FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
Annual Report
Annual Report
September 30, 1997
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
Robert C. Pozen, SENIOR VICE PRESIDENT
Willliam J. Hayes, VICE PRESIDENT
Abigail Johnson, VICE PRESIDENT
George A. Vanderheiden, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Richard A. Silver, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Boston, MA
DES-ANN-1197
42276
6i
* INDEPENDENT TRUSTEES
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
FUND TALK A-3 The manager's review of the funds' performance,
strategy and outlook.
PERFORMANCE A-6 How the funds have done over time.
INVESTMENT CHANGES A-8 A summary of major shifts in the funds' investments
over the past six months.
DESTINY I
INVESTMENTS A-9 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS A-14 Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.
DESTINY II
INVESTMENTS A-18 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS A-23 Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.
NOTES A-27 Notes to the financial statements.
REPORT OF INDEPENDENT ACCOUNTANTS A-30 The auditors' opinion.
DISTRIBUTIONS A-31
</TABLE>
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, 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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
The U.S. stock market - supported by moderate
economic growth and subdued inflation - turned in a
strong performance for the 12 months that ended
September 30, 1997. The Standard & Poor's 500
Index, a broad measure of the U.S. stock market,
returned 40.45% during the period, well above its
long-term annual average of approximately 11%.
The stock market spent much of the past 12 months
breaking price and trading volume records. Solid
corporate earnings, large cash inflows into mutual
funds, widespread optimism and a generally
favorable interest-rate climate boosted share prices
higher, especially among large-capitalization,
household-name stocks. Concerns in the springtime
over an overheating economy combined with
earnings shortfall announcements from several key
companies toward the end of the period provided the
only considerable hiccups in the market's rise. When
the Federal Reserve Board raised a key short-term
interest rate in March, an already richly priced market
sold off sharply. From that point on, with positive
economic news being the primary catalyst, the
market soared. In July, the Dow Jones Industrial
Average surged past the 8000 mark for the first time
ever. August, however, posed a different story as
inflation fears, a weakened dollar and sluggish
corporate earnings ate away at some of the market's
prior gains, particularly among the aforementioned
large-cap stocks. The silver lining in this decline,
though, was the overall broadening of the market, as
small- and mid-cap stocks began to perform well,
leading to a relatively strong September.
AN INTERVIEW WITH
GEORGE A. VANDERHEIDEN,
PORTFOLIO MANAGER
OF FIDELITY DESTINY
PORTFOLIOS
Q. HOW DID THE FUNDS PERFORM, GEORGE?
A. For the 12-month period that ended September 30, 1997, Destiny I
and II produced returns of 36.29% and 34.72%, respectively. The
Standard & Poor's 500 Index had a return of 40.45% for the same
period, while the growth funds average, as tracked by Lipper
Analytical Services, returned 33.52%.
Q. HOW HAVE CHANGES IN THE INVESTMENT CLIMATE AFFECTED THE FUNDS?
A. One of the biggest equity market changes in recent months has been
the dominance of small-company stocks over large-company stocks. I
believe the recent outperformance of small-capitalization stocks is
due to several factors. First, when the Federal Reserve Board starts
raising rates, as it did this past spring, investors typically take
refuge in those stocks with lower, more conservative valuations. For
the past several years, large-cap stocks have outperformed small-cap
stocks. Consequently, small stocks have become more undervalued
relative to large stocks. As a result, over the past few months we've
seen small stocks rally while the richly priced, big-name consumer
growth stocks have languished. Second, large-cap companies have
recently seen their earnings growth slow. The valuation levels of many
large-cap companies, particularly in the consumer and technology
sectors, were based upon continued strength in earnings growth. Third,
small-cap stocks have historically outperformed when economic strength
is broadening and accelerating as it has in 1997, particularly after
an economic slowdown like we had in the first three quarters of 1996.
Q. WHAT EVENTS PLAYED KEY ROLES IN THE FUNDS' PERFORMANCE?
A. During the early fall of 1996, I continued to increase the funds'
positions in technology companies, including manufacturers of
semiconductors and semiconductor capital equipment. By late summer of
1997, valuations in many technology companies had risen to levels that
allowed little margin for error. After many of the large technology
companies reported below-estimate earnings, I began to reduce my
positions in many of the funds' technology holdings.
Q. WHAT MARKET SECTORS HELPED THE FUNDS' PERFORMANCE?
A. Over the past year, stocks in the consumer nondurable and
technology sectors have had the biggest impact on performance. Despite
the stigma of litigation, tobacco and consumer nondurable giant Philip
Morris was the biggest single contributor to the funds' performance
for the year. Strong growth in personal computer sales and corporate
spending on telecommunications and networking hardware also propelled
the funds' technology-related holdings to strong gains. IBM and Compaq
were particularly good performers.
Q. HAVE RECENT DEVELOPMENTS WITH COLUMBIA/HCA AND PHILIP MORRIS
CHANGED YOUR VIEW OF THESE STOCKS?
A. After the news broke about the government investigation into the
Medicare billing practices of Columbia/HCA, its market valuation
declined by over $10 billion from its peak this year in March. I felt
that any fine imposed by the government was more than adequately
reflected in this market discount. Further, I believed any fine would
be tax-deductible to Columbia/HCA and that the impact of the
government investigation was already reflected in the stock price. In
addition, management was in the process of seeking a settlement with
the government. When management has cooperated with the government in
similar cases with other companies in the past, the company's stock
price has rebounded during and after the settlement agreement process.
In turn then, I felt Columbia had good long-term business prospects,
as its hospitals are in prime locations and 20% of them have a
monopoly position.
Litigation has been a way of life for tobacco companies since the
Surgeon General's first warning about the effects of smoking over 30
years ago. If investors had decided to sell Philip Morris after that
first warning, they would have missed the more than 32,700% increase
in its price - excluding reinvested dividends - since that time. While
past performance is no guarantee of future results, this phenomenal
increase in the price of Philip Morris equates to a gain of roughly
18% per year for the past 35 years. Despite the ongoing tobacco
litigation, Philip Morris had strong business prospects and was
attractively priced as the period closed. The company has some of the
strongest brand names in the consumer industry and can use this
advantage to increase market share in new global markets.
Q. HOW DID THE FUNDS' BOND AND CASH HOLDINGS AFFECT PERFORMANCE?
A. Relative to the performance of the S&P 500, the bond and cash
holdings hurt performance over the past 12 months. The allocations to
bonds reduced the return of the funds by approximately 3%. Compared to
the S&P 500, the allocation to cash reduced the return of the funds by
about 1%-2%. Over the past year, the equity holdings in the funds
returned more than 42%, outperforming the S&P 500 return of 40.45%.
Q. WHY DO THE DESTINY FUNDS OWN BONDS?
A. I own bonds because they are currently among the most undervalued
and attractively priced financial assets. Four years ago, the long
bond yield - also known as the 30-year Treasury bond - was 5.94%.
Since then, inflation has declined and industrial capacity has, on
average, grown in line with demand. In spite of this, long bond prices
remain below their level of four years ago. In addition, although the
investment community considers it unlikely, deflation is one potential
shock to the economy that could disrupt the stock market. In this
scenario, the economy slows due to a cycle of capital investment in
strong markets that eventually results in industry overcapacity, which
then leads to weaker product prices. As a result, corporate earnings
fall sharply and the stock market declines. Though I also consider
this development unlikely, Treasury bonds would be the best assets to
own in this scenario.
Q. WHAT IS YOUR OUTLOOK FOR THE STOCK MARKET AND THE DESTINY FUNDS?
A. The most widely held view, and the one that dominates my
positioning of the Destiny funds, is the so-called "Goldilocks"
economy. In this scenario, real GDP - the gross domestic product
adjusted for inflation - grows between 2.5%-3% per year, inflation
stays restrained, profits grow at their long-term growth rate of
7%-8%, and the stock market rises in line with corporate profits.
Another possibility that is reflected in the funds' positioning is
deflation, which I mentioned earlier. I have positioned the Destiny
funds with both economic scenarios in mind.
The funds' stock selection emphasizes companies with strong business
prospects and attractive valuation levels. I have recently positioned
the fund to take advantage of a low inflation environment by focusing
on four areas: (1) innovative companies in the technology, health
care, and telecommunications sectors that can rely on unit growth to
increase earnings, (2) companies in the financial sector that should
benefit from falling interest rates, (3) global companies that have
strong proprietary advantages and can use these advantages to grow
market share worldwide, and (4) industries in consolidation that still
have strong growth rates. There will always be short-term fluctuations
in the marketplace. I remain focused on the long-term and have
positioned the funds to take advantage of the investment climate over
the next five to 10 years.
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.
GEORGE VANDERHEIDEN ON THE IMPORTANCE OF
BEING A LONG-TERM INVESTOR:
"With the explosion of the Internet, cable and
satellite television, cellular phones, and personal
computers, our society has become overloaded
with information. Investors are constantly
bombarded from all angles with reports of the
latest economic developments and stock market
activity. In this environment of instantaneous
reporting of short- term market fluctuations, it can
be all too easy to lose sight of your long-term
investment objectives. Destiny shareholders saving
for a child's college education or saving for
retirement, may have an investment time horizon of
15 to 25 years or more. Over a time period this
long, you should remain focused on maintaining
your regular investment schedule. Although this
can be distressing at times, keep in mind that
short-term market fluctuations are essentially
meaningless over the long-term. For example, if
you had invested in the S&P 500 at the peak of the
market in December 1972, your portfolio would have
lost over 40% of its value during the following two
years. However, if you had remained focused on your
long-term objectives and stayed fully invested, by
1997 your portfolio would have had an average
return of over 12% per year. I manage the Destiny
funds with a similar long-term perspective in mind.
