FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I
DESTINY II
Semiannual Report
Annual Report
March 31, 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
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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTION AGENT
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-SANN-0597
31339
6i
* INDEPENDENT TRUSTEES
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
FUND TALK 3 The manager's review of the funds' performance,
strategy and outlook.
PERFORMANCE 6 How the funds have done over time.
INVESTMENT CHANGES 8 A summary of major shifts in the funds'
investments
over the past six months.
DESTINY I
INVESTMENTS 9 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS 14 Statements of assets and liabilities, operations,
and
changes in net assets, as well as financial
highlights.
DESTINY II
INVESTMENTS 18 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities, operations,
and
changes in net assets, as well as financial
highlights.
NOTES 27 Notes to the financial statements.
</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
An interview with George A. Vanderheiden, Portfolio Manager of Fidelity
Destiny Portfolios: Destiny I and
Destiny II
Q. HOW DID THE FUNDS PERFORM, GEORGE?
A. For the six months that ended March 31, 1997, Destiny I and II returned
9.28% and 9.18%, respectively. The Standard & Poor's 500 Index had a return
of 11.24% for the same period, while the growth funds average, as tracked
by Lipper Analytical Services, had a return of 4.10%. For the 12 months
that ended March 31, 1997, Destiny I and II had returns of 17.58% and
17.19%, respectively. The S&P 500 had a return of 19.82%, and the Lipper
peer group returned 11.76% for the same period.
Q. CAN YOU IDENTIFY WHY THE FUNDS BEAT THE PEER GROUP YET TRAILED THE S&P
500?
A. Destiny I and II beat the Lipper group over the past six months due to
better stock selection, specifically less exposure to many of the
smaller-cap, momentum-type stocks so heavily owned by some growth funds.
The funds' underperformance relative to the S&P 500 can be traced to asset
allocation. The funds had about 14% of their investments in bonds and
approximately 5% of investments in cash. Over the past six months, this
total of approximately 19% of investments appreciated only about 1.7%.
Conversely, the other 81% in stocks was up approximately 11%, in line with
the S&P 500.
Q. WHAT STANDS OUT IN THE INVESTING CLIMATE OF THE LAST SIX MONTHS?
A. On December 6, 1996, Federal Reserve Board chairman Alan Greenspan
warned that stock market valuations were excessive. The Fed followed up
this warning three months later with an increase of one-quarter percentage
point to the Fed funds rate - the rates at which banks make overnight loans
to each other. The bond market subsequently declined and stocks went down a
greater amount. While the media and the investing public have rebuked the
Fed for making the warning and have largely chosen to ignore it - the Dow
Jones Industrial Average is currently above the 6382 level it was at on
December 6, 1996 - history tells us we should be paying attention. The two
other instances this century when the Fed chairman warned of excessive
stock prices were February 6, 1929 and June 1, 1965. Seven months after the
February 1929 warning, the Dow Jones peaked at 381 in September and
declined 89% over the next three years. Likewise, seven months following
the June 1965 warning, the market peaked in January 1966 at 994 and went
sideways for 16 years, not decisively breaking over 1000 until the latter
part of 1982.
Q. WHAT ARE THE IMPLICATIONS OF THE FED RAISING INTEREST RATES?
A. Rising interest rates are poison to high price/earnings (P/E) multiples,
and large-cap consumer growth stocks carry some of the highest P/E ratios
in the market today. These stocks have done very well over the past three
years while smaller- to mid-cap stocks have suffered both on a relative
basis and on an absolute basis since mid-1996. Recently, I have been
reallocating assets to these smaller-cap stocks where I think there is
better value.
Q. WHAT ARE YOU DOING TO PROTECT THE FUNDS IN CASE THE MARKET BECOMES MORE
DIFFICULT?
A. Bonds comprise about 14% of investments, and they should outperform
stocks in the event of a market decline. Furthermore, I've minimized
holdings in stocks with high P/E ratios and have tried to focus on growth
companies selling at reasonable valuations. In addition, at the period's
end, slightly under 10% of the portfolios was invested overseas either in
international oil stocks, growth stocks like Vodafone, or restructurings
such as Alcatel and Credit Suisse.
Q. THE ECONOMY HAS STRENGTHENED LATELY AND YOU STILL OWN BONDS? WHY?
A. Bonds were originally purchased as a short-term tactical move to hedge
against slowing corporate earnings growth in 1996. Earnings growth did slow
as expected in 1996, but the stock market did not correct as it normally
has done in the past. With Treasury bond yields at 3 1/2 times the yield on
the S&P 500, I consider bonds a good safety cushion in an expensive market.
I have no plans to add to the position and my next move will be to sell
them either when inflation accelerates or after they outperform equities.
Q. WHAT IS YOUR POSITION ON TOBACCO STOCKS?
A. I own the tobacco stocks because they operate a profitable business that
has offered above-average returns to shareholders over the long-term. The
stocks provide better-than-average earnings growth, lower-than-average P/E
ratios and high yields. Nothing this year has changed that. We have
determined that the tobacco stocks are selling at a "litigation discount"
far in excess of any reasonable estimate of potential liabilities. In spite
of the barrage of litigation over the past 10 years and the occurrence of
the "Marlboro Friday" price-cutting incident, Philip Morris has appreciated
five-and-a-half fold over the 10-year period - versus a fourfold increase
in the S&P 500 - and also has paid a higher dividend yield compared to the
market during the entire time.
Q. WHAT IMPACT WILL A RISING DOLLAR HAVE ON THE STOCK MARKET?
A. A rising dollar acts as a drag on the economy by slowing exports and
suppressing corporate earnings. Historically, a stronger dollar has
coincided with the outperformance of smaller-cap stocks as well as the
outperformance of domestic companies, such as retailers, restaurants,
apparel makers and financials.
Q. ARE THE DESTINY FUNDS BECOMING TOO LARGE TO MANAGE? ARE YOU RUNNING OUT
OF IDEAS?
A. The funds have not become too large to manage and we're definitely not
running out of ideas. There are many more issues to invest in and market
caps are much larger. Since 1991, there have been 3,947 domestic initial
public offerings, and some of these - including Allstate Insurance and
Lucent Technologies - have been huge. Also, 10 years ago there were no
companies with market caps in excess of $100 billion, and now we have
several, including GE, Coca-Cola, Exxon, Merck, Intel and Microsoft.
Q. WHAT'S YOUR OUTLOOK?
A. With the market continuing to advance over the past six months and Fed
policy becoming restrictive with interest rates rising, the investing
climate has become more precarious. As the period came to a close, some
sectors of the market, such as the average NASDAQ stock, were already in a
correction. This makes sense because investors typically sell off more
volatile holdings when they become anxious and hold on to the large-cap
growth stocks with which they are more familiar. Consequently, this is a
time to shift expectations downward at least for the near-term. However,
whatever the shorter term holds, remember that since 1945 the stock market
has risen 70% of the time, so chances are if one year is down, the next two
very well could be up. Destiny shareholders have done well by remaining
focused on long-term opportunities and goals, and this will continue to be
important over the next year.
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.
FUND FACTS
GOAL: seeks capital growth
START DATE: Destiny I: July 10, 1970; Destiny II:
December 30, 1985
SIZE: as of March 31, 1997, Destiny I: more
than $4.8 billion; Destiny II: more than $2.8
billion
MANAGER: George Vanderheiden, Destiny I
since 1980, Destiny II since 1985; joined
Fidelity in 1971
(checkmark)
GEORGE VANDERHEIDEN ON STEERING THE FUNDS
THROUGH DIFFICULT MARKET PHASES:
"One of the ways to protect a portfolio of
stocks going into a difficult market is to
emphasize companies with reliable and
above-average earnings growth rates whose
stock carries a dividend yield equal to or
better than that of the broad market, and
whose stock valuation is lower than that of the
market. In looking at the top 10 equity
positions in the Destiny portfolios at the
period's end, 80% of the assets were in
growth companies, such as Philip Morris,
Fannie Mae, Fleet Financial, IBM, Freddie
Mac, Columbia/HCA Healthcare and
Vodafone. This combined group of
companies has an earnings growth rate of
14%, which is nearly twice that of the S&P
500. The average dividend yield of this group
of companies is 2%, similar to that of the S&P
500. The average price-to-earnings ratio of
this group of stocks - based on 1997
earnings - is 14, while that of the S&P 500
is 17. I take much comfort that these
companies in aggregate have better earnings
prospects than the S&P 500, yet sell for a
lower valuation. In a rising market, they've got
superior growth going for them and, in a falling
market, they've got conservative valuation
giving them support."
