc. (The) 112,913 2,145,347
Melville Corp. 148,800 5,338,200
TJX Companies, Inc. 468,025 11,759,128
19,242,675
GENERAL MERCHANDISE STORES - 2.8%
Aoyama Trading Co. Ord. 221,300 6,745,756
Dillard Department Stores, Inc. Class A 240,800 8,337,700
Federated Department Stores, Inc. (a) 1,563,173 50,412,329
Wal-Mart Stores, Inc. 2,299,500 53,175,938
118,671,723
RETAIL & WHOLESALE, MISCELLANEOUS - 3.8%
Circuit City Stores, Inc. 1,618,100 48,340,738
Good Guys, Inc. (a) 211,500 1,850,625
Home Depot, Inc. (The) 875,000 41,890,625
Lowe's Companies, Inc. 617,800 22,086,350
Officemax, Inc. (a) 523,800 12,702,150
Office Depot, Inc. (a) 367,000 7,202,375
PETsMART, Inc. (a) 181,200 6,568,500
Rex Stores Corp. (a) 149,000 2,067,375
Tandy Corp. 325,800 15,068,250
Toys "R" Us, Inc. 203,900 5,505,300
163,282,288
TOTAL RETAIL & WHOLESALE 301,196,686
SERVICES - 0.0%
ADVERTISING - 0.0%
Interpublic Group of Companies, Inc. 33,300 1,573,425
TECHNOLOGY - 9.7%
COMMUNICATIONS EQUIPMENT - 0.1%
General Instrument Corp. (a) 110,300 3,019,463
COMPUTER SERVICES & SOFTWARE - 0.7%
Adobe Systems, Inc. 22,800 735,300
Automatic Data Processing, Inc. 307,000 12,088,125
MicroAge, Inc. (a) 194,900 2,022,088
Microsoft Corp. (a) 48,700 5,022,188
Policy Management Systems Corp. (a) 227,200 10,224,000
30,091,701
COMPUTERS & OFFICE EQUIPMENT - 6.2%
Canon, Inc. 662,000 12,588,953
Compaq Computer Corp. (a) 3,236,700 125,017,538
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Dell Computer Corp. (a) 80,400 $ 2,693,400
Digital Equipment Corp. (a) 184,200 10,154,025
Gateway 2000, Inc. (a) 82,900 2,310,838
Hewlett-Packard Co. 130,900 12,304,600
International Business Machines Corp. 573,300 63,707,963
SCI Systems, Inc. (a) 787,000 28,823,875
Tech Data Corp. (a) 546,800 9,158,900
266,760,092
ELECTRONICS - 2.7%
Intel Corp. 896,000 50,960,000
Methode Electronics, Inc. Class A 1,600,500 26,008,125
Molex, Inc. 110,468 3,534,976
Nitto Denko Corp. 472,000 6,951,852
Rohm Co. Ltd. 12,000 682,358
Solectron Corp. (a) 676,300 29,757,200
117,894,511
TOTAL TECHNOLOGY 417,765,767
TRANSPORTATION - 1.8%
AIR TRANSPORTATION - 0.1%
Southwest Airlines Co. 97,700 2,894,363
RAILROADS - 1.7%
Burlington Northern Santa Fe Corp. 319,400 26,230,725
CSX Corp. 1,000,400 45,643,250
Southern Pacific Rail Corp. (a) 55,622 1,307,117
73,181,092
TRUCKING & FREIGHT - 0.0%
Caliber System, Inc. 36,800 1,577,800
Consolidated Freightways, Inc. 38,200 985,934
2,563,734
TOTAL TRANSPORTATION 78,639,189
UTILITIES - 5.6%
CELLULAR - 2.7%
AirTouch Communications, Inc. (a) 624,900 19,450,013
Vodafone Group PLC sponsored ADR 2,565,300 96,198,750
115,648,763
ELECTRIC UTILITY - 0.0%
Southern Co. 69,700 1,664,088
TELEPHONE SERVICES - 2.9%
Ameritech Corp. 473,400 25,800,300
Bell Atlantic Corp. 283,600 17,512,300
BellSouth Corp. 590,200 21,837,400
NYNEX Corp. 468,500 $ 23,366,417
SBC Communications, Inc. 708,000 37,258,500
125,774,917
TOTAL UTILITIES 243,087,768
TOTAL COMMON STOCKS
(Cost $2,451,213,726) 3,490,490,821
PRINCIPAL
AMOUNT
U.S. Treasury OBLIGATIONS - 15.1%
8 1/8%, 8/15/19
(Cost $632,140,629) $ 570,000,000 651,401,700
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 4.0%
Investments in repurchase agreements
(U.S. Treasury obligations) in a
joint trading account at 5.40%,
dated 3/29/96 due 4/1/96 $ 170,990,911 170,914,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,254,268,355) $ 4,312,806,521