Rather than become distracted by the investment
fads of the moment, I remain focused on investing
in securities that I believe offer the best return
potential over the next five to 10 years. I also keep
the funds diversified across industry sectors and
invest a portion of the funds in bonds when I feel
they are undervalued. I have been in this business
since 1968 and have learned to hedge my
investment choices when I feel I don't have all
the answers. This gives me confidence that
regardless of the state of the economy, Destiny
shareholders will be well-positioned."
FUND FACTS
GOAL: seeks capital growth
START DATE: Destiny I: July 10, 1970; Destiny II:
December 30, 1985
SIZE: as of September 30, 1997, Destiny I:
more than $5.9 billion; Destiny II: more than
$3.6 billion
MANAGER: George Vandherheiden, Destiny I
since 1980, Destiny II since 1985; joined
Fidelity in 1971
(checkmark)
FIDELITY DESTINY PORTFOLIOS: DESTINY I
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19970930 19971014 100311 S00000000000001
Destiny I S&P 500
00006 SP001
1987/09/30 10000.00 10000.00
1987/10/31 7461.28 7846.00
1987/11/30 6821.55 7199.49
1987/12/31 7579.89 7747.37
1988/01/31 7856.05 8073.54
1988/02/29 8408.37 8449.76
1988/03/31 8212.15 8188.66
1988/04/30 8393.84 8279.56
1988/05/31 8430.18 8351.59
1988/06/30 9040.64 8734.93
1988/07/31 8953.43 8701.74
1988/08/31 8570.10 8405.88
1988/09/30 8906.32 8763.97
1988/10/31 9025.87 9007.61
1988/11/30 8816.66 8878.80
1988/12/31 9056.14 9034.18
1989/01/31 9823.48 9695.48
1989/02/28 9603.15 9454.06
1989/03/31 9823.48 9674.34
1989/04/30 10271.73 10176.44
1989/05/31 10902.31 10588.58
1989/06/30 10659.19 10528.23
1989/07/31 11373.35 11478.93
1989/08/31 11681.24 11703.91
1989/09/30 11776.41 11655.93
1989/10/31 11379.89 11385.51
1989/11/30 11435.41 11617.78
1989/12/31 11369.17 11896.60
1990/01/31 10689.03 11098.34
1990/02/28 10915.74 11241.51
1990/03/31 11150.85 11539.41
1990/04/30 10789.79 11250.92
1990/05/31 11982.13 12347.89
1990/06/30 11956.94 12263.92
1990/07/31 11621.07 12224.68
1990/08/31 10431.04 11119.57
1990/09/30 9728.02 10578.04
1990/10/31 9657.72 10532.56
1990/11/30 10483.77 11212.96
1990/12/31 11011.03 11525.80
1991/01/31 12197.37 12028.33
1991/02/28 13041.00 12888.35
1991/03/31 13348.57 13200.25
1991/04/30 13515.53 13231.93
1991/05/31 14324.00 13803.55
1991/06/30 13383.72 13171.35
1991/07/31 14271.28 13785.13
1991/08/31 14755.46 14111.84
1991/09/30 14506.62 13876.17
1991/10/31 14442.10 14062.12
1991/11/30 13557.33 13495.41
1991/12/31 15296.63 15039.29
1992/01/31 15461.95 14759.56
1992/02/29 16025.97 14951.43
1992/03/31 15666.16 14659.88
1992/04/30 16230.18 15090.88
1992/05/31 16366.32 15164.82
1992/06/30 16084.31 14938.87
1992/07/31 16735.86 15549.87
1992/08/31 16292.15 15231.10
1992/09/30 16456.28 15410.82
1992/10/31 16357.80 15464.76
1992/11/30 17145.60 15992.11
1992/12/31 17614.42 16188.81
1993/01/31 18158.36 16324.80
1993/02/28 18216.23 16546.81
1993/03/31 19118.94 16895.95
1993/04/30 19234.67 16487.07
1993/05/31 19778.61 16928.92
1993/06/30 19929.06 16978.02
1993/07/31 20183.67 16910.11
1993/08/31 20879.01 17551.00
1993/09/30 20879.01 17415.86
1993/10/31 21646.80 17776.36
1993/11/30 21510.58 17607.49
1993/12/31 22267.98 17820.54
1994/01/31 23685.40 18426.44
1994/02/28 23327.73 17927.08
1994/03/31 22228.24 17145.46
1994/04/30 22890.58 17364.92
1994/05/31 23062.79 17649.71
1994/06/30 22413.70 17217.29
1994/07/31 23155.52 17782.02
1994/08/31 24202.02 18511.08
1994/09/30 23446.95 18057.56
1994/10/31 23963.58 18463.85
1994/11/30 23142.27 17791.40
1994/12/31 23254.30 18055.25
1995/01/31 23477.14 18523.42
1995/02/28 24272.97 19245.28
1995/03/31 24957.39 19813.20
1995/04/30 25896.48 20396.70
1995/05/31 27106.15 21211.96
1995/06/30 28029.32 21704.71
1995/07/31 29032.07 22424.44
1995/08/31 29286.74 22480.73
1995/09/30 29891.57 23429.41
1995/10/31 30130.32 23345.77
1995/11/30 30989.82 24370.65
1995/12/31 31846.82 24840.03
1996/01/31 32441.61 25685.58
1996/02/29 32322.66 25923.69
1996/03/31 32237.69 26173.33
1996/04/30 32849.47 26559.13
1996/05/31 33563.22 27244.09
1996/06/30 33801.14 27347.89
1996/07/31 32764.50 26139.66
1996/08/31 33036.41 26690.94
1996/09/30 34684.83 28193.11
1996/10/31 36010.36 28970.68
1996/11/30 38746.40 31160.57
1996/12/31 37753.02 30543.28
1997/01/31 39600.15 32451.62
1997/02/28 39958.27 32706.04
1997/03/31 37903.81 31362.15
1997/04/30 39807.48 33234.47
1997/05/31 42370.84 35257.79
1997/06/30 43727.92 36837.33
1997/07/31 47045.21 39768.48
1997/08/31 45348.87 37540.65
1997/09/30 47271.39 39596.75
IMATRL PRASUN SHR__CHT 19970930 19971014 100314 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Destiny I on September 30, 1987. As the chart shows, by
September 30, 1997, the value of the investment would have grown to
$47,271 - a 372.71% increase on the initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $39,597 - a 295.97% increase.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 PAST 10
SEPTEMBER 30, 1997 YEAR YEARS YEARS
Destiny I 36.29% 187.25% 372.71%
S&P 500(registered trademark) 40.45% 156.94% 295.97%
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 PAST 10
SEPTEMBER 30, 1997 YEAR YEARS YEARS
Destiny I 36.29% 23.50% 16.80%
$50/month 15-Year Plan -34.85% 19.04% 15.27%
The charts above show Destiny I 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); the figures provided for a "$50/month 15-year plan" illustrate
the fund's performance adjusted to reflect fees and sales charges
assessed by the Plans. The illustrations assume an initial investment
at the beginning of each period shown. Because the illustrations
assume lump sum investments, they do not reflect what investors would
have earned had they made regular monthly investments over the period.