FIDELITY DESTINY PORTFOLIOS: DESTINY I
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
1987/03/31 10000.00 10000.00
1987/04/30 9993.42 9911.00
1987/05/31 10065.83 9997.23
1987/06/30 10487.16 10502.09
1987/07/31 11119.16 11034.54
1987/08/31 11709.42 11446.13
1987/09/30 11432.28 11195.46
1987/10/31 8529.94 8783.96
1987/11/30 7798.58 8060.16
1987/12/31 8665.54 8673.54
1988/01/31 8981.26 9038.69
1988/02/29 9612.69 9459.90
1988/03/31 9388.36 9167.59
1988/04/30 9596.07 9269.35
1988/05/31 9637.61 9349.99
1988/06/30 10335.51 9779.15
1988/07/31 10235.81 9741.99
1988/08/31 9797.57 9410.77
1988/09/30 10181.96 9811.66
1988/10/31 10318.63 10084.43
1988/11/30 10079.45 9940.22
1988/12/31 10353.23 10114.17
1989/01/31 11230.47 10854.53
1989/02/28 10978.59 10584.25
1989/03/31 11230.47 10830.87
1989/04/30 11742.92 11392.99
1989/05/31 12463.82 11854.41
1989/06/30 12185.89 11786.84
1989/07/31 13002.33 12851.19
1989/08/31 13354.32 13103.07
1989/09/30 13463.11 13049.35
1989/10/31 13009.81 12746.60
1989/11/30 13073.27 13006.63
1989/12/31 12997.54 13318.79
1990/01/31 12219.99 12425.10
1990/02/28 12479.18 12585.39
1990/03/31 12747.96 12918.90
1990/04/30 12335.19 12595.93
1990/05/31 13698.30 13824.03
1990/06/30 13669.50 13730.02
1990/07/31 13285.52 13686.09
1990/08/31 11925.05 12448.87
1990/09/30 11121.34 11842.61
1990/10/31 11040.97 11791.68
1990/11/30 11985.33 12553.43
1990/12/31 12588.11 12903.67
1991/01/31 13944.37 13466.27
1991/02/28 14908.83 14429.10
1991/03/31 15260.45 14778.29
1991/04/30 15451.33 14813.76
1991/05/31 16375.60 15453.71
1991/06/30 15300.63 14745.93
1991/07/31 16315.32 15433.09
1991/08/31 16868.85 15798.86
1991/09/30 16584.37 15535.01
1991/10/31 16510.61 15743.18
1991/11/30 15499.11 15108.73
1991/12/31 17487.53 16837.17
1992/01/31 17676.52 16524.00
1992/02/29 18321.33 16738.81
1992/03/31 17909.99 16412.41
1992/04/30 18554.79 16894.93
1992/05/31 18710.43 16977.72
1992/06/30 18388.03 16724.75
1992/07/31 19132.89 17408.79
1992/08/31 18625.64 17051.91
1992/09/30 18813.27 17253.12
1992/10/31 18700.69 17313.51
1992/11/30 19601.33 17903.90
1992/12/31 20137.29 18124.12
1993/01/31 20759.14 18276.36
1993/02/28 20825.30 18524.92
1993/03/31 21857.30 18915.79
1993/04/30 21989.61 18458.03
1993/05/31 22611.46 18952.71
1993/06/30 22783.46 19007.67
1993/07/31 23074.53 18931.64
1993/08/31 23869.46 19649.15
1993/09/30 23869.46 19497.85
1993/10/31 24747.22 19901.46
1993/11/30 24591.49 19712.39
1993/12/31 25457.37 19950.91
1994/01/31 27077.80 20629.24
1994/02/28 26668.90 20070.19
1994/03/31 25411.94 19195.13
1994/04/30 26169.15 19440.83
1994/05/31 26366.02 19759.66
1994/06/30 25623.96 19275.55
1994/07/31 26472.03 19907.78
1994/08/31 27668.42 20724.00
1994/09/30 26805.20 20216.27
1994/10/31 27395.83 20671.13
1994/11/30 26456.89 19918.29
1994/12/31 26584.96 20213.68
1995/01/31 26839.71 20737.82
1995/02/28 27749.53 21545.97
1995/03/31 28531.98 22181.79
1995/04/30 29605.57 22835.05
1995/05/31 30988.50 23747.76
1995/06/30 32043.89 24299.42
1995/07/31 33190.26 25105.19
1995/08/31 33481.40 25168.21
1995/09/30 34172.87 26230.30
1995/10/31 34445.81 26136.66
1995/11/30 35428.42 27284.06
1995/12/31 36408.17 27809.55
1996/01/31 37088.15 28756.19
1996/02/29 36952.15 29022.76
1996/03/31 36855.01 29302.25
1996/04/30 37554.42 29734.16
1996/05/31 38370.40 30501.01
1996/06/30 38642.39 30617.22
1996/07/31 37457.28 29264.55
1996/08/31 37768.13 29881.74
1996/09/30 39652.65 31563.48
1996/10/31 41168.04 32434.00
1996/11/30 44295.96 34885.69
1996/12/31 43160.30 34194.60
1997/01/31 45271.99 36331.08
1997/02/28 45681.40 36615.92
1997/03/31 43332.68 35111.37
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Destiny I on March 31, 1987. As the chart shows, by March 31, 1997, the
value of the investment would have grown to $43,333 - a 333.33% 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 $35,111 - a 251.11% increase.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 6 PAST 1 PAST 5 PAST 10
MARCH 31, 1997 MONTHS YEAR YEARS YEARS
Destiny I 9.28% 17.58% 141.95% 333.33%
S&P 500(registered trademark) 11.24% 19.82% 113.93% 251.11%
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 PAST 10
MARCH 31, 1997 YEAR YEARS YEARS
Destiny I 17.58% 19.33% 15.79%
$50/month 15-Year Plan -43.80 15.02% 14.28%
%
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
1987/03/31 9700.00 10000.00
1987/04/30 9544.41 9911.00
1987/05/31 9554.14 9997.23
1987/06/30 9949.66 10502.09
1987/07/31 10435.89 11034.54
1987/08/31 10855.00 11446.13
1987/09/30 10588.29 11195.46
1987/10/31 7855.95 8783.96
1987/11/30 7262.67 8060.16
1987/12/31 7970.23 8673.54
1988/01/31 8286.26 9038.69
1988/02/29 8789.12 9459.90
1988/03/31 8765.27 9167.59
1988/04/30 8922.29 9269.35
1988/05/31 8898.44 9349.99
1988/06/30 9506.64 9779.15
1988/07/31 9445.02 9741.99
1988/08/31 9144.90 9410.77
1988/09/30 9528.50 9811.66
1988/10/31 9727.26 10084.43
1988/11/30 9596.08 9940.22
1988/12/31 9784.63 10114.17
1989/01/31 10578.42 10854.53
1989/02/28 10406.30 10584.25
1989/03/31 10716.12 10830.87
1989/04/30 11254.76 11392.99
1989/05/31 11848.97 11854.41
1989/06/30 11746.17 11786.84
1989/07/31 12733.07 12851.19
1989/08/31 13066.15 13103.07
1989/09/30 13292.31 13049.35
1989/10/31 12874.94 12746.60
1989/11/30 13086.71 13006.63
1989/12/31 13168.59 13318.79
1990/01/31 12319.29 12425.10
1990/02/28 12572.32 12585.39
1990/03/31 12893.56 12918.90
1990/04/30 12567.92 12595.93
1990/05/31 13685.74 13824.03
1990/06/30 13745.23 13730.02
1990/07/31 13589.66 13686.09
1990/08/31 12258.14 12448.87
1990/09/30 11480.28 11842.61
1990/10/31 11338.44 11791.68
1990/11/30 12196.37 12553.43
1990/12/31 12574.87 12903.67
1991/01/31 13453.92 13466.27
1991/02/28 14622.10 14429.10
1991/03/31 15118.75 14778.29
1991/04/30 15174.71 14813.76
1991/05/31 16039.96 15453.71
1991/06/30 15097.43 14745.93
1991/07/31 16035.15 15433.09
1991/08/31 16528.06 15798.86
1991/09/30 16465.55 15535.01
1991/10/31 16686.75 15743.18
1991/11/30 15862.03 15108.73
1991/12/31 17734.13 16837.17
1992/01/31 17741.88 16524.00
1992/02/29 18101.17 16738.81
1992/03/31 17610.06 16412.41
1992/04/30 17871.12 16894.93
1992/05/31 18042.35 16977.72
1992/06/30 17724.56 16724.75
1992/07/31 18221.97 17408.79
1992/08/31 17826.80 17051.91
1992/09/30 18031.30 17253.12
1992/10/31 18158.41 17313.51
1992/11/30 18617.14 17903.90
1992/12/31 18978.10 18124.12
1993/01/31 19478.08 18276.36
1993/02/28 19884.69 18524.92
1993/03/31 20613.58 18915.79
1993/04/30 20815.37 18458.03
1993/05/31 21635.80 18952.71
1993/06/30 21937.52 19007.67
1993/07/31 22179.52 18931.64
1993/08/31 23483.83 19649.15
1993/09/30 23738.41 19497.85
1993/10/31 23754.12 19901.46
1993/11/30 22971.54 19712.39
1993/12/31 23657.64 19950.91
1994/01/31 24592.59 20629.24
1994/02/28 24412.28 20070.19
1994/03/31 23280.32 19195.13
1994/04/30 23514.06 19440.83
1994/05/31 23243.18 19759.66
1994/06/30 22234.72 19275.55
1994/07/31 22978.89 19907.78
1994/08/31 24067.33 20724.00
1994/09/30 23441.39 20216.27
1994/10/31 24234.24 20671.13
1994/11/30 22905.86 19918.29
1994/12/31 23229.27 20213.68
1995/01/31 22992.80 20737.82
1995/02/28 24282.93 21545.97
1995/03/31 25190.54 22181.79
1995/04/30 26362.44 22835.05
1995/05/31 27099.41 23747.76
1995/06/30 29163.56 24299.42
1995/07/31 31402.35 25105.19
1995/08/31 31674.77 25168.21
1995/09/30 32254.55 26230.30
1995/10/31 31430.29 26136.66
1995/11/30 32128.82 27284.06
1995/12/31 31783.07 27809.55
1996/01/31 32241.44 28756.19
1996/02/29 32030.74 29022.76
1996/03/31 32352.34 29302.25
1996/04/30 32559.35 29734.16
1996/05/31 32706.51 30501.01
1996/06/30 32675.93 30617.22
1996/07/31 31155.71 29264.55
1996/08/31 31942.03 29881.74
1996/09/30 33221.98 31563.48
1996/10/31 34008.30 32434.00
1996/11/30 36209.99 34885.69
1996/12/31 35497.46 34194.60
1997/01/31 37055.57 36331.08
1997/02/28 36558.20 36615.92
1997/03/31 35299.40 35111.37
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Destiny II on March 31, 1987. As the chart shows, by March 31, 1997, the
value of the investment would have grown to $45,090 - a 350.90% 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 $35,111 - a 251.11% increase.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED PAST 6 PAST 1 PAST 5 PAST 10
MARCH 31, 1997 MONTHS YEAR YEARS YEARS
Destiny II 9.18% 17.19% 139.36% 350.90%
S&P 500(registered trademark) 11.24% 19.82% 113.93% 251.11%
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED PAST 1 PAST 5 PAST 10
MARCH 31, 1997 YEAR YEARS YEARS
Destiny II 17.19% 19.07% 16.25%
$50/month 15-Year Plan -43.98 14.78% 14.73%
%
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
TOP TEN EQUITY HOLDINGS - DESTINY I
AS OF MARCH 31, 1997 AS OF SEPTEMBER 30, 1996
Philip Morris Companies, Inc. Federal National Mortgage Association
Federal National Mortgage Association Philip Morris Companies, Inc.