LEGEND:
(a) Non-income producing
INCOME TAX INFORMATION:
At March 31, 1996, the aggregate cost of investment securities for income
tax purposes was $3,255,164,299. Net unrealized appreciation aggregated
$1,057,642,222, of which $1,090,314,528 related to appreciated investment
securities and $32,672,306 related to depreciated investment securities.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1996 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $170,914,000) (cost $ 4,312,806,521
$3,254,268,355) - See accompanying schedule
Cash 466
Receivable for investments sold 9,141,277
Receivable for fund shares sold 170,873
Dividends receivable 8,435,829
Interest receivable 5,687,909
Other receivables 784,792
Total assets 4,337,027,667
LIABILITIES
Payable for investments purchased $ 25,920,556
Payable for fund shares redeemed 958,555
Accrued management fee 2,295,164
Other payables and accrued expenses 238,290
Total liabilities 29,412,565
NET ASSETS $ 4,307,615,102
Net Assets consist of:
Paid in capital $ 3,013,387,810
Undistributed net investment income 21,355,340
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 214,377,054
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 1,058,494,898
NET ASSETS, for 227,065,832 shares outstanding $ 4,307,615,102
NET ASSET VALUE, offering price and redemption price per share ($4,307,615,102 (divided by) 227,065,832 shares) $18.97
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended March 31, 1996 (Unaudited)
INVESTMENT INCOME $ 33,713,088
Dividends (including $72,240 received from affiliated issuers)
Interest 28,590,002
Total income 62,303,090
EXPENSES
Management fee $ 10,131,004
Basic fee
Performance adjustment 3,335,160
Transfer agent fees 93,235
Accounting fees and expenses 392,996
Non-interested trustees' compensation 7,142
Custodian fees and expenses 63,566
Registration fees 79,191
Audit 21,468
Legal 22,113
Miscellaneous 14,728
Total expenses before reductions 14,160,603
Expense reductions (48,966) 14,111,637
Net investment income 48,191,453
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 254,154,420
realized gain (loss) of
$3,017,294 on sales of
investments in affiliated
issuers)
Foreign currency transactions (21,227) 254,133,193
Change in net unrealized appreciation (depreciation) on:
Investment securities 13,525,991
Assets and liabilities in (8,364) 13,517,627
foreign currencies
Net gain (loss) 267,650,820
Net increase (decrease) in net assets resulting from operations $ 315,842,273
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31,1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 48,191,453 $ 83,108,891
Net investment income
Net realized gain (loss) 254,133,193 163,214,586
Change in net unrealized appreciation (depreciation) 13,517,627 634,757,107
Net increase (decrease) in net assets resulting from operations 315,842,273 881,080,584
Distributions to shareholders (92,599,151) (62,951,723)
From net investment income
From net realized gain (174,422,963) (468,451,357)
Total distributions (267,022,114) (531,403,080)
Share transactions 75,406,185 137,291,888
Net proceeds from sales of shares
Reinvestment of distributions 251,037,739 502,563,938
Cost of shares redeemed (121,038,425) (209,384,277)
Net increase (decrease) in net assets resulting from share transactions 205,405,499 430,471,549