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, a widely recognized,
unmanaged index of common stocks, 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.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19970930 19971014 100847 S00000000000001
Destiny II S&P 500
00306 SP001
1987/09/30 10000.00 10000.00
1987/10/31 7301.05 7846.00
1987/11/30 6701.82 7199.49
1987/12/31 7516.76 7747.37
1988/01/31 7739.18 8073.54
1988/02/29 8421.60 8449.76
1988/03/31 8371.05 8188.66
1988/04/30 8588.41 8279.56
1988/05/31 8502.48 8351.59
1988/06/30 9225.34 8734.93
1988/07/31 9174.79 8701.74
1988/08/31 8851.27 8405.88
1988/09/30 9210.18 8763.97
1988/10/31 9230.40 9007.61
1988/11/30 8942.26 8878.80
1988/12/31 9232.04 9034.18
1989/01/31 10004.42 9695.48
1989/02/28 9806.10 9454.06
1989/03/31 9931.35 9674.34
1989/04/30 10505.42 10176.44
1989/05/31 11168.21 10588.58
1989/06/30 10771.58 10528.23
1989/07/31 11418.71 11478.93
1989/08/31 11783.57 11703.91
1989/09/30 11849.77 11655.93
1989/10/31 11463.60 11385.51
1989/11/30 11573.94 11617.78
1989/12/31 11670.56 11896.60
1990/01/31 10911.60 11098.34
1990/02/28 11115.93 11241.51
1990/03/31 11390.33 11539.41
1990/04/30 11040.04 11250.92
1990/05/31 12301.09 12347.89
1990/06/30 12324.44 12263.92
1990/07/31 11886.58 12224.68
1990/08/31 10600.49 11119.57
1990/09/30 9809.32 10578.04
1990/10/31 9737.93 10532.56
1990/11/30 10737.30 11212.96
1990/12/31 11376.18 11525.80
1991/01/31 12653.52 12028.33
1991/02/28 13643.01 12888.35
1991/03/31 14074.79 13200.25
1991/04/30 14350.65 13231.93
1991/05/31 15166.23 13803.55
1991/06/30 14092.78 13171.35
1991/07/31 15082.28 13785.13
1991/08/31 15674.93 14111.84
1991/09/30 15407.26 13876.17
1991/10/31 15341.97 14062.12
1991/11/30 14349.64 13495.41
1991/12/31 16088.67 15039.29
1992/01/31 16398.60 14759.56
1992/02/29 17087.33 14951.43
1992/03/31 16563.90 14659.88
1992/04/30 17121.77 15090.88
1992/05/31 17383.48 15164.82
1992/06/30 16997.79 14938.87
1992/07/31 17679.64 15549.87
1992/08/31 17166.71 15231.10
1992/09/30 17219.69 15410.82
1992/10/31 17212.12 15464.76
1992/11/30 18075.00 15992.11
1992/12/31 18579.76 16188.81
1993/01/31 19221.26 16324.80
1993/02/28 19268.78 16546.81
1993/03/31 20076.59 16895.95
1993/04/30 20076.59 16487.07
1993/05/31 20773.53 16928.92
1993/06/30 20955.69 16978.02
1993/07/31 21153.68 16910.11
1993/08/31 21930.51 17551.00
1993/09/30 21988.20 17415.86
1993/10/31 22812.34 17776.36
1993/11/30 22721.69 17607.49
1993/12/31 23560.28 17820.54
1994/01/31 25044.19 18426.44
1994/02/28 24740.46 17927.08
1994/03/31 23534.25 17145.46
1994/04/30 24237.15 17364.92
1994/05/31 24410.71 17649.71
1994/06/30 23690.45 17217.29
1994/07/31 24462.77 17782.02
1994/08/31 25582.21 18511.08
1994/09/30 24775.18 18057.56
1994/10/31 25313.20 18463.85
1994/11/30 24506.16 17791.40
1994/12/31 24615.26 18055.25
1995/01/31 24873.11 18523.42
1995/02/28 25686.35 19245.28
1995/03/31 26380.57 19813.20
1995/04/30 27342.57 20396.70
1995/05/31 28572.34 21211.96
1995/06/30 29534.34 21704.71
1995/07/31 30545.93 22424.44
1995/08/31 30813.70 22480.73
1995/09/30 31458.34 23429.41
1995/10/31 31716.19 23345.77
1995/11/30 32579.01 24370.65
1995/12/31 33467.00 24840.03
1996/01/31 34092.55 25685.58
1996/02/29 33946.59 25923.69
1996/03/31 33831.90 26173.33
1996/04/30 34457.45 26559.13
1996/05/31 35176.84 27244.09
1996/06/30 35406.21 27347.89
1996/07/31 34374.05 26139.66
1996/08/31 34655.54 26690.94
1996/09/30 36313.25 28193.11
1996/10/31 37626.91 28970.68
1996/11/30 40473.17 31160.57
1996/12/31 39443.71 30543.28
1997/01/31 41312.27 32451.62
1997/02/28 41753.93 32706.04
1997/03/31 39647.55 31362.15
1997/04/30 41516.12 33234.47
1997/05/31 44098.13 35257.79
1997/06/30 45423.12 36837.33
1997/07/31 48786.53 39768.48
1997/08/31 46985.92 37540.65
1997/09/30 48922.43 39596.75
IMATRL PRASUN SHR__CHT 19970930 19971014 100851 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Destiny II on September 30, 1987. As the chart shows, by
September 30, 1997, the value of the investment would have grown to
$48,922 - a 389.22% increase on the initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $39,597 - a 295.97% increase.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 PAST 10
SEPTEMBER 30, 1997 YEAR YEARS YEARS
Destiny II 34.72% 184.11% 389.22%
S&P 500(registered trademark) 40.45% 156.94% 295.97%
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 PAST 10
SEPTEMBER 30, 1997 YEAR YEARS YEARS
Destiny II 34.72% 23.22% 17.21%
$50/month 15-Year Plan -35.60% 18.78% 15.67%
The charts above show Destiny II 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); the figures provided for a "$50/month 15-year plan" illustrate
the fund's performance adjusted to reflect fees and sales charges
assessed by the Plans. The illustrations assume an initial investment
at the beginning of each period shown. Because the illustrations
assume lump sum investments, they do not reflect what investors would
have earned had they made regular monthly investments over the period.
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, a widely recognized,
unmanaged index of common stocks, 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.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C>
TOP TEN EQUITY HOLDINGS - DESTINY I
AS OF SEPTEMBER 30, 1997 AS OF MARCH 31, 1997
Federal National Mortgage Association Philip Morris Companies, Inc.
Philip Morris Companies, Inc. Federal National Mortgage Association
Fleet Financial Group, Inc. Fleet Financial Group, Inc.
General Motors Corp. General Motors Corp.
Federal Home Loan Mortgage Corporation International Business Machines Corp.
Columbia/HCA Healthcare Corp. Federal Home Loan Mortgage Corporation
International Business Machines Corp. Royal Dutch Petroleum Co. ADR
Wal-Mart Stores, Inc. Columbia/HCA Healthcare Corp.
Vodafone Group PLC sponsored ADR Vodafone Group PLC sponsored ADR
Home Depot, Inc. du Pont (E.I.) de Nemours & Co.
TOP TEN EQUITY HOLDINGS - DESTINY II
AS OF SEPTEMBER 30, 1997 AS OF MARCH 31, 1997
Federal National Mortgage Association Philip Morris Companies, Inc.
Philip Morris Companies, Inc. Federal National Mortgage Association
Fleet Financial Group, Inc. Fleet Financial Group, Inc.
Columbia/HCA Healthcare Corp. General Motors Corp.
General Motors Corp. International Business Machines Corp.
Federal Home Loan Mortgage Corporation Royal Dutch Petroleum Co. ADR
International Business Machines Corp. Federal Home Loan Mortgage Corporation
Wal-Mart Stores, Inc. Columbia/HCA Healthcare Corp.
Home Depot, Inc. Vodafone Group PLC sponsored ADR
Vodafone Group PLC sponsored ADR du Pont (E.I.) de Nemours & Co.
TOP FIVE MARKET SECTORS - DESTINY I
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AS OF SEPTEMBER 30, 1997 % OF FUND'S INVESTMENTS AS OF MARCH 31, 1997 % OF FUND'S INVESTMENTS
Finance 20.0% Finance 18.4%
Technology 13.5% Technology 12.1%
Retail & Wholesale 7.8% Nondurables 8.6%
Nondurables 6.6% Energy 7.6%
Utilities 6.6% Utilities 7.0%
</TABLE>
TOP FIVE MARKET SECTORS - DESTINY II
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AS OF SEPTEMBER 30, 1997 % OF FUND'S INVESTMENTS AS OF MARCH 31, 1997 % OF FUND'S INVESTMENTS
Finance 18.2% Finance 16.6%
Technology 13.4% Technology 11.9%
Retail & Wholesale 8.0% Nondurables 8.8%
Health 7.1% Energy 7.3%
Utilities 6.6% Utilities 6.8%
</TABLE>
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS SEPTEMBER 30, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 84.6%
VALUE
SHARES (NOTE 1)
AEROSPACE & DEFENSE - 1.5%
AEROSPACE & DEFENSE - 1.0%
Boeing Co. 994,700 $ 54,148,981
Gulfstream Aerospace Corp. (a) 76,600 2,221,400
56,370,381
DEFENSE ELECTRONICS - 0.4%
Raytheon Co. 452,800 26,771,800
SHIP BUILDING & REPAIR - 0.1%
Avondale Industries, Inc. (a) 37,600 991,700
Newport News Shipbuilding, Inc. 108,500 2,556,531
3,548,231
TOTAL AEROSPACE & DEFENSE 86,690,412
BASIC INDUSTRIES - 3.9%
CHEMICALS & PLASTICS - 2.4%
Air Products & Chemicals, Inc. 129,900 10,773,581
du Pont (E.I.) de Nemours & Co. 1,261,400 77,654,938
Raychem Corp. 416,400 35,185,800
Union Carbide Corp. 409,100 19,918,056
143,532,375
PACKAGING & CONTAINERS - 0.8%
Corning, Inc. 24,600 1,162,350
Owens-Illinois, Inc. (a) 1,259,600 42,747,675
43,910,025
PAPER & FOREST PRODUCTS - 0.7%
Boise Cascade Corp. 256,600 10,793,238
Champion International Corp. 361,800 22,047,188
International Paper Co. 88,400 4,867,525
Ivex Packaging Corp. 6,900 110,400
Willamette Industries, Inc. 102,400 3,916,800
41,735,151
TOTAL BASIC INDUSTRIES 229,177,551
CONSTRUCTION & REAL ESTATE - 1.1%
CONSTRUCTION - 0.8%
Centex Corp. 138,800 8,102,450
D.R. Horton, Inc. 346,980 5,464,935
Fleetwood Enterprises, Inc. 645,307 21,658,116
Kaufman & Broad Home Corp. 470,700 10,208,306
U.S. Home Corp. (a) 34,300 1,324,838
46,758,645
ENGINEERING - 0.3%
Fluor Corp. 324,300 17,390,588
TOTAL CONSTRUCTION & REAL ESTATE 64,149,233
