SUPPLEMENT TO THE FIDELITY DESTINY PORTFOLIOS:
DESTINY I: CLASS N AND DESTINY II: CLASS N APRIL 26, 1999
PROSPECTUS
On June 16, 1999, shareholders of Destiny I and Destiny II approved
a proposal to eliminate the performance adjustment component of the
management fee effective 18 months after the date that the amended
contract takes effect.
The following information replaces the second paragraph found under
the heading "Fundamental Investment Policies and Restrictions" in the
"The Funds in Detail" section on page F-12.
DESTINY I AND DESTINY II seek capital growth.
The following information replaces the similar information found
under the heading "Management Fee" in the "The Funds in Detail"
section on page F-13.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The
fee is determined by calculating a BASIC FEE and then applying
a PERFORMANCE ADJUSTMENT . The performance adjustment decreases
the management fee if a fund has performed worse than the S&P 500.
After December 31, 2000, no performance adjustment will be applied
to the ba sic fee.
THE BASIC FEE is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by a fund's average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For September 1998, the group fee rate was 0.2911% for Destiny I
and Destiny II. The individual fund fee rate is 0.17% for Destiny I
and 0.30% for Destiny II.
The basic fee for Destiny I and Destiny II for the fiscal year
ended September 1998, was 0.46% and 0.59%, respectively, of the fund's
average net assets.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by
comparing the performance of each fund's Class O to that of the S&P
500 over the performance period.
The performance period is the most recent 36-month period.
The performance adjustment rate is divided by twelve and multiplied
by the fund's average net assets throughout the month, and the
re sulting dollar amount is then subtracted from the basic fee if
Class O's performance is worse than that of the S&P 500. The maximum
annualized performance adjustment rate is -0.24% of the fund's average
net assets up to and including $100,000,000 and -0.20% of the fund's
average net assets in excess of $100,000,000 over the performance
period.
The total management fee for the fiscal year ended September 30,
1998 was 0.31% of the fund's average net assets for Destiny I and
0.45% of the fund's average net assets for Destiny II.
SUPPLEMENT TO THE FIDELITY DESTINY PORTFOLIOS: DESTINY I AND DESTINY
II
NOVEMBER 19, 1998 PROSPECTUS
On June 16, 1999, shareholders of Destiny I and Destiny II approved
a proposal to eliminate the performance adjustment component of the
management fee effective 18 months after the date that the amended
contract takes effect.
The following information replaces the second paragraph found under
the heading "Fundamental Investment Policies and Restrictions" in the
"The Funds in Detail" section on page F-14.
DESTINY I AND DESTINY II seek capital growth.
The following information replaces the similar information found
under the heading "Management Fee" in the "The Funds in Detail"
section on page F-15.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The
fee is determined by calculating a BASIC FEE and then applying
a PERFORMANCE ADJUSTMENT . The performance adjustment decreases
the management fee if a fund has performed worse than the S&P 500.
After December 31, 2000, no performance adjustment will be applied to
the basic fee.
THE BASIC FEE is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by a fund's average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For September 1998, the group fee rate was 0.2911% for Destiny I
and Destiny II. The individual fund fee rate is 0.17% for Destiny I
and 0.30% for Destiny II.
The basic fee for Destiny I and Destiny II for the fiscal year
ended September 30, 1998, was 0.46% and 0.59%, respectively, of the
fund's average net assets.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by comparing
each fund's performance to that of the S&P 500 over the performance
period.
The performance period is the most recent 36-month period.
The performance adjustment rate is divided by twelve and multiplied
by the fund's average net assets throughout the month, and the
resulting dollar amount is then subtracted from the basic fee if Class
O's performance is worse than that of the S&P 500. The maximum
annualized performance adjustment rate is -0.24% of the fund's average
net assets up to and including $100,000,000 and -0.20% of the fund's
average net assets in excess of $100,000,000 over the performance
period.
The total management fee for the fiscal year ended September 30,
1998 was 0.31% of the fund's average net assets for Destiny I and
0.45% of the fund's average net assets for Destiny II.
The following information supplements information found under the
heading "Other Expenses" in the "The Funds in Detail" section on page
F-16.
Each fund has adopted a Distribution and Service Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 that recognizes
that FMR may use its management fee revenues, as well as its past
profits or its resources from any other source, to pay FDC for
expenses incurred in connection with providing services intended to
result in the sale of fund shares and/or shareholder support services.
FMR, directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service-providers, that provide those
services. Currently, the Board of Trustees of each fund has authorized
such payments.
ADDITION OF CLASS N SHARES TO THE DESTINY PORTFOLIOS: DESTINY I AND
DESTINY II. The original class of shares (Class O) of the funds is
offered through the funds' November 19, 1998 Prospectus and Statement
of Additional Information. An additional class of shares (Class N) of
the funds is offered through a separate Prospectus and Statement of
Additional Information dated April 26, 1999.
The following information supplements the information found under the
heading "Who May Want to Invest" in the "Key Facts" section on page
F-3.
The funds are composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
Class N shares (the new class of shares for each fund) are offered at
net asset value and are subject to a Distribution and Service Fee
(12b-1 fee), while Class O shares (the original class of shares for
each fund) are offered at net asset value and are not subject to a
12b-1 fee. In addition, Class N shares are subject to higher transfer
agent fees than Class O shares. The 12b-1 fee of Class N is 0.25% of
Class N's assets and the transfer agent fee is limited to no more than
0.63% of Class N's assets. You may obtain more information about Class
N shares, which are not offered through this prospectus, from your
Plan Sponsor or by calling Fidelity Distributors Corporation at
1-800-433-0734.