Total increase (decrease) in net assets 254,225,658 780,149,053
NET ASSETS
Beginning of period 4,053,389,444 3,273,240,391
End of period (including undistributed net investment income of $21,355,340 and $67,129,385, $ 4,307,615,102 $ 4,053,389,444
respectively)
OTHER INFORMATION
Shares
Sold 3,974,904 8,281,603
Issued in reinvestment of distributions 13,702,934 35,292,414
Redeemed (6,393,130) (12,689,491)
Net increase (decrease) 11,284,708 30,884,526
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED SEPTEMBER THREE YEARS ENDED JUNE 30,
ENDED 30, MONTHS
MARCH 31, 1996 ENDED
SEPTEMBER
30,
(UNAUDITED 1995 1994 C 1993 1993 1992 1991
)
SELECTED PER-SHARE DATA
Net asset value,
beginning of period $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24
Income from Investment Operations
Net investment
income .21 .41 .30 .04 .26 .31 .33
Net realized and
unrealized gain
(loss) 1.22 3.54 1.69 .75 3.16 2.55 1.25
Total from investment
operations 1.43 3.95 1.99 .79 3.42 2.86 1.58
Less Distributions (.43) (.34) (.11) (.14) (.30) (.49) (.10)
From net investment income
From net realized
gain (.81) (2.53) (1.04) (1.01) (2.44) (1.06) (.49)
Total distributions (1.24) (2.87) (1.15) (1.15) (2.74) (1.55) (.59)
Net asset value, end
of period $ 18.97 $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23
TOTAL RETURN B 7.85% 27.49% 12.30% 4.77% 23.90% 20.18% 11.93%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $ 4,308 $ 4,053 $ 3,273 $ 2,973 $ 2,869 $ 2,373 $ 2,023
Ratio of expenses to
average net assets .67% .68% .70% .65% .66% .61% .50%
A A
Ratio of net
investment income
to 2.29% 2.35% 1.69% 1.11% 1.83% 2.00% 2.45%
average A A
net assets
Portfolio turnover
rate 54% 55% 77% 82% 75% 75% 84%
A A
Average commission
rate D $ .0127 - - - - - -
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
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.
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
TRADES ON
WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS/MARCH 31, 1996 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF
INVESTMENT IN SECURITIES)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 78.4%
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.3%
Boeing Co. 70,100 $ 6,072,385
C A E Industries Ltd. 88,300 763,307
6,835,692
DEFENSE ELECTRONICS - 0.8%
Loral Corp . 118,500 5,806,500
Raytheon Co. 227,000 11,633,750
17,440,250
TOTAL AEROSPACE & DEFENSE 24,275,942
BASIC INDUSTRIES - 5.0%
CHEMICALS & PLASTICS - 2.7%
Air Products & Chemicals, Inc. 33,100 1,808,088
Betz Laboratories, Inc. 19,300 897,450
Dow Chemical Co. 14,400 1,251,000
du Pont (E. I.) de Nemours & Co. 420,300 34,884,900
Raychem Corp. 190,400 12,280,800
Rohm & Haas Co. 11,300 751,450
Union Carbide Corp. 201,300 9,989,513
61,863,201
IRON & STEEL - 0.0%
Bethlehem Steel Corp. (a) 48,600 637,875
METALS & MINING - 0.7%
Aluminum Co. of America 22,500 1,409,063
Reynolds Metals Co. 251,500 14,869,938
16,279,001
PACKAGING & CONTAINERS - 0.6%
Corning, Inc. 49,500 1,732,500
Owens-Illinois, Inc. (a) 759,900 12,253,388
13,985,888
PAPER & FOREST PRODUCTS - 1.0%
Champion International Corp. 198,000 8,959,500
Georgia-Pacific Corp. 24,800 1,720,500
International Paper Co . 173,400 6,827,625
Temple-Inland, Inc. 39,700 1,860,938
Willamette Industries, Inc. 46,500 2,801,625
22,170,188
TOTAL BASIC INDUSTRIES 114,936,153
CONSTRUCTION & REAL ESTATE - 1.0%