VALUE
SHARES (NOTE 1)
DURABLES - 4.6%
AUTOS, TIRES, & ACCESSORIES - 3.7%
Circuit City Stores, Inc. - CarMax Group 40,300 $ 667,469
Cummins Engine Co., Inc. 222,200 17,345,488
Discount Auto Parts, Inc. (a) 248,300 5,959,200
Federal-Mogul Corp. 110,400 4,098,600
General Motors Corp. 2,253,107 150,817,350
Gentex Corp. (a) 64,900 1,610,331
Goodyear Tire & Rubber Co. 109,400 7,521,250
Honda Motor Co. Ltd. 139,000 4,862,805
Magna International, Inc. Class A 250,700 17,399,511
Superior Industries International, Inc. 388,300 10,751,056
221,033,060
CONSUMER ELECTRONICS - 0.2%
Newell Co. 210,100 8,404,000
Philips Electronics NV (Bearer) 27,000 2,293,584
Philips Electronics NV NY shares 8,100 680,400
11,377,984
TEXTILES & APPAREL - 0.7%
Big Dog Holdings, Inc. 2,600 36,400
Burlington Industries, Inc. (a) 535,200 7,492,800
Liz Claiborne, Inc. 152,900 8,399,944
NIKE, Inc. Class B 398,900 21,141,700
Reebok International Ltd. 36,100 1,757,619
38,828,463
TOTAL DURABLES 271,239,507
ENERGY - 6.1%
ENERGY SERVICES - 0.3%
McDermott International, Inc. 489,600 17,870,400
OIL & GAS - 5.8%
Amerada Hess Corp. 208,500 12,861,844
Atlantic Richfield Co. 251,300 21,470,444
British Petroleum PLC ADR 668,126 60,674,192
Burlington Resources, Inc. 530,600 27,226,413
Elf Aquitaine SA sponsored ADR 107,764 7,186,512
Enron Oil & Gas Co. 57,600 1,281,600
Kerr-McGee Corp. 123,900 8,525,869
Louisiana Land & Exploration Co. 390,900 30,612,356
Mobil Corp. 61,400 4,543,600
Occidental Petroleum Corp. 952,000 24,692,500
Royal Dutch Petroleum Co. 1,627,000 90,298,500
Santa Fe Energy Resources, Inc. 295,000 3,687,500
Tosco Corp. 1,002,900 34,913,456
Total SA Class B 53,556 6,154,768
Total SA sponsored ADR 156,636 8,977,201
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Union Pacific Resources Group, Inc. 21,000 $ 549,938
Valero Energy Corp. 92,100 3,022,031
346,678,724
TOTAL ENERGY 364,549,124
FINANCE - 20.0%
BANKS - 1.0%
Credit Suisse Group (Reg.) 183,600 24,915,331
NationsBank Corp. 227,600 14,082,750
Providian Financial Corp. 463,800 18,407,063
57,405,144
CREDIT & OTHER FINANCE - 3.4%
Fleet Financial Group, Inc. 2,954,130 193,680,148
Green Tree Financial Corp. 179,500 8,436,500
202,116,648
FEDERAL SPONSORED CREDIT - 9.4%
Federal Home Loan Mortgage Corporation 4,230,000 149,107,500
Federal National Mortgage Association 8,775,900 412,467,300
561,574,800
INSURANCE - 5.7%
AFLAC, Inc. 162,200 8,799,350
Aegon NV (Reg.) 159,578 12,716,372
Allmerica Financial Corp. 235,200 10,334,100
Allstate Corp. 1,216,190 97,751,271
American International Group, Inc. 692,550 71,462,503
CIGNA Corp. 103,800 19,332,750
Equitable of Iowa Companies 26,300 1,762,100
General Re Corp. 104,800 20,802,800
Loews Corp. 164,800 18,612,100
MGIC Investment Corp. 551,400 31,602,113
Nationwide Financial Services, Inc. Class A 16,500 459,938
PMI Group, Inc. 249,200 14,282,275
Provident Companies, Inc. 30,400 1,063,050
Reliastar Financial Corp. 145,780 5,803,866
Torchmark Corp. 496,000 19,468,000
Travelers Property Casualty Corp. Class A 60,100 2,434,050
UNUM Corp. 44,000 2,007,500
338,694,138
SAVINGS & LOANS - 0.3%
Golden West Financial Corp. 217,950 19,561,013
SECURITIES INDUSTRY - 0.2%
United Asset Management Corp. 389,900 11,185,256
TOTAL FINANCE 1,190,536,999
VALUE
SHARES (NOTE 1)
HEALTH - 6.1%
DRUGS & PHARMACEUTICALS - 2.3%
American Home Products Corp. 252,200 $ 18,410,600
Amgen, Inc. 299,800 14,371,663
Astra AB Class A Free shares 1,702,100 31,484,971
Merck & Co., Inc. 89,900 8,984,381
Novartis AG (Reg.) 20,600 31,725,138
Schering-Plough Corp. 672,500 34,633,750
139,610,503
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
Allegiance Corp. 24,120 747,720
Bard (C.R.), Inc. 172,600 5,857,613
Baxter International, Inc. 85,100 4,446,475
Biomet, Inc. 409,800 9,835,200
Johnson & Johnson 46,900 2,702,613
St. Jude Medical, Inc. (a) 474,000 16,619,625
40,209,246
MEDICAL FACILITIES MANAGEMENT - 3.1%
Columbia/HCA Healthcare Corp. 4,146,487 119,211,501
Humana, Inc. (a) 1,020,800 24,307,800
Tenet Healthcare Corp. (a) 682,800 19,886,550
United HealthCare Corp. 416,900 20,845,000
184,250,851
TOTAL HEALTH 364,070,600
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. 396,750 11,505,750
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
ELECTRICAL EQUIPMENT - 1.5%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 27,700 735,781
Alcatel Alsthom Compagnie Generale
d'Electricite SA 226,800 30,286,831
Emerson Electric Co. 103,200 5,946,900
General Electric Co. 467,800 31,839,638
Grainger (W.W.), Inc. 36,500 3,248,500
Scientific-Atlanta, Inc. 235,800 5,334,975
Westinghouse Electric Corp. 376,600 10,191,738
87,584,363
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
Caterpillar, Inc. 535,700 28,894,319
Ultratech Stepper, Inc. (a) 270,900 9,210,600
38,104,919
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. 145,700 5,545,706
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 131,234,988
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
MEDIA & LEISURE - 3.4%
BROADCASTING - 0.4%
Cox Communications, Inc. Class A (a) 70,900 $ 1,954,181
HSN, Inc. (a) 45,680 1,855,750
TCI Group Class A 174,621 3,579,731
Tele-Communications, Inc. (TCI)
(Ventures Group) Series A 232,179 4,788,692
Time Warner, Inc. 208,400 11,292,675
23,471,029
ENTERTAINMENT - 0.7%
Cedar Fair LP (depositary unit) 17,800 849,950
King World Productions, Inc. 47,300 2,045,725
MGM Grand, Inc. 7,300 317,094
Royal Caribbean Cruises Ltd. 669,500 29,290,625
Viacom, Inc. Class A (a) 105,300 3,310,369
Viacom, Inc. Class B (non-vtg.) (a) 153,300 4,848,113
40,661,876
LEISURE DURABLES & TOYS - 0.5%
Nintendo Co. Ltd. Ord. 295,200 27,719,462
LODGING & GAMING - 1.1%
Circus Circus Enterprises, Inc. (a) 556,500 14,016,844
Harrah's Entertainment, Inc. (a) 137,700 3,089,644
HFS, Inc. (a) 222,100 16,532,569
Mirage Resorts, Inc. (a) 572,200 17,237,525
Rio Hotel & Casino, Inc. (a) 35,500 743,281
Sun International Hotels Ltd. Ord. (a) 336,900 11,623,050
63,242,913
PUBLISHING - 0.1%
Cognizant Corp. 154,300 6,287,725
US WEST Media Group 61,100 1,363,275
7,651,000
RESTAURANTS - 0.6%
Brinker International, Inc. (a) 171,900 3,061,969
Lone Star Steakhouse Saloon (a) 145,500 3,037,313
McDonald's Corp. 480,800 22,898,100
Papa John's International, Inc. (a) 43,200 1,476,900
Wendy's International, Inc. 378,300 8,038,875
38,513,157
TOTAL MEDIA & LEISURE 201,259,437
NONDURABLES - 6.6%
BEVERAGES - 0.1%
PepsiCo, Inc. 58,900 2,389,131
HOUSEHOLD PRODUCTS - 0.0%
Premark International, Inc. 63,300 2,025,600
VALUE
SHARES (NOTE 1)
TOBACCO - 6.5%
Philip Morris Companies, Inc. 7,977,100 $ 331,548,219
RJR Nabisco Holdings Corp. 1,612,698 55,436,494
386,984,713
TOTAL NONDURABLES 391,399,444
PRECIOUS METALS - 0.1%
Barrick Gold Corp. 54,000 1,339,198
Newmont Mining Corp. 143,206 6,435,320
7,774,518
RETAIL & WHOLESALE - 7.8%
APPAREL STORES - 0.4%
Gap, Inc. 140,500 7,033,781
TJX Companies, Inc. 476,650 14,567,616
21,601,397
DRUG STORES - 0.1%
CVS Corp. 72,300 4,112,063
GENERAL MERCHANDISE STORES - 2.3%
Federated Department Stores, Inc. (a) 570,773 24,614,586
Proffitts, Inc. (a) 86,800 5,142,900
Wal-Mart Stores, Inc. 2,996,500 109,746,813
139,504,299
GROCERY STORES - 0.3%
Safeway, Inc. (a) 354,600 19,281,375
RETAIL & WHOLESALE, MISCELLANEOUS - 4.7%
Comcast Corp. Class A 12,200 312,625
Circuit City Stores, Inc. - Circuit City Group 1,388,300 55,965,844
Corporate Express, Inc. (a) 256,900 5,427,013
Home Depot, Inc. 1,909,650 99,540,506
Lowe's Companies, Inc. 1,418,700 55,151,963
Officemax, Inc. (a) 741,750 11,265,328
Office Depot, Inc. (a) 233,500 4,713,781
PEAPOD, Inc. 14,300 178,750
Rex Stores Corp. (a) 88,100 991,125
Staples, Inc. (a) 309,900 8,560,988
Toys "R" Us, Inc. (a) 620,900 22,041,950
U.S. Office Products Co. (a) 231,500 8,160,375
Viking Office Products, Inc. (a) 309,700 6,735,975
279,046,223
TOTAL RETAIL & WHOLESALE 463,545,357
SERVICES - 0.2%
ADVERTISING - 0.1%
Interpublic Group of Companies, Inc. 49,950 2,563,059
LEASING & RENTAL - 0.0%
Avis Rent A Car, Inc. 16,500 393,938
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
SERVICES - CONTINUED
PRINTING - 0.0%
Donnelley (R.R.) & Sons Co. 45,500 $ 1,623,781
SERVICES - 0.1%
Boron LePore & Associates, Inc. 3,700 85,563
Reuters Holdings PLC ADR Class B 64,000 4,560,000
4,645,563
TOTAL SERVICES 9,226,341
TECHNOLOGY - 13.5%
COMMUNICATIONS EQUIPMENT - 0.3%
Andrew Corp. (a) 110,500 2,893,719
Cisco Systems, Inc. (a) 141,800 10,360,263
Nokia Corp. AB sponsored ADR 49,100 4,606,194
17,860,176
COMPUTER SERVICES & SOFTWARE - 2.6%
Advantage Learning Systems, Inc. 2,700 68,175
Automatic Data Processing, Inc. 340,400 17,020,000
Ceridian Corp. (a) 393,600 14,563,200
CompUSA, Inc. (a) 172,300 6,030,500
CUC International, Inc. (a) 375,000 11,625,000
J.D. Edwards & Co. 4,400 147,400
E Trade Group, Inc. 15,200 714,400
Electronic Data Systems Corp. 719,300 25,535,150