Fleet Financial Group, Inc. Compaq Computer Corp.
General Motors Corp. General Motors Corp.
International Business Machines Corp. Fleet Financial Group, Inc.
Federal Home Loan Mortgage Corporation Royal Dutch Petroleum Co. ADR
Royal Dutch Petroleum Co. ADR Columbia/HCA Healthcare Corp.
Columbia/HCA Healthcare Corp. International Business Machines Corp.
Vodafone Group PLC sponsored ADR Federal Home Loan Mortgage Corporation
du Pont (E.I.) de Nemours & Co. du Pont (E.I.) de Nemours & Co.
TOP TEN EQUITY HOLDINGS - DESTINY II
AS OF MARCH 31, 1997 AS OF SEPTEMBER 30, 1996
Philip Morris Companies, Inc. Federal National Mortgage Association
Federal National Mortgage Association Philip Morris Companies, Inc.
Fleet Financial Group, Inc. Compaq Computer Corp.
General Motors Corp. General Motors Corp.
International Business Machines Corp. Fleet Financial Group, Inc.
Royal Dutch Petroleum Co. ADR Royal Dutch Petroleum Co. ADR
Federal Home Loan Mortgage Corporation Columbia/HCA Healthcare Corp.
Columbia/HCA Healthcare Corp. International Business Machines Corp.
Vodafone Group PLC sponsored ADR Federal Home Loan Mortgage Corporation
du Pont (E.I.) de Nemours & Co. du Pont (E.I.) de Nemours & Co.
TOP FIVE MARKET SECTORS - DESTINY I
<TABLE>
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AS OF MARCH 31, 1997 % OF FUND'S INVESTMENTS AS OF SEPTEMBER 30, 1996 % OF FUND'S INVESTMENTS
Finance 18.4% Finance 17.9%
Technology 12.1% Technology 13.0%
Nondurables 8.6% Energy 7.7%
Energy 7.6% Nondurables 7.3%
Utilities 7.0% Durables 7.0%
</TABLE>
TOP FIVE MARKET SECTORS - DESTINY II
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AS OF MARCH 31, 1997 % OF FUND'S INVESTMENTS AS OF SEPTEMBER 30, 1996 % OF FUND'S INVESTMENTS
Finance 16.6% Finance 16.5%
Technology 11.9% Technology 12.3%
Nondurables 8.8% Energy 7.4%
Energy 7.3% Nondurables 7.1%
Utilities 6.8% Durables 6.7%
</TABLE>
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS MARCH 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 81.6%
VALUE
SHARES (NOTE 1)
AEROSPACE & DEFENSE - 1.4%
AEROSPACE & DEFENSE - 0.9%
Boeing Co. 398,700 $ 39,319,394
Gulfstream Aerospace Corp. (a) 92,900 2,020,575
41,339,969
DEFENSE ELECTRONICS - 0.5%
Raytheon Co. 519,900 23,460,488
SHIP BUILDING & REPAIR - 0.0%
Avondale Industries, Inc. (a) 37,600 648,600
Newport News Shipbuilding, Inc. 108,500 1,573,250
2,221,850
TOTAL AEROSPACE & DEFENSE 67,022,307
BASIC INDUSTRIES - 4.4%
CHEMICALS & PLASTICS - 2.7%
Air Products & Chemicals, Inc. 129,900 8,816,963
du Pont (E.I.) de Nemours & Co. 817,700 86,676,200
Raychem Corp. 207,400 17,084,575
Union Carbide Corp. 405,800 17,956,650
130,534,388
IRON & STEEL - 0.0%
Inland Steel Industries, Inc. 10,800 210,600
METALS & MINING - 0.0%
Aluminum Co. of America 16,200 1,101,600
Special Metals Corp. 18,000 315,000
1,416,600
PACKAGING & CONTAINERS - 0.8%
Owens-Illinois, Inc. (a) 1,385,300 34,113,013
Tupperware Corp. 81,900 2,743,650
36,856,663
PAPER & FOREST PRODUCTS - 0.9%
Boise Cascade Corp. 269,100 8,207,550
Champion International Corp. 419,700 19,096,350
International Paper Co. 231,900 9,015,113
Temple-Inland, Inc. 76,100 3,995,250
Willamette Industries, Inc. 51,200 3,200,000
43,514,263
TOTAL BASIC INDUSTRIES 212,532,514
CONSTRUCTION & REAL ESTATE - 0.7%
CONSTRUCTION - 0.6%
Centex Corp. 151,700 5,347,425
D.R. Horton, Inc. 296,680 3,189,310
Fleetwood Enterprises, Inc. 645,307 16,132,675
VALUE
SHARES (NOTE 1)
Kaufman & Broad Home Corp. 320,100 $ 4,241,325
U.S. Home Corp. (a) 34,300 870,363
29,781,098
ENGINEERING - 0.1%
Fluor Corp. 116,500 6,116,250
TOTAL CONSTRUCTION & REAL ESTATE 35,897,348
DURABLES - 5.0%
AUTOS, TIRES, & ACCESSORIES - 4.7%
Circuit City Stores, Inc. CarMax Group 31,300 469,500
Cummins Engine Co., Inc. 280,000 14,350,000
Dana Corp. 116,900 3,843,088
Discount Auto Parts, Inc. (a) 248,300 3,972,800
Federal-Mogul Corp. 238,100 5,863,213
General Motors Corp. 2,453,107 135,840,800
Gentex Corp. (a) 13,300 262,675
Goodyear Tire & Rubber Co. 96,000 5,016,000
Honda Motor Co. Ltd. 380,000 11,328,163
Magna International, Inc. Class A 357,000 17,675,310
Superior Industries International, Inc. 437,600 9,900,700
Volvo AB Class B 696,000 18,545,678
227,067,927
CONSUMER ELECTRONICS - 0.1%
Newell Co. 219,200 7,343,200
TEXTILES & APPAREL - 0.2%
Burlington Industries, Inc. (a) 535,200 6,154,800
Liz Claiborne, Inc. 82,700 3,607,788
9,762,588
TOTAL DURABLES 244,173,715
ENERGY - 7.6%
ENERGY SERVICES - 0.2%
McDermott International, Inc. 531,100 11,352,263
OIL & GAS - 7.4%
Amerada Hess Corp. 208,500 11,050,500
Anadarko Petroleum Corp. 29,600 1,661,300
Atlantic Richfield Co. 303,300 40,945,500
British Petroleum PLC ADR 381,847 52,408,501
Burlington Resources, Inc. 511,400 21,862,350
Canada Occidental Petroleum Ltd. 431,400 7,945,325
Chevron Corp. 30,700 2,137,488
Elf Aquitaine SA sponsored ADR 107,764 5,307,377
Enron Oil & Gas Co. 31,900 661,925
Kerr-McGee Corp. 101,200 6,261,750
Louisiana Land & Exploration Co. 389,200 18,438,350
Mobil Corp. 30,700 4,010,188
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Noble Affiliates, Inc. 48,400 $ 1,827,100
Occidental Petroleum Corp. 691,800 17,035,575
Royal Dutch Petroleum Co. ADR 648,400 113,470,000
Santa Fe Energy Resources, Inc. (a) 310,300 4,305,413
Sun Co., Inc. 293,300 7,662,463
Tosco Corp. 1,053,300 30,019,050
Total SA:
Class B 53,556 4,624,298
sponsored ADR 156,636 6,637,451
Union Pacific Resources Group, Inc. 83,800 2,241,650
360,513,554
TOTAL ENERGY 371,865,817
FINANCE - 18.4%
BANKS - 0.6%
BankAmerica Corp. 41,700 4,201,275
Canadian Imperial Bank of Commerce 44,800 1,012,777
Credit Suisse Group (Reg.) 76,300 9,099,638
NationsBank Corp. 194,600 10,775,975
State Street Boston Corp. 51,400 3,565,875
28,655,540
CREDIT & OTHER FINANCE - 3.7%
Beneficial Corp. 6,500 420,063
Fleet Financial Group, Inc. 3,068,430 175,667,618
Homeside, Inc. 8,700 128,325
Transamerica Corp. 33,300 2,980,350
179,196,356
FEDERAL SPONSORED CREDIT - 9.1%
Federal Home Loan Mortgage Corporation 4,250,000 115,812,500
Federal National Mortgage Association 9,029,100 326,176,238
441,988,738
INSURANCE - 4.5%
AFLAC, Inc. 172,600 6,472,500
Allmerica Financial Corp. 235,200 8,261,400
Allstate Corp. 1,227,490 72,882,219
American International Group, Inc. 389,200 45,682,350
CIGNA Corp. 21,600 3,156,300
Equitable of Iowa Companies 26,300 1,315,000
General Re Corp. 148,100 23,399,800
Loews Corp. 41,200 3,661,650
MGIC Investment Corp. 136,000 9,622,000
Nationwide Financial Services, Inc. Class A 25,100 646,325
VALUE
SHARES (NOTE 1)
Provident Companies, Inc. 18,700 $ 1,023,825
Providian Corp. 392,200 20,982,700
Reliastar Financial Corp. 69,723 4,122,372
Torchmark Corp. 248,000 13,733,000
Travelers Property Casualty Corp. Class A 60,100 1,908,175
UNUM Corp. 22,000 1,606,000
218,475,616
SAVINGS & LOANS - 0.3%
Golden West Financial Corp. 242,250 15,201,188
SECURITIES INDUSTRY - 0.2%