BUILDING MATERIALS - 0.4%
Armstrong World Industries, Inc. 70,300 4,367,388
Masco Corp. 78,200 2,267,800
Tecumseh Products Co. Class A 41,800 2,460,975
9,096,163
CONSTRUCTION - 0.3%
Centex Corp. 60,500 $ 1,875,500
Daito Trust Construction 137,100 1,648,651
Kaufman & Broad Home Corp. 136,700 2,187,200
Ryland Group, Inc. 9,500 153,188
Sekisui House Ltd. 154,000 1,923,654
7,788,193
ENGINEERING - 0.3%
Fluor Corp. 103,300 7,050,225
TOTAL CONSTRUCTION & REAL ESTATE 23,934,581
DURABLES - 8.4%
AUTOS, TIRES, & ACCESSORIES - 7.7%
Chrysler Corp. 481,400 29,967,150
Cummins Engine Co., Inc. 141,100 5,696,913
Dana Corp. 168,700 5,630,363
Discount Auto Parts, Inc. (a) 76,000 2,118,500
Federal-Mogul Corp. 106,500 1,983,563
Ford Motor Co. 52,000 1,787,500
General Motors Corp. 1,783,321 94,961,843
Gentex Corp. (a) 23,300 693,175
Goodyear Tire & Rubber Co. 46,300 2,361,300
Magna International, Inc. Class A 461,300 21,380,835
Modine Manufacturing Co. 2,300 60,950
Superior Industries International, Inc. 233,000 5,825,000
Volvo AB Class B 192,200 4,479,012
176,946,104
CONSUMER ELECTRONICS - 0.4%
Matsushita Electric Industrial Co. Ltd. 260,000 4,217,199
Whirlpool Corp. 107,200 5,922,800
10,139,999
HOME FURNISHINGS - 0.1%
Haverty Furniture Companies, Inc. 93,900 1,279,388
TEXTILES & APPAREL - 0.2%
Burlington Industries, Inc. (a) 370,100 4,672,513
TOTAL DURABLES 193,038,004
ENERGY - 7.5%
ENERGY SERVICES - 0.2%
McDermott International, Inc. 233,100 4,487,175
OIL & GAS - 7.3%
Amerada Hess Corp. 121,500 6,682,500
Amoco Corp. 28,000 2,023,000
Anadarko Petroleum Corp. 6,900 382,950
Apache Corp. 46,700 1,255,063
Atlantic Richfield Co. 161,700 19,242,300
Belco Oil & Gas Corp. 2,100 47,775
British Petroleum PLC ADR 213,773 22,713,381
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Burlington Resources, Inc. 255,700 $ 9,492,863
Canada Occidental Petroleum Ltd. 130,300 4,409,638
Elf Aquitaine sponsored ADR 40,344 1,366,653
Enron Oil & Gas Co. 20,500 540,688
Kerr-McGee Corp. 74,400 4,724,400
Louisiana Land & Exploration Co. 269,600 12,570,100
Noble Affiliates, Inc. 45,900 1,491,750
Occidental Petroleum Corp. 170,100 4,550,175
Royal Dutch Petroleum Co. 426,000 60,172,500
Santa Fe Energy Resources, Inc. (a) 174,500 1,832,250
Seagull Energy Corp. (a) 48,400 1,095,050
Sun Co., Inc. 143,500 4,143,563
Tosco Corp. 147,600 6,918,750
Union Pacific Resources Group, Inc. 47,400 1,256,100
Unocal Corp. 15,940 531,998
167,443,447
TOTAL ENERGY 171,930,622
FINANCE - 16.6%
BANKS - 3.2%
Fleet Financial Group, Inc. 1,744,216 70,640,748
State Street Boston Corp. 62,700 3,135,000
73,775,748
CREDIT & OTHER FINANCE - 0.0%
First USA Paymentech, Inc. 700 24,675
FEDERAL SPONSORED CREDIT - 8.3%
Federal Home Loan Mortgage Corp. 513,700 43,792,925
Federal National Mortgage Association 4,575,600 145,847,250
189,640,175
INSURANCE - 3.8%
AFLAC, Inc. 64,050 2,001,563
Allmerica Financial Corp. 115,500 3,046,313
Allstate Corp. 641,245 27,012,446
American International Group, Inc. 236,950 22,184,444
CIGNA Corp. 14,200 1,622,350
Chubb Corp. (The) 2,300 215,913
General Re Corp. 115,700 16,863,275
Providian Corp. 170,500 7,608,563
Prudential Reinsurance Holdings, Inc. 24,700 583,538
Torchmark Corp. 115,200 5,184,000
86,322,405
SAVINGS & LOANS - 0.5%
Ahmanson (H.F.) & Co. 57,600 1,396,800
Golden West Financial Corp. 201,300 10,794,713
12,191,513
SECURITIES INDUSTRY - 0.8%