First Data Corp. 443,200 16,647,700
Microsoft Corp. (a) 179,300 23,723,631
Netscape Communications Corp. (a) 26,600 957,600
Network Solutions, Inc. Class A 1,500 32,625
Oracle Corp. (a) 414,450 15,101,522
Paychex, Inc. 139,250 4,856,344
Policy Management Systems Corp. (a) 316,900 19,707,219
156,730,466
COMPUTERS & OFFICE EQUIPMENT - 5.1%
Bay Networks, Inc. (a) 154,900 5,983,013
Compaq Computer Corp. (a) 1,081,500 80,842,125
Hewlett-Packard Co. 233,400 16,235,888
Ingram Micro, Inc. Class A (a) 46,900 1,269,231
International Business Machines Corp. 1,084,300 114,868,031
Quantum Corp. 52,600 2,015,238
SCI Systems, Inc. (a) 1,327,600 65,799,175
Tech Data Corp. (a) 277,700 12,774,200
Western Digital Corp. 88,400 3,541,525
303,328,426
ELECTRONIC INSTRUMENTS - 1.0%
Applied Materials, Inc. (a) 34,600 3,295,650
Cognex Corp. (a) 117,300 3,856,238
Lam Research Corp. (a) 551,000 25,621,500
Novellus Systems, Inc. (a) 55,600 7,005,600
Thermo Electron Corp. (a) 288,300 11,532,000
Varian Associates, Inc. 60,900 3,783,413
55,094,401
VALUE
SHARES (NOTE 1)
ELECTRONICS - 4.5%
Uniphase Corp. 2,400 $ 190,800
AMP, Inc. 719,400 38,532,863
Intel Corp. 819,900 75,687,019
Methode Electronics, Inc. Class A 1,355,500 34,904,125
Micron Technology, Inc. (a) 953,400 33,071,063
Molex, Inc. 144,585 5,891,839
Motorola, Inc. 66,600 4,786,875
Power One, Inc. 2,500 35,001
Solectron Corp. (a) 1,705,500 75,894,750
Thomas & Betts Corp. 26,100 1,425,713
270,420,048
TOTAL TECHNOLOGY 803,433,517
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.0%
Northwest Airlines Corp. Class A (a) 60,400 2,506,600
RAILROADS - 0.5%
Bombardier, Inc. Class B 207,700 4,210,999
Burlington Northern Santa Fe Corp. 65,900 6,367,588
CSX Corp. 277,100 16,210,350
26,788,937
SHIPPING - 0.1%
Stolt-Nielsen SA Class B sponsored ADR 183,300 5,315,700
Stolt-Nielsen SA 63,600 1,693,350
7,009,050
TRUCKING & FREIGHT - 0.1%
Roadway Express, Inc. 44,000 1,204,500
Yellow Corp. (a) 186,700 6,079,419
7,283,919
TOTAL TRANSPORTATION 43,588,506
UTILITIES - 6.6%
CELLULAR - 2.5%
AirTouch Communications, Inc. (a) 1,368,900 48,510,394
Vodafone Group PLC sponsored ADR 1,882,380 101,177,925
149,688,319
ELECTRIC UTILITY - 0.3%
American Electric Power Co., Inc. 133,000 6,051,500
Entergy Corp. 344,000 8,965,500
Niagara Mohawk Power Corp. (a) 138,200 1,321,538
PG&E Corp. 36,226 839,990
17,178,528
GAS - 0.1
Enron Corp. 79,900 3,076,150
TELEPHONE SERVICES - 3.7%
AT&T Corp. 255,200 11,308,550
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Ameritech Corp. 282,200 $ 18,766,300
Bell Atlantic Corp. 385,311 30,993,454
BellSouth Corp. 514,700 23,804,875
Deutsche Telekom AG 143,600 2,768,222
MCI Communications Corp. 1,834,800 53,897,250
NEXTLINK Communications, Inc. Class A 7,100 170,400
SBC Communications, Inc. 335,600 20,597,450
Sprint Corp. 1,080,900 54,045,000
WorldCom, Inc. (a) 144,300 5,104,613
221,456,114
TOTAL UTILITIES 391,399,111
TOTAL COMMON STOCKS
(Cost $2,903,972,619) 5,024,780,395
U.S. TREASURY OBLIGATIONS - 11.7%
PRINCIPAL
AMOUNT
8 1/8%, 8/15/19 $ 441,000,000 524,582,730
stripped principal:
0%, 2/15/19 115,000,000 28,587,850
0%, 8/15/19 100,000,000 24,114,000
0%, 8/15/20 392,000,000 88,282,320
0%, 8/15/21 130,000,000 27,430,000
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $625,681,278) 692,996,900
CASH EQUIVALENTS - 3.7%
SHARES
Taxable Central Cash Fund
(Cost $223,153,984) (b) 223,153,984 223,153,984
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,752,807,881) $ 5,940,931,279
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At September 30, 1997, the aggregate cost of investment securities for
income tax purposes was $3,753,901,981. Net unrealized appreciation
aggregated $2,187,029,298, of which $2,230,540,147 related to
appreciated investment securities and $43,510,849 related to
depreciated investment securities.
The fund hereby designates approximately $15,644,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FIDELITY DESTINY PORTFOLIOS: DESTINY I
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, 1997
ASSETS
Investment in securities, at value (cost $3,752,807,881) - See accompanying schedule $ 5,940,931,279
Receivable for investments sold 30,396,566
Receivable for fund shares sold 137,543
Dividends receivable 9,115,133
Interest receivable 5,626,179
Other receivables 82,440
TOTAL ASSETS 5,986,289,140
LIABILITIES
Payable to custodian bank $ 2,712
Payable for investments purchased 22,756,418
Payable for fund shares redeemed 971,948
Accrued management fee 1,557,916
Other payables and accrued expenses 257,924
TOTAL LIABILITIES 25,546,918
NET ASSETS $ 5,960,742,222
Net Assets consist of:
Paid in capital $ 3,220,865,948
Undistributed net investment income 89,779,250
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 461,976,508
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 2,188,120,516
NET ASSETS, for 237,632,428 shares outstanding $ 5,960,742,222
NET ASSET VALUE, offering price and redemption price per share ($5,960,742,222 (divided by) 237,632,428
shares) $25.08
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED SEPTEMBER 30, 1997
INVESTMENT INCOME $ 74,021,127
Dividends
Interest 61,854,619
TOTAL INCOME 135,875,746
EXPENSES
Management fee $ 24,716,121
Basic fee
Performance adjustment (5,561,177)
Transfer agent fees 258,665
Accounting fees and expenses 810,796
Non-interested trustees' compensation 24,996
Custodian fees and expenses 175,971
Registration fees 64,237
Audit 53,008
Legal 30,965
Miscellaneous 19,162
Total expenses before reductions 20,592,744
Expense reductions (434,636) 20,158,108
NET INVESTMENT INCOME 115,717,638
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 475,712,004
Foreign currency transactions (40,217) 475,671,787
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,031,078,520
Assets and liabilities in foreign currencies 36,383 1,031,114,903
NET GAIN (LOSS) 1,506,786,690
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,622,504,328
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 115,717,638 $ 103,748,711
Net investment income
Net realized gain (loss) 475,671,787 423,288,867
Change in net unrealized appreciation (depreciation) 1,031,114,903 112,028,342
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,622,504,328 639,065,920
Distributions to shareholders (100,379,101) (92,599,379)
From net investment income
From net realized gain (385,905,369) (174,422,963)
TOTAL DISTRIBUTIONS (486,284,470) (267,022,342)
Share transactions 145,821,046 140,978,880
Net proceeds from sales of shares
Reinvestment of distributions 455,487,338 251,037,967
Cost of shares redeemed (342,267,830) (251,968,059)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 259,040,554 140,048,788
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,395,260,412 512,092,366
NET ASSETS
Beginning of period 4,565,481,810 4,053,389,444
End of period (including undistributed net investment income of $89,779,250
and $75,121,685, respectively) $ 5,960,742,222 $ 4,565,481,810
OTHER INFORMATION
Shares
Sold 6,693,954 7,327,796
Issued in reinvestment of distributions 22,797,165 13,702,946
Redeemed (15,580,927) (13,089,630)
Net increase (decrease) 13,910,192 7,941,112
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED SEPTEMBER 30, THREE MONTHS YEAR ENDED
ENDED JUNE 30,
SEPTEMBER
30,
1997 1996 1995 1994 D 1993 1993
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 20.41 $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54
Income from Investment Operations
Net investment income .49 C .45 .41 .30 .04 .26
Net realized and unrealized gain (loss) 6.36 2.42 3.54 1.69 .75 3.16
Total from investment operations 6.85 2.87 3.95 1.99 .79 3.42
Less Distributions
From net investment income (.45) (.43) (.34) (.11) (.14) (.30)
From net realized gain (1.73) (.81) (2.53) (1.04) (1.01) (2.44)
Total distributions (2.18) (1.24) (2.87) (1.15) (1.15) (2.74)
Net asset value, end of period $ 25.08 $ 20.41 $ 18.78 $ 17.70 $ 16.86 $ 17.22
TOTAL RETURN B 36.29% G 16.04% 27.49% 12.30% 4.77% 23.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 5,961 $ 4,565 $ 4,053 $ 3,273 $ 2,973 $ 2,869
Ratio of expenses to average net assets .39% .65% .68% .70% .65% A .66%
Ratio of expenses to average net assets after .38% E .65% .68% .70% .65% A .66%
expense reductions
Ratio of net investment income to average net assets 2.20% 2.40% 2.35% 1.69% 1.11% A 1.83%
Portfolio turnover rate 32% 42% 55% 77% 82% A 75%
Average commission rate F $ .0478 $ .0175
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGES AND CUSTODIAN FEES ASSESSED THROUGH FIDELITY SYSTEMATIC
INVESTMENT PLANS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D 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.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY 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.
G THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS SEPTEMBER 30, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.3%
VALUE
SHARES (NOTE 1)
AEROSPACE & DEFENSE - 1.7%
AEROSPACE & DEFENSE - 1.0%
Boeing Co. 646,600 $ 35,199,288
Gulfstream Aerospace Corp. (a) 42,700 1,238,300
36,437,588
DEFENSE ELECTRONICS - 0.6%
Raytheon Co. 359,800 21,273,175
SHIP BUILDING & REPAIR - 0.1%
Avondale Industries, Inc. (a) 21,500 567,063
Newport News Shipbuilding, Inc. 62,600 1,475,013
2,042,076
TOTAL AEROSPACE & DEFENSE 59,752,839
BASIC INDUSTRIES - 3.5%
CHEMICALS & PLASTICS - 2.2%
Air Products & Chemicals, Inc. 69,900 5,797,331
du Pont (E.I.) de Nemours & Co. 717,600 44,177,250
Raychem Corp. 240,900 20,356,050
Union Carbide Corp. 222,200 10,818,363
81,148,994
PACKAGING & CONTAINERS - 0.6%
Corning, Inc. 14,900 704,025
Owens-Illinois, Inc. (a) 604,100 20,501,644
21,205,669
PAPER & FOREST PRODUCTS - 0.7%
Boise Cascade Corp. 139,300 5,859,306
Champion International Corp. 192,900 11,754,844
Georgia-Pacific Corp. 20,000 2,087,500
International Paper Co. 47,000 2,587,938
Ivex Packaging Corp. 4,200 67,200
Willamette Industries, Inc. 88,000 3,366,000
25,722,788
TOTAL BASIC INDUSTRIES 128,077,451
CONSTRUCTION & REAL ESTATE - 1.3%
CONSTRUCTION - 0.9%
Centex Corp. 75,200 4,389,800
D.R. Horton, Inc. 391,936 6,172,992
Fleetwood Enterprises, Inc. 454,041 15,238,751
Kaufman & Broad Home Corp. 283,600 6,150,575
U.S. Home Corp. (a) 18,300 706,838
32,658,956
ENGINEERING - 0.4%
Fluor Corp. 249,500 13,379,438
TOTAL CONSTRUCTION & REAL ESTATE 46,038,394
VALUE
SHARES (NOTE 1)
DURABLES - 4.5%
AUTOS, TIRES, & ACCESSORIES - 3.6%
Circuit City Stores, Inc. - CarMax Group 23,500 $ 389,219
Cummins Engine Co., Inc. 117,900 9,203,569
Discount Auto Parts, Inc. (a) 181,900 4,365,600
Federal-Mogul Corp. 58,900 2,186,663
General Motors Corp. 1,348,621 90,273,318
Gentex Corp. (a) 38,600 957,763
Goodyear Tire & Rubber Co. 68,700 4,723,125
Honda Motor Co. Ltd. 77,000 2,693,784
Magna International, Inc. Class A 143,000 9,924,731
Superior Industries International, Inc. 197,400 5,465,513
130,183,285
CONSUMER ELECTRONICS - 0.2%
Newell Co. 114,300 4,572,000
Philips Electronics NV (Bearer) 16,300 1,384,645
Philips Electronics NV NY shares 4,900 411,600
6,368,245
TEXTILES & APPAREL - 0.7%
Big Dog Holdings, Inc. 1,600 22,400
Burlington Industries, Inc. (a) 254,600 3,564,400
Liz Claiborne, Inc. 89,300 4,905,919
NIKE, Inc. Class B 288,200 15,274,600
Reebok International Ltd. 26,400 1,285,350
25,052,669
TOTAL DURABLES 161,604,199
ENERGY - 5.8%
ENERGY SERVICES - 0.3%
McDermott International, Inc. 293,400 10,709,100
OIL & GAS - 5.5%
Amerada Hess Corp. 116,500 7,186,594
Atlantic Richfield Co. 135,900 11,610,956
British Petroleum PLC ADR 339,916 30,868,622
Burlington Resources, Inc. 276,000 14,162,250
Elf Aquitaine SA sponsored ADR 57,344 3,824,128
Enron Oil & Gas Co. 33,300 740,925
Kerr-McGee Corp. 72,700 5,002,669
Louisiana Land & Exploration Co. 224,200 17,557,663
Mobil Corp. 35,800 2,649,200
Occidental Petroleum Corp. 589,800 15,297,938
Royal Dutch Petroleum Co. 987,600 54,811,800
Santa Fe Energy Resources, Inc. 143,000 1,787,500
Tosco Corp. 629,100 21,900,544
Total SA Class B 29,156 3,350,669
Total SA sponsored ADR 84,904 4,866,061
Union Pacific Resources Group, Inc. 10,400 272,350
Valero Energy Corp. 76,600 2,513,438
198,403,307
TOTAL ENERGY 209,112,407
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
FINANCE - 18.2%
BANKS - 1.0%
Credit Suisse Group (Reg.) 109,000 $ 14,791,782
NationsBank Corp. 130,700 8,087,063
Providian Financial Corp. 332,900 13,211,969
36,090,814
CREDIT & OTHER FINANCE - 3.1%
Fleet Financial Group, Inc. 1,624,916 106,533,555
Green Tree Financial Corp. 140,800 6,617,600
113,151,155
FEDERAL SPONSORED CREDIT - 8.1%
Federal Home Loan Mortgage Corporation 2,334,200 82,280,550
Federal National Mortgage Association 4,460,500 209,643,500
291,924,050
INSURANCE - 5.6%
AFLAC, Inc. 86,350 4,684,488
Aegon NV (Reg.) 110,009 8,766,342
Allmerica Financial Corp. 120,200 5,281,288
Allstate Corp. 655,645 52,697,467
American International Group, Inc. 398,025 41,071,205
CIGNA Corp. 85,200 15,868,500
Equitable of Iowa Companies 13,900 931,300
General Re Corp. 55,500 11,016,750
Loews Corp. 96,800 10,932,350
MGIC Investment Corp. 325,000 18,626,563
Nationwide Financial Services, Inc. Class A 9,700 270,388
PMI Group, Inc. 210,100 12,041,356
Provident Companies, Inc. 29,400 1,028,081
Reliastar Financial Corp. 88,084 3,506,844
Torchmark Corp. 284,400 11,162,700
Travelers Property Casualty Corp. Class A 32,800 1,328,400
UNUM Corp. 25,600 1,168,000
200,382,022
SAVINGS & LOANS - 0.3%
Golden West Financial Corp. 111,400 9,998,150
SECURITIES INDUSTRY - 0.1%
United Asset Management Corp. 127,200 3,649,050
TOTAL FINANCE 655,195,241
HEALTH - 7.1%
DRUGS & PHARMACEUTICALS - 2.5%
American Home Products Corp. 193,900 14,154,700
Amgen, Inc. 186,900 8,959,519
Astra AB Class A Free shares 980,500 18,137,015
VALUE
SHARES (NOTE 1)
Merck & Co., Inc. 53,300 $ 5,326,669
Novartis AG (Reg.) 14,906 22,956,064
Schering-Plough Corp. 385,700 19,863,550
89,397,517
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
Allegiance Corp. 13,400 415,400
Bard (C.R.), Inc. 101,800 3,454,838
Baxter International, Inc. 67,000 3,500,750
Biomet, Inc. 221,700 5,320,800
Johnson & Johnson 26,900 1,550,113
St. Jude Medical, Inc. (a) 274,400 9,621,150
23,863,051
MEDICAL FACILITIES MANAGEMENT - 4.0%
Columbia/HCA Healthcare Corp. 3,252,660 93,513,975
Humana, Inc. (a) 837,500 19,942,969
Tenet Healthcare Corp. (a) 570,100 16,604,163
United HealthCare Corp. 271,500 13,575,000
143,636,107
TOTAL HEALTH 256,896,675
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. 203,550 5,902,950
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
ELECTRICAL EQUIPMENT - 1.3%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 16,200 430,313
Alcatel Alsthom Compagnie Generale
d'Electricite SA 132,400 17,680,672
Emerson Electric Co. 52,200 3,008,025
General Electric Co. 260,600 17,737,088
Grainger (W.W.), Inc. 21,800 1,940,200
Scientific-Atlanta, Inc. 124,600 2,819,075
Westinghouse Electric Corp. 206,800 5,596,525
49,211,898
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
Caterpillar, Inc. 357,600 19,288,050
Ultratech Stepper, Inc. (a) 158,000 5,372,000
24,660,050
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. 87,400 3,326,663
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 77,198,611
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
MEDIA & LEISURE - 3.5%
BROADCASTING - 0.5%
Cox Communications, Inc. Class A (a) 42,100 $ 1,160,381