United Asset Management Corp. 427,200 10,947,000
TOTAL FINANCE 894,464,438
HEALTH - 5.1%
DRUGS & PHARMACEUTICALS - 1.6%
American Home Products Corp. 18,600 1,116,000
Amgen, Inc. (a) 325,700 18,198,488
Astra AB Class A Free shares 517,200 24,867,845
Idexx Laboratories, Inc. 167,700 2,347,800
Novartis AG (Reg.) (a) 7,000 8,630,998
Pharmacia & Upjohn, Inc. 22,800 835,050
Schering-Plough Corp. 283,400 20,617,350
Warner-Lambert Co. 30,600 2,646,900
79,260,431
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
Abbott Laboratories 18,300 1,027,088
Allegiance Corp. 35,120 777,030
Baxter International, Inc. 74,600 3,217,125
Biomet, Inc. 409,800 6,915,375
Guidant Corp. 8,800 541,200
Johnson & Johnson 46,900 2,479,838
St. Jude Medical, Inc. (a) 407,400 13,596,975
28,554,631
MEDICAL FACILITIES MANAGEMENT - 2.9%
Columbia/HCA Healthcare Corp. 2,992,287 100,615,650
Health Management Associates, Inc.
Class A (a) 23,600 560,500
Humana, Inc. (a) 580,800 12,777,600
Tenet Healthcare Corp. (a) 517,200 12,736,050
United HealthCare Corp. 257,500 12,263,438
138,953,238
TOTAL HEALTH 246,768,300
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 299,700 $ 10,564,425
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
ELECTRICAL EQUIPMENT - 1.1%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 109,700 13,189,679
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 13,600 325,365
Emerson Electric Co. 103,200 4,644,000
General Electric Co. 224,000 22,232,000
Scientific-Atlanta, Inc. 255,600 3,897,900
Sensormatic Electronics Corp. 99,900 1,685,813
Westinghouse Electric Corp. 358,400 6,361,600
52,336,357
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
Caterpillar, Inc. 194,800 15,632,700
Dover Corp. 25,400 1,333,500
Ultratech Stepper, Inc. (a) 177,200 3,920,550
20,886,750
POLLUTION CONTROL - 0.3%
Browning-Ferris Industries, Inc. 513,100 14,815,763
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 88,038,870
MEDIA & LEISURE - 2.3%
BROADCASTING - 0.0%
HSN, Inc. (a) 73,580 1,867,093
ENTERTAINMENT - 0.4%
Cedar Fair LP (depositary unit) 17,800 671,950
Royal Caribbean Cruises Ltd. 651,400 19,867,700
20,539,650
LEISURE DURABLES & TOYS - 0.6%
Nintendo Co. Ltd. Ord. 362,600 26,012,992
LODGING & GAMING - 0.7%
Circus Circus Enterprises, Inc. (a) 556,500 14,469,000
Mirage Resorts, Inc. (a) 462,500 9,828,125
Sun International Hotels Ltd. Ord. (a) 298,300 10,440,500
34,737,625
RESTAURANTS - 0.6%
Brinker International, Inc. (a) 186,500 2,354,563
McDonald's Corp. 565,000 26,696,250
Papa John's International, Inc. (a) 6,100 160,888
29,211,701
TOTAL MEDIA & LEISURE 112,369,061
VALUE
SHARES (NOTE 1)
NONDURABLES - 8.6%
HOUSEHOLD PRODUCTS - 0.0%
Premark International, Inc. 100,500 $ 1,997,438
TOBACCO - 8.6%
Philip Morris Companies, Inc. 3,170,600 361,844,725
RJR Nabisco Holdings Corp. 1,677,798 54,108,986
UST, Inc. 86,900 2,422,338
418,376,049
TOTAL NONDURABLES 420,373,487
PRECIOUS METALS - 0.1%
Barrick Gold Corp. 80,500 1,901,231
Santa Fe Pacific Gold Corp. 165,375 2,728,688
4,629,919
RETAIL & WHOLESALE - 5.9%
APPAREL STORES - 0.2%
TJX Companies, Inc. 238,325 10,188,394
DRUG STORES - 0.1%
CVS Corp. 79,800 3,680,775
GENERAL MERCHANDISE STORES - 1.9%
Federated Department Stores, Inc. (a) 400,673 13,172,125
Wal-Mart Stores, Inc. 2,901,600 80,882,100
94,054,225
GROCERY STORES - 0.1%
Safeway, Inc. (a) 95,900 4,447,363
RETAIL & WHOLESALE, MISCELLANEOUS - 3.6%
Circuit City Stores, Inc. Circuit City Group 1,562,700 52,155,113
Corporate Express, Inc. (a) 162,300 1,663,575
Home Depot, Inc. (The) 855,200 45,753,200
Lowe's Companies, Inc. 818,200 30,580,225
Officemax, Inc. (a) 741,750 9,642,750
Office Depot, Inc. (a) 115,400 2,351,275
Rex Stores Corp. (a) 90,400 802,300
Staples, Inc. (a) 137,100 2,759,138
Toys "R" Us, Inc. (a) 620,900 17,385,200
U.S. Office Products Co. (a) 231,500 5,729,625
Viking Office Products, Inc. (a) 268,300 5,198,313
174,020,714
TOTAL RETAIL & WHOLESALE 286,391,471
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
SERVICES - 0.1%
ADVERTISING - 0.1%
Interpublic Group of Companies, Inc. 33,300 $ 1,756,575
SERVICES - 0.0%
HCIA, Inc. (a) 15,900 266,325
TOTAL SERVICES 2,022,900
TECHNOLOGY - 12.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Cisco Systems, Inc. (a) 80,100 3,854,813
Nokia Corp. AB sponsored ADR 49,100 2,860,075
6,714,888
COMPUTER SERVICES & SOFTWARE - 1.9%
America Online, Inc. (a) 46,500 1,970,438
American Management Systems, Inc. (a) 36,600 805,200
Automatic Data Processing, Inc. 340,400 14,254,250
CUC International, Inc. (a) 74,600 1,678,500
Ceridian Corp. (a) 138,200 4,957,925
Cerner Corp. (a) 9,200 120,750
CompUSA, Inc. (a) 144,800 2,280,600
Electronic Data Systems Corp. 304,300 12,286,113
First Data Corp. 400,500 13,566,938
Microsoft Corp. (a) 97,400 8,930,363
Netscape Communications Corp. (a) 60,300 1,812,769
Oracle Systems Corp. (a) 212,000 8,175,250
Paychex, Inc. 146,400 6,020,700
Policy Management Systems Corp. (a) 316,900 13,824,763
90,684,559
COMPUTERS & OFFICE EQUIPMENT - 5.6%
Adaptec, Inc. (a) 3,600 128,700
Bay Networks, Inc. (a) 743,900 13,297,213
Compaq Computer Corp. (a) 975,300 74,732,363
Hewlett-Packard Co. 265,800 14,153,850
Ingram Micro, Inc. Class A (a) 41,200 860,050
International Business Machines Corp. 849,100 116,645,113
SCI Systems, Inc. (a) 808,700 40,940,438
Seagate Technology (a) 184,200 8,265,975
Silicon Graphics, Inc. (a) 44,200 861,900
Tech Data Corp. (a) 188,600 4,549,975
274,435,577
ELECTRONIC INSTRUMENTS - 1.2%
Applied Materials, Inc. (a) 251,000 11,640,125
Cognex Corp. (a) 117,300 2,228,700
KLA Instruments Corp. (a) 73,100 2,668,150
VALUE
SHARES (NOTE 1)
Lam Research Corp. (a) 292,400 $ 9,868,500
Novellus Systems, Inc. (a) 150,400 10,377,600
Teradyne, Inc. (a) 359,400 10,377,675
Thermo Electron Corp. (a) 130,400 4,026,100
Varian Associates, Inc. 140,900 7,538,150
58,725,000
ELECTRONICS - 3.3%
AMP, Inc. 849,000 29,184,375
Atmel Corp. (a) 156,600 3,748,613
Intel Corp. 239,300 33,292,613
Methode Electronics, Inc. Class A 1,376,500 19,271,000
Microchip Technology, Inc. (a) 44,250 1,327,500
Molex, Inc. 115,668 4,048,380
Motorola, Inc. 11,800 712,425
National Semiconductor Corp. (a) 21,700 596,750
Solectron Corp. (a) 856,300 42,922,038
Storage Technology Corp. (a) 130,000 5,102,500
Texas Instruments, Inc. 268,000 20,066,500
Thomas & Betts Corp. 8,800 376,200
Xilinx, Inc. (a) 3,300 160,875
160,809,769
TOTAL TECHNOLOGY 591,369,793
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.2%
Continental Airlines, Inc. Class B (a) 81,000 2,541,375
Delta Air Lines, Inc. 47,400 3,987,525
Northwest Airlines Corp. Class A (a) 101,800 3,830,225
10,359,125
RAILROADS - 0.5%
Bombardier, Inc. Class B 207,700 3,757,817
Burlington Northern Santa Fe Corp. 98,200 7,266,800
CSX Corp. 287,400 13,364,100
24,388,717
SHIPPING - 0.1%
Stolt-Nielsen SA 66,900 1,154,025
Stolt-Nielsen SA Class B sponsored ADR 183,300 3,236,391