Nomura Securities Co. Ltd. 618,000 $ 13,538,102
United Asset Management Corp. 74,900 3,473,488
17,011,590
TOTAL FINANCE 378,966,106
HEALTH - 2.8%
DRUGS & PHARMACEUTICALS - 0.6%
Carter-Wallace, Inc. 85,300 1,396,788
Pharmacia & Upjohn, Inc. 206,300 8,226,213
Schering-Plough Corp. 57,300 3,330,563
12,953,564
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Baxter International, Inc. 80,900 3,660,725
Biomet, Inc. 102,100 1,429,400
5,090,125
MEDICAL FACILITIES MANAGEMENT - 2.0%
American Medical Response (a) 94,700 3,361,850
Columbia/HCA Healthcare Corp. 752,740 43,470,735
46,832,585
TOTAL HEALTH 64,876,274
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 250,800 5,204,100
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
ELECTRICAL EQUIPMENT - 0.9%
Antec Corp. (a) 27,800 430,900
Emerson Electric Co. 22,400 1,808,800
General Electric Co. 90,700 7,063,263
Oak Industries, Inc. (a) 14,500 360,688
Omron Corp. 69,000 1,524,400
Scientific-Atlanta, Inc. 191,800 3,404,450
Sensormatic Electronics Corp. 259,800 5,260,950
19,853,451
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
Caterpillar, Inc. 207,800 14,130,400
Deere & Co. 415,400 17,342,950
Harnischfeger Industries, Inc. 3 116
31,473,466
POLLUTION CONTROL - 0.4%
Browning-Ferris Industries, Inc. 329,900 10,391,850
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 61,718,767
MEDIA & LEISURE - 2.4%
BROADCASTING - 0.3%
Comcast Corp.:
Class A 10,500 182,438
Class A special 134,600 2,380,738
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
PanAmSat Corp. (a) 62,300 $ 1,900,150
People's Choice TV Corp. (a) 14,300 260,975
TCI Group Class A 24,300 451,069
Telemundo Group, Inc. Class A (a) 100,000 1,975,000
7,150,370
ENTERTAINMENT - 0.4%
Cedar Fair LP (depositary unit) 9,300 352,238
Royal Caribbean Cruises Ltd. 331,900 8,090,063
8,442,301
LEISURE DURABLES & TOYS - 0.7%
Brunswick Corp. 87,600 2,014,800
Fleetwood Enterprises, Inc. 492,300 12,184,425
Outboard Marine Corp. 99,200 1,897,200
16,096,425
LODGING & GAMING - 0.6%
Circus Circus Enterprises, Inc. (a) 361,500 12,155,438
Mirage Resorts, Inc. (a) 31,300 1,373,288
13,528,726
PUBLISHING - 0.1%
Knight-Ridder, Inc. 26,200 1,784,875
Times Mirror Co. Class A 18,600 732,375
2,517,250
RESTAURANTS - 0.3%
Applebee's International, Inc. 15,800 395,000
Bertucci's, Inc. (a) 67,100 322,919
Brinker International, Inc. (a) 112,300 1,881,025
Darden Restaurants, Inc. 122,600 1,655,100
McDonald's Corp. 58,300 2,798,400
7,052,444
TOTAL MEDIA & LEISURE 54,787,516
NONDURABLES - 7.4%
FOODS - 0.2%
General Mills, Inc. 55,800 3,257,325
HOUSEHOLD PRODUCTS - 0.1%
Kao Corp. 219,000 2,715,171
TOBACCO - 7.1%
American Brands, Inc. 6,100 258,488
Philip Morris Companies, Inc. 1,610,100 141,286,275
RJR Nabisco Holdings Corp. 691,554 20,919,509
UST, Inc. 24,400 777,750
163,242,022
TOTAL NONDURABLES 169,214,518
PRECIOUS METALS - 0.2%
Barrick Gold Corp. 24,200 $ 738,863
Santa Fe Pacific Gold Corp. 168,147 2,690,352
3,429,215
RETAIL & WHOLESALE - 6.7%
APPAREL STORES - 0.4%
Limited, Inc. (The) 58,904 1,119,176
Melville Corp. 78,600 2,819,775
TJX Companies, Inc. 247,300 6,213,413
10,152,364
GENERAL MERCHANDISE STORES - 2.6%
Aoyama Trading Co. Ord. 112,600 3,432,319
Dillard Department Stores, Inc. Class A 127,200 4,404,300
Federated Department Stores, Inc. (a) 694,000 22,381,500
Wal-Mart Stores, Inc. 1,216,000 28,120,000