HSN, Inc. (a) 62,645 2,544,953
TCI Group Class A 103,772 2,127,326
Tele-Communications, Inc. (TCI)
(Ventures Group) Series A 139,228 2,871,578
Telemundo Group, Inc. Class A (a) 68,000 2,380,000
Time Warner, Inc. 126,100 6,833,044
17,917,282
ENTERTAINMENT - 0.6%
Cedar Fair LP (depositary unit) 9,300 444,075
King World Productions, Inc. 28,400 1,228,300
MGM Grand, Inc. 4,300 186,781
Royal Caribbean Cruises Ltd. 354,000 15,487,500
Viacom, Inc. Class A (a) 62,900 1,977,419
Viacom, Inc. Class B (non-vtg.) (a) 92,100 2,912,663
22,236,738
LEISURE DURABLES & TOYS - 0.5%
Nintendo Co. Ltd. Ord. 196,100 18,413,911
LODGING & GAMING - 1.1%
Circus Circus Enterprises, Inc. (a) 287,600 7,243,925
Harrah's Entertainment, Inc. (a) 81,100 1,819,681
HFS, Inc. (a) 133,100 9,907,631
Mirage Resorts, Inc. (a) 350,500 10,558,813
Rio Hotel & Casino, Inc. (a) 27,200 569,500
Sun International Hotels Ltd. Ord. (a) 223,700 7,717,650
37,817,200
PUBLISHING - 0.1%
Cognizant Corp. 91,800 3,740,850
US WEST Media Group 37,000 828,530
4,569,380
RESTAURANTS - 0.7%
Brinker International, Inc. (a) 83,900 1,494,469
Lone Star Steakhouse Saloon (a) 172,900 3,609,288
McDonald's Corp. 285,900 13,615,988
Papa John's International, Inc. (a) 25,600 875,200
Wendy's International, Inc. 227,800 4,840,750
24,435,695
TOTAL MEDIA & LEISURE 125,390,206
NONDURABLES - 6.4%
BEVERAGES - 0.0%
PepsiCo, Inc. 35,300 1,431,856
HOUSEHOLD PRODUCTS - 0.0%
Premark International, Inc. 34,100 1,091,200
VALUE
SHARES (NOTE 1)
TOBACCO - 6.4%
Philip Morris Companies, Inc. 4,715,000 $ 195,967,188
RJR Nabisco Holdings Corp. 872,354 29,987,169
Standard Commercial Corp. 51,005 860,709
226,815,066
TOTAL NONDURABLES 229,338,122
PRECIOUS METALS - 0.1%
Barrick Gold Corp. 29,200 724,159
Newmont Mining Corp. 82,848 3,722,982
4,447,141
RETAIL & WHOLESALE - 8.0%
APPAREL STORES - 0.3%
Gap, Inc. 83,100 4,160,194
TJX Companies, Inc. 266,800 8,154,075
12,314,269
DRUG STORES - 0.1%
CVS Corp. 39,100 2,223,813
GENERAL MERCHANDISE STORES - 2.2%
Federated Department Stores, Inc. (a) 325,900 14,054,438
Proffitts, Inc. (a) 81,900 4,852,575
Wal-Mart Stores, Inc. 1,686,900 61,782,713
80,689,726
GROCERY STORES - 0.5%
Food Lion, Inc. Class B 120,000 960,000
Safeway, Inc. (a) 325,700 17,709,938
18,669,938
RETAIL & WHOLESALE, MISCELLANEOUS - 4.9%
Comcast Corp. Class A 7,400 189,625
Circuit City Stores, Inc. - Circuit City Group 723,700 29,174,156
Corporate Express, Inc. (a) 150,800 3,185,650
Home Depot, Inc. 1,161,650 60,551,006
Lowe's Companies, Inc. 1,139,600 44,301,950
Officemax, Inc. (a) 550,700 8,363,756
Office Depot, Inc. (a) 132,700 2,678,881
PEAPOD, Inc. 8,600 107,500
Rex Stores Corp. (a) 37,600 423,000
Staples, Inc. (a) 205,300 5,671,413
Toys "R" Us, Inc. (a) 335,800 11,920,900
U.S. Office Products Co. (a) 133,600 4,709,400
Viking Office Products, Inc. (a) 180,200 3,919,350
175,196,587
TOTAL RETAIL & WHOLESALE 289,094,333
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
SERVICES - 0.1%
ADVERTISING - 0.0%
Interpublic Group of Companies, Inc. 26,100 $ 1,339,256
LEASING & RENTAL - 0.0%
Avis Rent A Car, Inc. 10,000 238,750
PRINTING - 0.0%
Donnelley (R.R.) & Sons Co. 27,200 970,700
SERVICES - 0.1%
Boron LePore & Associates, Inc. 2,200 50,875
Reuters Holdings PLC ADR Class B 38,600 2,750,250
2,801,125
TOTAL SERVICES 5,349,831
TECHNOLOGY - 13.4%
COMMUNICATIONS EQUIPMENT - 0.4%
Andrew Corp. (a) 115,900 3,035,131
Cisco Systems, Inc. (a) 125,500 9,169,344
Nokia Corp. AB sponsored ADR 27,900 2,617,369
14,821,844
COMPUTER SERVICES & SOFTWARE - 2.5%
Advantage Learning Systems, Inc. 1,600 40,400
Automatic Data Processing, Inc. 183,000 9,150,000
Ceridian Corp. (a) 232,600 8,606,200
CompUSA, Inc. (a) 100,200 3,507,000
CUC International, Inc. (a) 353,300 10,952,300
J.D. Edwards & Co. 2,700 90,450
E Trade Group, Inc. 9,200 432,400
Electronic Data Systems Corp. 406,400 14,427,200
First Data Corp. 258,000 9,691,125
Microsoft Corp. (a) 95,500 12,635,844
Netscape Communications Corp. (a) 15,300 550,800
Network Solutions, Inc. Class A 900 19,575
Oracle Corp. (a) 226,875 8,266,758
Paychex, Inc. 81,150 2,830,106
Policy Management Systems Corp. (a) 169,800 10,559,438
91,759,596
COMPUTERS & OFFICE EQUIPMENT - 5.4%
Bay Networks, Inc. (a) 86,700 3,348,788
Compaq Computer Corp. (a) 692,650 51,775,588
Hewlett-Packard Co. 124,400 8,653,575
Ingram Micro, Inc. Class A (a) 26,900 727,981
International Business Machines Corp. 717,300 75,988,969
Quantum Corp. 31,900 1,222,169
SCI Systems, Inc. (a) 835,100 41,389,644
Tech Data Corp. (a) 154,700 7,116,200
Western Digital Corp. 53,400 2,139,338
192,362,252
VALUE
SHARES (NOTE 1)
ELECTRONIC INSTRUMENTS - 1.1%
Applied Materials, Inc. (a) 21,700 $ 2,066,925
Cognex Corp. (a) 67,500 2,219,063
Lam Research Corp. (a) 315,500 14,670,750
Novellus Systems, Inc. (a) 32,100 4,044,600
Thermo Electron Corp. (a) 325,200 13,008,000
Varian Associates, Inc. 34,900 2,168,163
38,177,501
ELECTRONICS - 4.0%
Uniphase Corp. 1,500 119,250
AMP, Inc. 453,400 24,285,238
Intel Corp. 530,700 48,990,244
Methode Electronics, Inc. Class A 128,350 3,305,013
Micron Technology, Inc. (a) 566,900 19,664,344
Molex, Inc. 68,257 2,781,473
Motorola, Inc. 39,900 2,867,813
Power One, Inc. 1,500 21,000
Solectron Corp. (a) 929,096 41,344,772
Thomas & Betts Corp. 15,600 852,150
144,231,297
TOTAL TECHNOLOGY 481,352,490
TRANSPORTATION - 0.8%
AIR TRANSPORTATION - 0.1%
Northwest Airlines Corp. Class A (a) 34,900 1,448,350
RAILROADS - 0.5%
Bombardier, Inc. Class B 112,000 2,270,736
Burlington Northern Santa Fe Corp. 44,400 4,290,150
CSX Corp. 175,100 10,243,350
16,804,236
SHIPPING - 0.1%
Stolt-Nielsen SA Class B sponsored ADR 99,500 2,885,500
Stolt-Nielsen SA 58,200 1,549,575
4,435,075
TRUCKING & FREIGHT - 0.1%
Roadway Express, Inc. 45,600 1,248,300
Yellow Corp. (a) 115,500 3,760,969
5,009,269
TOTAL TRANSPORTATION 27,696,930
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
UTILITIES - 6.6%
CELLULAR - 2.4%
AirTouch Communications, Inc. (a) 884,600 $ 31,348,013
Vodafone Group PLC sponsored ADR 1,022,800 54,975,500
86,323,513
ELECTRIC UTILITY - 0.3%
American Electric Power Co., Inc. 109,200 4,968,600
Entergy Corp. 201,800 5,259,413
Niagara Mohawk Power Corp. (a) 82,800 791,775
PG&E Corp. 33,442 775,436
11,795,224
GAS - 0.1%
Enron Corp. 55,100 2,121,350
TELEPHONE SERVICES - 3.8%
AT&T Corp. 147,000 6,513,938
Ameritech Corp. 150,400 10,001,600
Bell Atlantic Corp. 209,393 16,843,049
BellSouth Corp. 271,700 12,566,125
Deutsche Telekom AG 80,500 1,551,824
MCI Communications Corp. 1,221,700 35,887,438
NEXTLINK Communications, Inc.