4,390,416
TRUCKING & FREIGHT - 0.1%
Roadway Express, Inc. 37,900 734,313
Yellow Corp. (a) 153,900 2,866,388
3,600,701
TOTAL TRANSPORTATION 42,738,959
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
UTILITIES - 7.0%
CELLULAR - 2.4%
AirTouch Communications, Inc. (a) 1,137,700 $ 26,167,100
360 Degrees Communications Co. (a) 67,200 1,159,200
Vodafone Group PLC sponsored ADR 2,034,680 89,780,255
117,106,555
ELECTRIC UTILITY - 0.2%
American Electric Power Co., Inc. 16,800 693,000
Entergy Corp. 315,400 7,727,300
8,420,300
GAS - 0.2%
Enron Corp. 229,100 8,705,800
TELEPHONE SERVICES - 4.2%
AT&T Corp. 375,000 13,031,250
Ameritech Corp. 354,700 21,814,050
Bell Atlantic Corp. 247,000 15,036,125
BellSouth Corp. 578,600 24,445,850
Deutsche Telekom AG 143,600 3,257,884
MCI Communications Corp. 1,165,300 41,513,813
NYNEX Corp. 528,900 24,131,063
SBC Communications, Inc. 542,200 28,533,275
Sprint Corp. 778,700 35,430,850
WorldCom, Inc. (a) 12,200 268,400
207,462,560
TOTAL UTILITIES 341,695,215
TOTAL COMMON STOCKS
(Cost $2,663,580,072) 3,972,918,539
U.S. TREASURY OBLIGATIONS - 14.5%
PRINCIPAL
AMOUNT
8 1/8%, 8/15/19 $ 493,000,000 540,914,670
stripped principal:
0%, 2/15/19 115,000,000 23,585,350
0%, 8/15/19 100,000,000 19,823,000
0%, 8/15/20 392,000,000 72,037,840
0%, 8/15/21 130,000,000 22,246,900
0%,11/15/21 176,000,000 29,622,560
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $714,733,501) 708,230,320
CASH EQUIVALENTS - 3.9%
VALUE
SHARES (NOTE 1)
Taxable Central Cash Fund (b) 187,757,565 $ 187,757,565
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,566,071,138) $ 4,868,906,424
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.62%. 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 March 31, 1997, the aggregate cost of investment securities for income
tax purposes was $3,566,432,609. Net unrealized appreciation aggregated
$1,302,473,815, of which $1,382,861,088 related to appreciated investment
securities and $80,387,273 related to depreciated investment securities.
FIDELITY DESTINY PORTFOLIOS: DESTINY I
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $3,566,071,138) - See accompanying schedule $ 4,868,906,424
Cash 131,814
Receivable for investments sold 32,081,238
Receivable for fund shares sold 316,389
Dividends receivable 8,761,612
Interest receivable 5,712,616
Other receivables 123,123
TOTAL ASSETS 4,916,033,216
LIABILITIES
Payable for investments purchased $ 37,598,539
Payable for fund shares redeemed 2,903,920
Accrued management fee 1,346,105
Other payables and accrued expenses 279,768
TOTAL LIABILITIES 42,128,332
NET ASSETS $ 4,873,904,884
Net Assets consist of:
Paid in capital $ 3,332,398,183
Undistributed net investment income 28,528,183
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 210,146,016
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign 1,302,832,502
currencies
NET ASSETS, for 242,380,154 shares outstanding $ 4,873,904,884
NET ASSET VALUE, offering price and redemption price per share ($4,873,904,884 (divided by) 242,380,154 $20.11
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 35,947,276
Dividends
Interest 31,112,503
TOTAL INCOME 67,059,779
EXPENSES
Management fee $ 11,757,420
Basic fee
Performance adjustment (1,342,663)
Transfer agent fees 124,959
Accounting fees and expenses 405,315
Non-interested trustees' compensation 12,994
Custodian fees and expenses 69,703
Registration fees 115,779
Audit 12,583
Legal 12,452
Miscellaneous 19,051
Total expenses before reductions 11,187,593
Expense reductions (220,247) 10,967,346
NET INVESTMENT INCOME 56,092,433
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 223,887,358
Foreign currency transactions (5,846) 223,881,512
Change in net unrealized appreciation (depreciation) on:
Investment securities 145,790,408
Assets and liabilities in foreign currencies 36,481 145,826,889
NET GAIN (LOSS) 369,708,401
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 425,800,834
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED
ENDED MARCH 31, SEPTEMBER 30,
1997 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 56,092,433 $ 103,748,711
Net investment income
Net realized gain (loss) 223,881,512 423,288,867
Change in net unrealized appreciation (depreciation) 145,826,889 112,028,342
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 425,800,834 639,065,920
Distributions to shareholders (100,379,015) (92,599,379)
From net investment income
From net realized gain (385,905,369) (174,422,963)
TOTAL DISTRIBUTIONS (486,284,384) (267,022,342)
Share transactions 78,047,404 140,978,880
Net proceeds from sales of shares
Reinvestment of distributions 455,487,252 251,037,967
Cost of shares redeemed (164,628,032) (251,968,059)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 368,906,624 140,048,788
TOTAL INCREASE (DECREASE) IN NET ASSETS 308,423,074 512,092,366
NET ASSETS
Beginning of period 4,565,481,810 4,053,389,444
End of period (including undistributed net investment income of $28,528,183 and $75,121,685, $ 4,873,904,884 $ 4,565,481,810
respectively)
OTHER INFORMATION
Shares
Sold 3,715,405 7,327,796
Issued in reinvestment of distributions 22,797,152 13,702,946
Redeemed (7,854,639) (13,089,630)
Net increase (decrease) 18,657,918 7,941,112
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED SEPTEMBER 30, THREE YEARS ENDED JUNE 30,
ENDED MONTHS
MARCH 31, ENDED
1997 SEPTEMBER
30,
(UNAUDITED) 1996 1995 1994 C 1993 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 $ 15.23
Income from Investment Operations
Net investment income .24 E .45 .41 .30 .04 .26 .31
Net realized and unrealized gain (loss) 1.64 2.42 3.54 1.69 .75 3.16 2.55
Total from investment operations 1.88 2.87 3.95 1.99 .79 3.42 2.86
Less Distributions
From net investment income (.45) (.43) (.34) (.11) (.14) (.30) (.49)
From net realized gain (1.73) (.81) (2.53) (1.04) (1.01) (2.44) (1.06)
Total distributions (2.18) (1.24) (2.87) (1.15) (1.15) (2.74) (1.55)
Net asset value, end of period $ 20.11 $ 20.41 $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54
TOTAL RETURN B 9.28% 16.04% 27.49% 12.30% 4.77% 23.90% 20.18%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 4,874 $ 4,565 $ 4,053 $ 3,273 $ 2,973 $ 2,869 $ 2,373
Ratio of expenses to average net assets .46% A .65% .68% .70% .65% A .66% .61%
Ratio of expenses to average net assets .45% A, .65% .68% .70% .65% A .66% .61%
after expense reductions F
Ratio of net investment income to 2.28% A 2.40% 2.35% 1.69% 1.11% A 1.83% 2.00%
average
net assets
Portfolio turnover rate 35% A 42% 55% 77% 82% A 75% 75%
Average commission rate D $ .0463 $ .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 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 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.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F 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).