58,338,119
GROCERY STORES - 0.0%
Food Lion Inc. Class B 120,000 720,000
RETAIL & WHOLESALE, MISCELLANEOUS - 3.7%
Circuit City Stores, Inc. 839,100 25,068,113
Good Guys, Inc. (a) 91,400 799,750
Home Depot, Inc. (The) 445,400 21,323,525
Lowe's Companies, Inc. 322,300 11,522,225
Officemax, Inc. (a) 277,000 6,717,250
Office Depot, Inc. (a) 191,500 3,758,188
PETsMART, Inc. (a) 94,500 3,425,625
Rex Stores Corp. (a) 63,500 881,063
Tandy Corp. 172,000 7,955,000
Toys "R" Us, Inc. 107,900 2,913,300
84,364,039
TOTAL RETAIL & WHOLESALE 153,574,522
SERVICES - 0.0%
ADVERTISING - 0.0%
Interpublic Group of Companies, Inc. 17,400 822,150
TECHNOLOGY - 9.1%
COMMUNICATIONS EQUIPMENT - 0.1%
General Instrument Corp. (a) 57,500 1,574,063
COMPUTER SERVICES & SOFTWARE - 0.7%
Adobe Systems, Inc. 12,000 387,000
Automatic Data Processing, Inc. 162,000 6,378,750
MicroAge, Inc. (a) 93,600 971,100
Microsoft Corp. (a) 25,700 2,650,313
Policy Management Systems Corp. (a) 120,200 5,409,000
15,796,163
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 6.1%
Canon, Inc. 336,000 $ 6,389,559
Compaq Computer Corp. (a) 1,707,900 65,967,638
Dell Computer Corp. (a) 42,400 1,420,400
Digital Equipment Corp. (a) 97,400 5,369,175
Gateway 2000, Inc. (a) 43,800 1,220,925
Hewlett-Packard Co. 68,800 6,467,200
International Business Machines Corp. 303,200 33,693,100
SCI Systems, Inc. (a) 439,900 16,111,338
Tech Data Corp. (a) 286,700 4,802,225
141,441,560
ELECTRONICS - 2.2%
Intel Corp. 473,400 26,924,625
Methode Electronics, Inc. Class A 136,150 2,212,438
Molex, Inc. 43,906 1,404,992
Nitto Denko Corp. 239,000 3,520,112
Rohm Co. Ltd. 6,000 341,179
Solectron Corp. (a) 354,598 15,602,312
50,005,658
TOTAL TECHNOLOGY 208,817,444
TRANSPORTATION - 1.7%
AIR TRANSPORTATION - 0.1%
Southwest Airlines Co. 51,700 1,531,613
RAILROADS - 1.5%
Burlington Northern Santa Fe Corp. 148,900 12,228,413
CSX Corp. 479,400 21,872,625
Southern Pacific Rail Corp. (a) 29,387 690,595
34,791,633
TRUCKING & FREIGHT - 0.1%
Caliber System, Inc. 18,100 776,038
Consolidated Freightways, Inc. 20,200 521,358
1,297,396
TOTAL TRANSPORTATION 37,620,642
UTILITIES - 5.6%
CELLULAR - 2.7%
AirTouch Communications, Inc. (a) 324,000 10,084,500
Vodafone Group PLC sponsored ADR 1,343,200 50,370,000
60,454,500
ELECTRIC UTILITY - 0.0%
Southern Co. 36,800 878,600
TELEPHONE SERVICES - 2.9%
Ameritech Corp. 250,000 $ 13,625,000
Bell Atlantic Corp. 149,700 9,243,975
BellSouth Corp. 311,500 11,525,500
NYNEX Corp. 245,600 12,249,300
SBC Communications, Inc. 369,300 19,434,413
66,078,188
TOTAL UTILITIES 127,411,288
TOTAL COMMON STOCKS
(Cost $1,345,639,930) 1,794,557,844
PRINCIPAL
AMOUNT
U.S. TREASURY OBLIGATIONS - 15.5%
8 1/8%, 8/15/19
(Cost $345,451,566) $ 310,000,000 354,271,100
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 6.1%
Investments in repurchase agreements
(U.S. Treasury obligations) in a
joint trading account at 5.40%,
dated 3/29/96 due 4/1/96 $ 139,526,759 139,464,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,830,555,496) $2,288,292,944
LEGEND:
(a) Non-income producing
INCOME TAX INFORMATION:
At March 31, 1996, the aggregate cost of investment securities for income
tax purposes was $1,831,281,505. Net unrealized appreciation aggregated
$457,011,439, of which $476,482,422 related to appreciated investment
securities and $19,470,983 related to depreciated investment securities.