Class A 4,300 103,200
SBC Communications, Inc. 224,100 13,754,138
Sprint Corp. 712,300 35,615,000
WorldCom, Inc. (a) 84,800 2,996,806
135,833,118
TOTAL UTILITIES 236,073,205
TOTAL COMMON STOCKS
(Cost $1,895,000,117) 2,998,521,025
U.S. TREASURY OBLIGATIONS - 11.7%
PRINCIPAL
AMOUNT
8 1/8%, 8/15/19 $ 268,000,000 318,794,040
stripped principal:
0%, 2/15/19 115,000,000 28,587,850
0%, 8/15/19 70,000,000 16,879,800
0%, 8/15/20 196,000,000 44,141,160
0%, 8/15/21 60,000,000 12,660,000
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $385,743,443) 421,062,850
CASH EQUIVALENTS - 5.0%
VALUE
SHARES (NOTE 1)
Taxable Central Cash Fund
(Cost $179,617,726) (b) 179,617,726 $ 179,617,726
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,460,361,286) $ 3,599,201,601
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At September 30, 1997, the aggregate cost of investment securities for
income tax purposes was $2,461,291,528. Net unrealized appreciation
aggregated $1,137,910,073, of which $1,173,261,705 related to
appreciated investment securities and $35,351,632 related to
depreciated investment securities.
The fund hereby designates approximately $6,218,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, 1997
ASSETS
Investment in securities, at value (cost $2,460,361,286) - See accompanying schedule $ 3,599,201,601
Receivable for investments sold 16,862,957
Receivable for fund shares sold 160,076
Dividends receivable 5,256,935
Interest receivable 3,581,825
Other receivables 33,321
TOTAL ASSETS 3,625,096,715
LIABILITIES
Payable for investments purchased $ 13,750,513
Payable for fund shares redeemed 577,975
Accrued management fee 1,377,160
Other payables and accrued expenses 246,646
TOTAL LIABILITIES 15,952,294
NET ASSETS $ 3,609,144,421
Net Assets consist of:
Paid in capital $ 2,188,592,650
Undistributed net investment income 50,768,400
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 230,944,721
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 1,138,838,650
NET ASSETS, for 250,596,142 shares outstanding $ 3,609,144,421
NET ASSET VALUE, offering price and redemption price per share ($3,609,144,421 (divided by) 250,596,142
shares) $14.40
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED SEPTEMBER 30, 1997
INVESTMENT INCOME $ 41,725,744
Dividends
Interest 39,529,118
TOTAL INCOME 81,254,862
EXPENSES
Management fee $ 18,443,181
Basic fee
Performance adjustment (3,137,435)
Transfer agent fees 187,300
Accounting fees and expenses 806,279
Non-interested trustees' compensation 16,411
Custodian fees and expenses 113,521
Registration fees 132,950
Audit 49,631
Legal 16,516
Miscellaneous 10,082
Total expenses before reductions 16,638,436
Expense reductions (300,821) 16,337,615
NET INVESTMENT INCOME 64,917,247
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 238,662,916
Foreign currency transactions 24,778 238,687,694
Change in net unrealized appreciation (depreciation) on:
Investment securities 606,542,378
Assets and liabilities in foreign currencies 1,634 606,544,012
NET GAIN (LOSS) 845,231,706
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 910,148,953
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 64,917,247 $ 54,527,132
Net investment income
Net realized gain (loss) 238,687,694 177,717,874
Change in net unrealized appreciation (depreciation) 606,544,012 95,101,281
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 910,148,953 327,346,287
Distributions to shareholders (55,499,110) (43,813,086)
From net investment income
From net realized gain (166,474,990) (61,463,441)
TOTAL DISTRIBUTIONS (221,974,100) (105,276,527)
Share transactions 326,984,358 291,742,259
Net proceeds from sales of shares
Reinvestment of distributions 218,448,216 103,441,673
Cost of shares redeemed (162,870,326) (110,608,517)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 382,562,248 284,575,415
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,070,737,101 506,645,175
NET ASSETS
Beginning of period 2,538,407,320 2,031,762,145
End of period (including undistributed net investment income of $50,768,400 and
$41,533,520, respectively) $ 3,609,144,421 $ 2,538,407,320
OTHER INFORMATION
Shares
Sold (1996 shares adjusted for 3 for 1 stock split paid June 21, 1996) 25,964,294 26,673,779
Issued in reinvestment of distributions 18,831,746 9,879,858
Redeemed (12,796,917) (10,109,951)
Net increase (decrease) 31,999,123 26,443,686
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(PER-SHARE DATA HAVE BEEN ADJUSTED FOR A 3-FOR-1 SHARE SPLIT PAID JUNE 21, 1996.)
YEARS ENDED SEPTEMBER 30, THREE MONTHS YEAR ENDED
ENDED JUNE 30,
SEPTEMBER
30,
1997 1996 1995 1994 D 1993 1993
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.61 $ 10.57 $ 9.52 $ 8.89 $ 8.82 $ 8.23
Income from Investment Operations
Net investment income .27 C .24 .22 .14 .01 .09
Net realized and unrealized gain (loss) 3.52 1.34 1.99 .96 .41 1.61
Total from investment operations 3.79 1.58 2.21 1.10 .42 1.70
Less Distributions
From net investment income (.25) (.22) (.17) (.04) (.05) (.12)
From net realized gain (.75) (.32) (.99) (.43) (.30) (.99)
Total distributions (1.00) (.54) (1.16) (.47) (.35) (1.11)
Net asset value, end of period $ 14.40 $ 11.61 $ 10.57 $ 9.52 $ 8.89 $ 8.82
TOTAL RETURN B 34.72% G 15.43% 26.98% 12.67% 4.93% 23.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 3,609 $ 2,538 $ 2,032 $ 1,437 $ 1,143 $ 1,061
Ratio of expenses to average net assets .54% .78% .80% .80% .84% A .84%
Ratio of expenses to average net assets after .53% E .78% .80% .80% .84% A .84%
expense reductions
Ratio of net investment income to average net assets 2.11% 2.38% 2.33% 1.56% .69% A 1.41%
Portfolio turnover rate 35% 37% 52% 72% 80% A 81%
Average commission rate F $ .0482 $ .0182
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGES AND CUSTODIAN FEES ASSESSED THROUGH FIDELITY SYSTEMATIC
INVESTMENT PLANS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D 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.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY 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.
G THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
for the period ended September 30, 1997
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 with two series. 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 with
remaining maturities of sixty days or less for which quotations are
not readily available 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. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
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, 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 its 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. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. 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, partnerships 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.
Undistributed net investment income
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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.
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.
FOREIGN CURRENCY CONTRACTS. Each fund may use foreign currency
contracts to facilitate transactions in foreign-denominated
securities. 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 foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
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 for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). 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.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the funds may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the funds are recorded as interest income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Destiny I: Purchases and sales of securities, other than short-term
securities, aggregated $1,620,709,937 and $1,811,892,048,
respectively, of which U.S. government and government agency
obligations aggregated $90,002,181 and $178,764,729, respectively.
Destiny II: Purchases and sales of securities, other than short-term
securities, aggregated $1,219,702,491 and $999,237,318, respectively,
of which U.S. government and government agency obligations aggregated
$86,141,257 and $100,651,718, 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 .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 rates are .17% and .30%
for Destiny I and Destiny II, respectively. The basic fee is subject
to a performance
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
adjustment (up to a maximum of (plus/minus).24% of the fund's average
net assets over the performance period) 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 .36% and .50%, 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 $1,427,473 and $2,907,727 as its portion of the
Creation and Sales Charges on sales of Destiny Plans I and Destiny
Plans II, respectively, for the period.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (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 annual rate of .00%, and .01% of the average net
assets of Destiny I and Destiny II, respectively.
ACCOUNTING FEES. FSC maintains each fund's 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 $392,046 and $245,016, respectively.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of each fund's expenses. For the period, the fund's expenses
were reduced by $411,547 and $279,098 under this arrangement for
Destiny I and Destiny II, respectively.
In addition, each fund has entered into arrangements with it's
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 $10,371 and $12,718 for Destiny I and $7,293 and $14,430, for
Destiny II under these arrangements, respectively.
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, 1997, 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 four
years in the period then ended, for the three month period ended
September 30, 1993, and for the year 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, 1997 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 Fidelity Destiny Portfolios: Destiny I and
Destiny II as of September 30, 1997, 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 four years in the period then ended, for the three
month period ended September 30, 1993, and for the year ended June 30,
1993, in conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 11, 1997
DISTRIBUTIONS
Totals of 23% and 24% of the dividends distributed during the fiscal
year was 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 36% and 37% of the dividends distributed during the fiscal
year qualify for the dividends-received deductions for corporate
shareholders for Destiny I and Destiny II, respectively.
The fund will notify shareholders in January 1998 of these percentages
for use in preparing 1997 income tax returns.