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS MARCH 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.2%
VALUE
SHARES (NOTE 1)
AEROSPACE & DEFENSE - 1.6%
AEROSPACE & DEFENSE - 0.9%
Boeing Co. 235,100 $ 23,185,338
Gulfstream Aerospace Corp. (a) 51,800 1,126,650
24,311,988
DEFENSE ELECTRONICS - 0.7%
Raytheon Co. 415,900 18,767,488
SHIP BUILDING & REPAIR - 0.0%
Avondale Industries, Inc. (a) 21,500 370,875
Newport News Shipbuilding, Inc. 62,600 907,700
1,278,575
TOTAL AEROSPACE & DEFENSE 44,358,051
BASIC INDUSTRIES - 4.1%
CHEMICALS & PLASTICS - 2.5%
Air Products & Chemicals, Inc. 69,900 4,744,463
du Pont (E.I.) de Nemours & Co. 450,100 47,710,600
Raychem Corp. 117,600 9,687,300
Union Carbide Corp. 219,600 9,717,300
71,859,663
IRON & STEEL - 0.0%
Inland Steel Industries, Inc. 6,300 122,850
METALS & MINING - 0.0%
Aluminum Co. of America 9,300 632,400
Special Metals Corp. 10,400 182,000
814,400
PACKAGING & CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 664,400 16,360,850
Tupperware Corp. 44,700 1,497,450
17,858,300
PAPER & FOREST PRODUCTS - 0.9%
Boise Cascade Corp. 146,100 4,456,050
Champion International Corp. 223,800 10,182,900
Georgia-Pacific Corp. 20,000 1,450,000
International Paper Co. 123,700 4,808,838
Temple-Inland, Inc. 40,700 2,136,750
Willamette Industries, Inc. 44,000 2,750,000
25,784,538
TOTAL BASIC INDUSTRIES 116,439,751
CONSTRUCTION & REAL ESTATE - 0.9%
CONSTRUCTION - 0.8%
Centex Corp. 82,000 2,890,500
D.R. Horton, Inc. 362,036 3,891,887
VALUE
SHARES (NOTE 1)
Fleetwood Enterprises, Inc. 454,041 $ 11,351,025
Kaufman & Broad Home Corp. 170,500 2,259,125
U.S. Home Corp. (a) 18,300 464,363
20,856,900
ENGINEERING - 0.1%
Fluor Corp. 61,400 3,223,500
TOTAL CONSTRUCTION & REAL ESTATE 24,080,400
DURABLES - 4.9%
AUTOS, TIRES, & ACCESSORIES - 4.6%
Circuit City Stores, Inc. CarMax Group 18,100 271,500
Cummins Engine Co., Inc. 148,500 7,610,625
Dana Corp. 63,300 2,080,988
Discount Auto Parts, Inc. (a) 181,900 2,910,400
Federal-Mogul Corp. 127,300 3,134,763
General Motors Corp. 1,471,121 81,463,325
Gentex Corp. (a) 7,800 154,050
Goodyear Tire & Rubber Co. 50,800 2,654,300
Honda Motor Co. Ltd. 208,000 6,200,679
Magna International, Inc. Class A 203,600 10,080,373
Superior Industries International, Inc. 222,400 5,031,800
Volvo AB Class B 377,600 10,061,563
131,654,366
CONSUMER ELECTRONICS - 0.1%
Newell Co. 119,300 3,996,550
TEXTILES & APPAREL - 0.2%
Burlington Industries, Inc. (a) 254,600 2,927,900
Liz Claiborne, Inc. 47,300 2,063,463
4,991,363
TOTAL DURABLES 140,642,279
ENERGY - 7.3%
ENERGY SERVICES - 0.3%
McDermott International, Inc. 318,500 6,807,938
OIL & GAS - 7.0%
Amerada Hess Corp. 116,500 6,174,500
Anadarko Petroleum Corp. 15,800 886,775
Atlantic Richfield Co. 161,800 21,843,000
British Petroleum PLC ADR 194,318 26,670,146
Burlington Resources, Inc. 263,900 11,281,725
Canada Occidental Petroleum Ltd. 227,900 4,197,357
Chevron Corp. 17,800 1,239,325
Elf Aquitaine SA sponsored ADR 57,344 2,824,192
Enron Oil & Gas Co. 17,800 369,350
Kerr-McGee Corp. 59,000 3,650,625
Louisiana Land & Exploration Co. 194,200 9,200,225
Mobil Corp. 17,900 2,338,188
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Noble Affiliates, Inc. 26,200 $ 989,050
Occidental Petroleum Corp. 435,900 10,734,038
Royal Dutch Petroleum Co. ADR 376,900 65,957,500
Santa Fe Energy Resources, Inc. (a) 150,400 2,086,800
Sun Co., Inc. 172,400 4,503,950
Tosco Corp. 640,800 18,262,800
Total SA:
Class B 29,156 2,517,478
sponsored ADR 84,904 3,597,807
Union Pacific Resources Group, Inc. 42,300 1,131,525
200,456,356
TOTAL ENERGY 207,264,294
FINANCE - 16.6%
BANKS - 0.6%
BankAmerica Corp. 23,900 2,407,925
Canadian Imperial Bank of Commerce 24,100 544,820
Credit Suisse Group (Reg.) 44,600 5,319,054
NationsBank Corp. 108,700 6,019,263
State Street Boston Corp. 28,600 1,984,125
16,275,187
CREDIT & OTHER FINANCE - 3.4%
Beneficial Corp. 3,600 232,650
Fleet Financial Group, Inc. 1,678,816 96,112,216
Homeside, Inc. 5,100 75,225
Transamerica Corp. 18,500 1,655,750
98,075,841
FEDERAL SPONSORED CREDIT - 8.0%
Federal Home Loan Mortgage Corporation 2,334,200 63,606,950
Federal National Mortgage Association 4,557,700 164,646,913
228,253,863
INSURANCE - 4.2%
AFLAC, Inc. 91,950 3,448,125
Allmerica Financial Corp. 120,200 4,222,025
Allstate Corp. 661,745 39,291,109
American International Group, Inc. 206,350 24,220,331
CIGNA Corp. 10,900 1,592,763
Equitable of Iowa Companies 13,900 695,000
General Re Corp. 78,500 12,403,000
Loews Corp. 22,600 2,008,575
MGIC Investment Corp. 77,300 5,468,975
Nationwide Financial Services, Inc. Class A 14,700 378,525
VALUE
SHARES (NOTE 1)
Provident Companies, Inc. 18,100 $ 990,975
Providian Corp. 255,500 13,669,250
Reliastar Financial Corp. 42,139 2,491,468
Torchmark Corp. 142,200 7,874,325
Travelers Property Casualty Corp. Class A 32,800 1,041,400
UNUM Corp. 12,800 934,400
120,730,246
SAVINGS & LOANS - 0.3%
Golden West Financial Corp. 123,700 7,762,175
SECURITIES INDUSTRY - 0.1%
United Asset Management Corp. 138,000 3,536,250
TOTAL FINANCE 474,633,562
HEALTH - 5.1%
DRUGS & PHARMACEUTICALS - 1.6%
American Home Products Corp. 10,800 648,000
Amgen, Inc. (a) 194,500 10,867,688
Astra AB Class A Free shares 293,300 14,102,357
Idexx Laboratories, Inc. 98,000 1,372,000
Novartis AG (Reg.) (a) 3,800 4,685,399
Pharmacia & Upjohn, Inc. 12,300 450,488
Schering-Plough Corp. 161,000 11,712,750
Warner-Lambert Co. 17,900 1,548,350
45,387,032
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Abbott Laboratories 10,700 600,538
Allegiance Corp. 19,400 429,225
Baxter International, Inc. 40,000 1,725,000
Biomet, Inc. 221,700 3,741,188
Guidant Corp. 5,000 307,500
Johnson & Johnson 26,900 1,422,338
St. Jude Medical, Inc. (a) 234,900 7,839,788
16,065,577
MEDICAL FACILITIES MANAGEMENT - 3.0%
Columbia/HCA Healthcare Corp. 1,781,160 59,891,505
Health Management Associates, Inc.