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1996 (Unaudited)
ASSETS
Investment in securities, at value (including repurchase agreements of $139,464,000) (cost $ 2,288,292,944
$1,830,555,496) - See accompanying schedule
Cash 36,246
Receivable for investments sold 3,511,548
Receivable for fund shares sold 339,479
Dividends receivable 4,351,592
Interest receivable 3,076,302
Other receivables 307,613
Total assets 2,299,915,724
LIABILITIES
Payable for investments purchased $ 13,948,686
Payable for fund shares redeemed 366,787
Accrued management fee 1,418,850
Other payables and accrued expenses 186,590
Total liabilities 15,920,913
NET ASSETS $ 2,283,994,811
Net Assets consist of:
Paid in capital $ 1,718,280,785
Undistributed net investment income 12,293,217
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 95,688,649
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 457,732,160
NET ASSETS, for 70,388,146 shares outstanding $ 2,283,994,811
NET ASSET VALUE, offering price and redemption price per share ($2,283,994,811 (divided by) 70,388,146 shares) $32.45
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended March 31, 1996 (Unaudited)
INVESTMENT INCOME $ 16,971,865
Dividends
Interest 16,298,746
Total income 33,270,611
EXPENSES
Management fee $ 6,657,185
Basic fee
Performance adjustment 1,450,210
Transfer agent fees 69,485
Accounting fees and expenses 390,259
Non-interested trustees' compensation 3,834
Custodian fees and expenses 39,228
Registration fees 78,200
Audit 22,059
Legal 10,620
Miscellaneous 7,097
Total expenses before reductions 8,728,177
Expense reductions (33,918) 8,694,259
Net investment income 24,576,352
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 110,667,528
Foreign currency transactions (9,928) 110,657,600
Change in net unrealized appreciation (depreciation) on:
Investment securities 20,542,768
Assets and liabilities in (3,965) 20,538,803
foreign currencies
Net gain (loss) 131,196,403
Net increase (decrease) in net assets resulting from operations $ 155,772,755
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31,1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 24,576,352 $ 39,184,675
Net investment income
Net realized gain (loss) 110,657,600 59,622,513
Change in net unrealized appreciation (depreciation) 20,538,803 320,527,572
Net increase (decrease) in net assets resulting from operations 155,772,755 419,334,760
Distributions to shareholders (43,812,914) (25,869,943)
From net investment income
From net realized gain (61,463,441) (153,114,736)
Total distributions (105,276,355) (178,984,679)
Share transactions 153,275,599 261,682,843
Net proceeds from sales of shares
Reinvestment of distributions 103,441,501 177,278,996
Cost of shares redeemed (54,980,834) (84,723,915)
Net increase (decrease) in net assets resulting from share transactions 201,736,266 354,237,924
Total increase (decrease) in net assets 252,232,666 594,588,005
NET ASSETS
Beginning of period 2,031,762,145 1,437,174,140
End of period (including undistributed net investment income of $12,293,217 and $32,076,535, $ 2,283,994,811 $ 2,031,762,145
respectively)
OTHER INFORMATION
Shares
Sold 4,745,262 9,406,008
Issued in reinvestment of distributions 3,293,270 7,319,526
Redeemed (1,701,497) (3,015,787)
Net increase (decrease) 6,337,035 13,709,747
</TABLE>
Financial Highlights
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED SEPTEMBER THREE YEARS ENDED JUNE 30,
ENDED 30, MONTHS
MARCH 31, 1996 ENDED
SEPTEMBER
30,
(UNAUDITED 1995 1994 C 1993 1993 1992 1991
)
SELECTED PER-SHARE DATA
Net asset value,
beginning of period $ 31.72 $ 28.55 $ 26.68 $ 26.46 $ 24.68 $ 23.50 $ 21.11
Income from Investment Operations
Net investment
income .34 .66 .42 .04 .26 .33 .29
Net realized and
unrealized gain
(loss) 2.00 5.97 2.86 1.23 4.85 4.08 2.61
Total from investment
operations 2.34 6.63 3.28 1.27 5.11 4.41 2.90
Less Distributions (.67) (.50) (.12) (.14) (.36) (.34) (.35)
From net investment income
From net realized
gain (.94) (2.96) (1.29) (.91) (2.97) (2.89) (.16)
Total distributions (1.61) (3.46) (1.41) (1.05) (3.33) (3.23) (.51)