Class A (a) 13,800 327,750
Humana, Inc. (a) 382,800 8,421,600
Tenet Healthcare Corp. (a) 381,100 9,384,588
United HealthCare Corp. 146,900 6,996,113
85,021,556
TOTAL HEALTH 146,474,165
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 149,100 5,255,775
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
ELECTRICAL EQUIPMENT - 1.0%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 63,500 $ 7,634,864
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 7,900 188,999
Emerson Electric Co. 52,200 2,349,000
General Electric Co. 124,500 12,356,625
Scientific-Atlanta, Inc. 135,100 2,060,275
Sensormatic Electronics Corp. 52,800 891,000
Westinghouse Electric Corp. 195,900 3,477,225
28,957,988
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
Caterpillar, Inc. 109,800 8,811,450
Dover Corp. 13,500 708,750
Ultratech Stepper, Inc. (a) 102,700 2,272,238
11,792,438
POLLUTION CONTROL - 0.3%
Browning-Ferris Industries, Inc. 275,000 7,940,625
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 48,691,051
MEDIA & LEISURE - 2.5%
BROADCASTING - 0.2%
HSN, Inc. (a) 101,145 2,566,554
Telemundo Group, Inc. Class A (a) 68,000 1,946,500
4,513,054
ENTERTAINMENT - 0.4%
Cedar Fair LP (depositary unit) 9,300 351,075
Royal Caribbean Cruises Ltd. 343,000 10,461,500
10,812,575
LEISURE DURABLES & TOYS - 0.6%
Nintendo Co. Ltd. Ord. 240,900 17,282,211
LODGING & GAMING - 0.7%
Circus Circus Enterprises, Inc. (a) 287,600 7,477,600
Mirage Resorts, Inc. (a) 286,000 6,077,500
Sun International Hotels Ltd. Ord. (a) 200,500 7,017,500
20,572,600
RESTAURANTS - 0.6%
Brinker International, Inc. (a) 91,000 1,148,875
McDonald's Corp. 319,200 15,082,200
Papa John's International, Inc. (a) 3,600 94,950
16,326,025
TOTAL MEDIA & LEISURE 69,506,465
VALUE
SHARES (NOTE 1)
NONDURABLES - 8.8%
HOUSEHOLD PRODUCTS - 0.1%
Premark International, Inc. 54,100 $ 1,075,238
TOBACCO - 8.7%
Philip Morris Companies, Inc. 1,904,400 217,339,650
RJR Nabisco Holdings Corp. 907,054 29,252,492
Standard Commercial Corp. 50,500 902,688
UST, Inc. 47,900 1,335,213
248,830,043
TOTAL NONDURABLES 249,905,281
PRECIOUS METALS - 0.1%
Barrick Gold Corp. 43,600 1,029,735
Santa Fe Pacific Gold Corp. 86,747 1,431,326
2,461,061
RETAIL & WHOLESALE - 5.8%
APPAREL STORES - 0.2%
TJX Companies, Inc. 133,400 5,702,850
DRUG STORES - 0.1%
CVS Corp. 43,100 1,987,988
GENERAL MERCHANDISE STORES - 1.8%
Federated Department Stores, Inc. (a) 222,500 7,314,688
Wal-Mart Stores, Inc. 1,617,200 45,079,450
52,394,138
GROCERY STORES - 0.3%
Food Lion, Inc. Class B 120,000 963,750
Safeway, Inc. (a) 163,300 7,573,038
8,536,788
RETAIL & WHOLESALE, MISCELLANEOUS - 3.4%
Circuit City Stores, Inc. Circuit City Group 810,400 27,047,100
Corporate Express, Inc. (a) 95,000 973,750
Home Depot, Inc. (The) 489,500 26,188,250
Lowe's Companies, Inc. 518,000 19,360,250
Officemax, Inc. (a) 406,500 5,284,500
Office Depot, Inc. (a) 62,300 1,269,363
Rex Stores Corp. (a) 38,600 342,575
Staples, Inc. (a) 79,000 1,589,875
Toys "R" Us, Inc. (a) 335,800 9,402,400
U.S. Office Products Co. (a) 133,600 3,306,600
Viking Office Products, Inc. (a) 155,900 3,020,563
97,785,226
TOTAL RETAIL & WHOLESALE 166,406,990
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
SERVICES - 0.0%
ADVERTISING - 0.0%
Interpublic Group of Companies, Inc. 17,400 $ 917,850
SERVICES - 0.0%
HCIA, Inc. (a) 8,800 147,400
TOTAL SERVICES 1,065,250
TECHNOLOGY - 11.9%
COMMUNICATIONS EQUIPMENT - 0.1%
Cisco Systems, Inc. (a) 47,200 2,271,500
Nokia Corp. AB sponsored ADR 27,900 1,625,175
3,896,675
COMPUTER SERVICES & SOFTWARE - 1.8%
America Online, Inc. (a) 26,700 1,131,413
American Management Systems, Inc. (a) 21,300 468,600
Automatic Data Processing, Inc. 183,000 7,663,125
CUC International, Inc. (a) 43,300 974,250
Ceridian Corp. (a) 79,900 2,866,413
Cerner Corp. (a) 5,200 68,250
CompUSA, Inc. (a) 83,700 1,318,275
Electronic Data Systems Corp. 159,300 6,431,738
First Data Corp. 232,800 7,886,100
Microsoft Corp. (a) 51,400 4,712,738
Netscape Communications Corp. (a) 34,700 1,043,169
Oracle Systems Corp. (a) 113,150 4,363,347
Paychex, Inc. 85,300 3,507,963
Policy Management Systems Corp. (a) 169,800 7,407,525
49,842,906
COMPUTERS & OFFICE EQUIPMENT - 5.7%
Adaptec, Inc. (a) 2,000 71,500
Bay Networks, Inc. (a) 414,900 7,416,338
Compaq Computer Corp. (a) 532,700 40,818,138
Hewlett-Packard Co. 141,700 7,545,525
Ingram Micro, Inc. Class A (a) 23,500 490,563
International Business Machines Corp. 554,900 76,229,388
SCI Systems, Inc. (a) 452,000 22,882,500
Seagate Technology (a) 101,500 4,554,813
Silicon Graphics, Inc. (a) 25,100 489,450
Tech Data Corp. (a) 102,200 2,465,575
162,963,790
ELECTRONIC INSTRUMENTS - 1.2%
Applied Materials, Inc. (a) 138,400 6,418,300
Cognex Corp. (a) 67,500 1,282,500
KLA Instruments Corp. (a) 41,000 1,496,500
VALUE
SHARES (NOTE 1)
Lam Research Corp. (a) 200,900 $ 6,780,375
Novellus Systems, Inc. (a) 86,500 5,968,500
Teradyne, Inc. (a) 203,600 5,878,950
Thermo Electron Corp. (a) 85,800 2,649,075
Varian Associates, Inc. 81,300 4,349,550
34,823,750
ELECTRONICS - 3.1%
AMP, Inc. 481,600 16,555,000
Atmel Corp. (a) 111,400 2,666,638
Intel Corp. 155,300 21,606,113
Methode Electronics, Inc. Class A 129,450 1,812,300
Microchip Technology, Inc. (a) 25,350 760,500
Molex, Inc. 54,606 1,911,210
Motorola, Inc. 6,600 398,475
National Semiconductor Corp. (a) 12,100 332,750
Solectron Corp. (a) 466,298 23,373,187
Storage Technology Corp. (a) 71,400 2,802,450
Texas Instruments, Inc. 194,700 14,578,163
Thomas & Betts Corp. 5,200 222,300
Xilinx, Inc. (a) 1,800 87,750
87,106,836
TOTAL TECHNOLOGY 338,633,957
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.2%
Continental Airlines, Inc. Class B (a) 46,700 1,465,213
Delta Air Lines, Inc. 27,700 2,330,263
Northwest Airlines Corp. Class A (a) 59,100 2,223,638
6,019,114
RAILROADS - 0.5%
Bombardier, Inc. Class B 112,000 2,026,362
Burlington Northern Santa Fe Corp. 67,600 5,002,400
CSX Corp. 181,600 8,444,400
15,473,162
SHIPPING - 0.1%
Stolt-Nielsen SA 61,200 1,055,700
Stolt-Nielsen SA Class B sponsored ADR 99,500 1,756,797
2,812,497
TRUCKING & FREIGHT - 0.1%
Roadway Express, Inc. 42,000 813,750
Yellow Corp. (a) 88,800 1,653,900
2,467,650
TOTAL TRANSPORTATION 26,772,423
COMMON STOCKS - CONTINUED
VALUE
SHARES (NOTE 1)
UTILITIES - 6.8%
CELLULAR - 2.3%
AirTouch Communications, Inc. (a) 719,500 $ 16,548,500
360 Degrees Communications Co. (a) 37,700 650,325
Vodafone Group PLC sponsored ADR 1,102,400 48,643,400
65,842,225
ELECTRIC UTILITY - 0.2%
American Electric Power Co., Inc. 9,700 400,125
Entergy Corp. 183,300 4,490,850
4,890,975
GAS - 0.2%
Enron Corp. 158,700 6,030,600
TELEPHONE SERVICES - 4.1%
AT&T Corp. 215,800 7,499,050
Ameritech Corp. 189,200 11,635,800
Bell Atlantic Corp. 132,200 8,047,675
BellSouth Corp. 305,400 12,903,150
Deutsche Telekom AG 80,500 1,826,324
MCI Communications Corp. 719,700 25,639,313
NYNEX Corp. 286,600 13,076,125
SBC Communications, Inc. 308,500 16,234,813
Sprint Corp. 454,200 20,666,100
WorldCom, Inc. (a) 7,100 156,200
117,684,550
TOTAL UTILITIES 194,448,350
TOTAL COMMON STOCKS
(Cost $1,623,785,519) 2,257,039,105
U.S. TREASURY OBLIGATIONS - 14.5%
PRINCIPAL
AMOUNT
8 1/8%, 8/15/19 $ 268,000,000 294,046,920
6 1/4%, 8/15/23 26,000,000 23,038,340
stripped principal:
0%, 2/15/19 92,000,000 18,868,280
0%, 8/15/19 70,000,000 13,876,100
0%, 8/15/20 196,000,000 36,018,920
0%, 8/15/21 78,000,000 13,348,140
0%,11/15/21 86,000,000 14,474,660
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $420,083,088) 413,671,360
CASH EQUIVALENTS - 6.3%
VALUE
SHARES (NOTE 1)
Taxable Central Cash Fund (b) 180,812,403 $ 180,812,403
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,224,681,010) $ 2,851,522,868
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.62%. 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 March 31, 1997, the aggregate cost of investment securities for income
tax purposes was $2,224,932,261. Net unrealized appreciation aggregated
$626,590,607, of which $678,125,624 related to appreciated investment
securities and $51,535,017 related to depreciated investment securities.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $2,224,681,010) - See accompanying schedule $ 2,851,522,868
Cash 1,682
Receivable for investments sold 18,060,644
Receivable for fund shares sold 943,677
Dividends receivable 4,996,303
Interest receivable 3,638,471
Other receivables 37,184
TOTAL ASSETS 2,879,200,829
LIABILITIES
Payable for investments purchased $ 21,766,649
Payable for fund shares redeemed 1,124,633
Accrued management fee 1,157,344
Other payables and accrued expenses 201,333
TOTAL LIABILITIES 24,249,959
NET ASSETS $ 2,854,950,870
Net Assets consist of:
Paid in capital $ 2,112,919,260
Undistributed net investment income 16,211,320
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 98,979,935
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign 626,840,355
currencies
NET ASSETS, for 244,672,233 shares outstanding $ 2,854,950,870
NET ASSET VALUE, offering price and redemption price per share ($2,854,950,870 (divided by) 244,672,233 $11.67
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 20,002,097
Dividends
Interest 19,381,205
TOTAL INCOME 39,383,302
EXPENSES
Management fee $ 8,554,263
Basic fee
Performance adjustment (910,854)
Transfer agent fees 89,983
Accounting fees and expenses 403,078
Non-interested trustees' compensation 9,304
Custodian fees and expenses 41,397
Registration fees 102,158
Audit 25,243
Legal 6,058
Miscellaneous 10,028
Total expenses before reductions 8,330,658
Expense reductions (138,250) 8,192,408
NET INVESTMENT INCOME 31,190,894
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 106,614,749
Foreign currency transactions 33,295 106,648,044
Change in net unrealized appreciation (depreciation) on:
Investment securities 94,543,921
Assets and liabilities in foreign currencies 1,796 94,545,717
NET GAIN (LOSS) 201,193,761
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 232,384,655
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED MARCH 31, SEPTEMBER 30,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 31,190,894 $ 54,527,132
Net investment income
Net realized gain (loss) 106,648,044 177,717,874
Change in net unrealized appreciation (depreciation) 94,545,717 95,101,281
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 232,384,655 327,346,287
Distributions to shareholders (55,499,139) (43,813,086)
From net investment income
From net realized gain (166,474,990) (61,463,441)
TOTAL DISTRIBUTIONS (221,974,129) (105,276,527)
Share transactions 162,903,534 291,742,259
Net proceeds from sales of shares
Reinvestment of distributions 218,448,245 103,441,673
Cost of shares redeemed (75,218,755) (110,608,517)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 306,133,024 284,575,415
TOTAL INCREASE (DECREASE) IN NET ASSETS 316,543,550 506,645,175
NET ASSETS
Beginning of period 2,538,407,320 2,031,762,145
End of period (including undistributed net investment income of $16,211,320 and $41,533,520, $ 2,854,950,870 $ 2,538,407,320
respectively)
OTHER INFORMATION
Shares (1996 shares adjusted for a 3-for-1 share split paid June 21, 1996)
Sold 13,440,922 26,673,779
Issued in reinvestment of distributions 18,831,748 9,879,858
Redeemed (6,197,456) (10,109,951)
Net increase (decrease) 26,075,214 26,443,686
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(PER-SHARE DATA HAVE BEEN ADJUSTED FOR A 3-FOR-1 SHARE SPLIT PAID JUNE 21, 1996.)
SIX MONTHS YEARS ENDED SEPTEMBER 30, THREE YEARS ENDED JUNE 30,
ENDED MONTHS
MARCH 31, ENDED
1997 SEPTEMBER
30,
(UNAUDITED) 1996 1995 1994 C 1993 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <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 $ 7.83
Income from Investment Operations
Net investment income .13 E .24 .22 .14 .01 .09 .11
Net realized and unrealized gain (loss) .93 1.34 1.99 .96 .41 1.61 1.36
Total from investment operations 1.06 1.58 2.21 1.10 .42 1.70 1.47
Less Distributions
From net investment income (.25) (.22) (.17) (.04) (.05) (.12) (.11)
From net realized gain (.75) (.32) (.99) (.43) (.30) (.99) (.96)
Total distributions (1.00) (.54) (1.16) (.47) (.35) (1.11) (1.07)
Net asset value, end of period $ 11.67 $ 11.61 $ 10.57 $ 9.52 $ 8.89 $ 8.82 $ 8.23
TOTAL RETURN B 9.18% 15.43% 26.98% 12.67% 4.93% 23.28% 20.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 2,855 $ 2,538 $ 2,032 $ 1,437 $ 1,143 $ 1,061 $ 479
Ratio of expenses to average net assets .59% A .78% .80% .80% .84% A .84% .88%
Ratio of expenses to average net assets .58% A, .78% .80% .80% .84% A .84% .88%
after expense reductions F
Ratio of net investment income to 2.23% A 2.38% 2.33% 1.56% .69% A 1.41% 1.60%
average
net assets
Portfolio turnover rate 37% A 37% 52% 72% 80% A 81% 113%
Average commission rate D $ .0462 $ .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 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 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.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F 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).
NOTES TO FINANCIAL STATEMENTS
for the period ended March 31, 1997 (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
I and Destiny 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 fund is 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, partnerships, non-taxable
dividends and losses deferred due to wash sales. The funds also utilized
earnings and profits distributed to shareholders on redemption of shares as
a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
paid in capital. Undistributed net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign currency
transactions may include temporary book and tax basis differences which
will reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
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. The funds generally 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. Dividends 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 $807,178,730 and $892,565,589, respectively, of
which U.S. government and government agency obligations aggregated
$90,002,180 and $88,943,575, respectively.
Destiny II: Purchases and sales of securities, other than short-term
securities, aggregated $595,472,047 and $476,715,554, respectively, of
which U.S. government and government agency obligations aggregated
$71,003,368 and $48,573,104, 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 for the funds.
In the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates, as
they resulted in the same or a lower management fee.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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
adjustment (up to a maximum of ".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 annualized rates of .42% and
.55%, 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 $403,537 and $1,720,470 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 annualized rate of
.01% 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 $215,346 and $138,804, 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 funds' expenses were reduced by
$209,809 and $127,118 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 $4,397 and $6,041 for
Destiny I and $3,315 and $7,817, for Destiny II under these arrangements,
respectively.