Net asset value,
end of period $ 32.45 $ 31.72 $ 28.55 $ 26.68 $ 26.46 $ 24.68 $ 23.50
TOTAL RETURN B 7.55% 26.98% 12.67% 4.93% 23.28% 20.61% 14.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $ 2,284 $ 2,032 $ 1,437 $ 1,143 $ 1,061 $ 479 $ 326
Ratio of expenses to
average net assets .80% .80% .80% .84% .84% .88% .84%
A A
Ratio of net investment
income to 2.26% 2.33% 1.56% .69% 1.41% 1.60% 1.70%
average net assets A A
Portfolio turnover
rate 49% 52% 72% 80% 81% 113% 129%
A A
Average commission
rate D $ .0131 - - - - - -
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
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.
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR TRADES ON
WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 1996 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Destiny I and Destiny II (the funds) are funds of Fidelity Destiny
Portfolios (the trust). The trust 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. Each fund
is authorized to issue an unlimited number of shares. Shares of each fund
are offered publicly through Fidelity Systematic Investment Plans: Destiny
Plans I and Destiny Plans II (the Plans), a unit investment trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. 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 funds 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 of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
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, market discount, 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.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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.
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. Each fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
each fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge each fund's 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 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 $1,110,049,342 and $1,071,857,804, respectively, of
which purchases of U.S. government and government agency obligations
aggregated $257,807,035.
Destiny II: Purchases and sales of securities, other than short-term
securities, aggregated $632,170,616 and $487,561,767, respectively, of
which purchases of U.S. government and government agency obligations
aggregated $161,813,285.
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 .2500% to .5200% for the period. 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 rate is
.17% and .30% for Destiny I and Destiny II, respectively. The basic fee is
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 annualized rates of .64% and .75%, respectively, of
average net assets after the performance adjustment for the Destiny I and
Destiny II funds, respectively.
Fidelity Distributors Corporation, an affiliate of FMR and sponsor of the
Plans, received $409,670 and $1,616,137 as its portion of the Creation and
Sales Charges on sales of Destiny Plans I and Destiny Plans II,
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.
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. For the
period, the transfer agent fees were equivalent to an annualized rate of
.00% and .01% of the average net assets of Destiny I and Destiny II,
respectively.
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 $444,197 and $220,575, respectively.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers of each fund who paid
a portion of each fund's expenses. For the period, expenses were reduced by
$44,970 and $30,587 under this arrangement for Destiny I and Destiny II,
respectively.
In addition, each fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of each fund's expenses. During the period, the
custodian and transfer agent fees were reduced by $13 and $3,983, and $78
and $3,253, for Destiny I and Destiny II, respectively, under these
arrangements.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows for Destiny I:
Purchase Sales Dividend Market
Affiliate Cost Cost Income Value
Methode Electronics, Inc. Class A $ - $ 458,957 $ 72,240 $ -