The following information supplements the similar information found
under the heading "Charter" in the "Funds in Detail" section on page
F-10.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
The following information replaces the similar information found under
the heading "Transaction Details" in the "Shareholder and Account
Policies" section beginning on page F-20.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting
that class's pro rata share of the value of the applicable fund's
liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class outstanding.
The following information supplements the information found under the
heading "Exchange Restrictions" in the "Shareholder and Account
Policies" section beginning on page F-20.
Shareholders of Class O shares may not exchange shares of Class O for
Class N shares.
SUPPLEMENT TO THE FIDELITY DESTINY PORTFOLIOS:
DESTINY I AND DESTINY II
NOVEMBER 19, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES PARAGRAPH (1) IN THE "INVESTMENT
POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INFORMATION REPLACES PARAGRAPH (III) IN THE "INVESTMENT
POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(iii) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
THE FOLLOWING INFORMATION REPLACES PARAGRAPH (V) IN THE "INVESTMENT
POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 3.
(v) Each fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION UNDER THE HEADING
"EXPOSURE TO FOREIGN MARKETS" BEGINNING ON PAGE 3.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION IN THE
"MANAGEMENT CONTRACTS" SECTION BEGINNING ON PAGE 23.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for each
fund is subject to downward adjustment, depending upon whether, and to
what extent, the fund's investment performance for the performance
period is exceeded by the record of the S&P 500 (the Index) over the
same period. The performance period consists of the most recent month
plus the previous 35 months. After December 31, 2000, no performance
adjustment will be applied to the basic fee for each of Destiny I and
Destiny II.
Each percentage point of difference, calculated to the nearest
1.00% (up to a maximum difference of -10.00) is multiplied by a
performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets for the entire performance period, giving a dollar amount which
will be subtracted from the basic fee.
The maximum annualized performance adjustment rate is limited to
- -0.24% of each fund's average net assets up to and including
$100,000,000 and -0.20% of each fund's average net assets in excess of
$100,000,000 over the performance period.
A fund's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if
reinvested in that fund's shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the Index, the
controlling factor is not whether the fund's performance is up or down
per se, but whether it is up or down more or less than the record of
the Index. Moreover, the comparative investment performance of each
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of
time.
The following table shows the amount of management fees paid by
each fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Years Ended September Performance Adjustment Management Fees Paid to FMR
30#
Destiny I 1998 $ (9,828,127) $ 19,657,092*
1997 $ (5,561,177) $ 19,154,944*
1996 $ 6,251,818 $ 26,878,078*
Destiny II 1998 $ (5,588,522) $ 18,377,658*
1997 $ (3,137,435) $ 15,305,746*
1996 $ 2,752,964 $ 16,685,378*
</TABLE>
* Including the amount of the performance adjustment.
# Prior to July 1, 1999, each of Destiny I and Destiny II paid FMR
a monthly management fee with two components: a basic fee and a
performance adjustment. The basic fee was subject to upward or
downward adjustment, depending on whether, and to what extent, the
fund's investment performance for the performance period exceeded, or
was exceeded by, the record over the same period of the S&P 500. The
maximum annualized performance adjustment rate for each fund was
limited to (plus/minus)0.24% of the fund's average net assets up to
and including $100,000,000 and (plus/minus)0.20% of the fund's average
net assets in excess of $100,000,000 over the performance period.
During the reporting period, FMR voluntarily modified the
breakpoints in the group fee rate schedule on January 1, 1996 to
provide for lower management fee rates as FMR's assets under
management increase.
FMR may, from time to time, voluntarily reimburse all or a portion
of a fund's operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
Expense reimbursements by FMR will increase a fund's total returns,
and repayment of the reimbursement by a fund will lower its total
returns.
THE FOLLOWING SECTION IS TO BE ADDED, FOLLOWING THE "MANAGEMENT
CONTRACTS" SECTION, ENDING ON PAGE 26.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements
call for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of the fund, which are
continuously offered at NAV. Promotional and administrative expenses
in connection with the offer and sale of shares are paid by FMR.
The Trustees have approved Distribution and Service Plans on behalf
of each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act
(the Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the fund to
FMR is deemed to be indirect financing by the fund of the distribution
of its shares, such payment is authorized by the Plan. Each Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with providing services intended to
result in the sale of fund shares and/or shareholder support services.
In addition, each Plan provides that FMR, directly or through FDC, may
pay intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees has authorized such payments for shares.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does not authorize payments by the fund other
than those made to FMR under its management contract with the fund. To
the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of fund shares, additional sales of
fund shares or stabilization of cash flows may result. Furthermore,
certain shareholder support services may be provided more effectively
under the Plans by local entities with whom shareholders have other
relationships.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION IN THE
"DESCRIPTION OF THE TRUST" SECTION BEGINNING ON PAGE 26.
AUDITOR. PricewaterhouseCoopers LLP, One Post Office Square, Boston,
Massachusetts served as independent accountant for each fund for the
most recent fiscal period. The auditor examined financial statements
for the funds and provided other audit, tax, and related services.
Effective February 18, 1999, Deloitte & Touche LLP, 125 Summer Street,
Boston, Massachusetts serves as independent accountant for each fund.
The auditor examines financial statements for the funds and provides
other audit, tax, and related services.
SUPPLEMENT TO THE FIDELITY DESTINY PORTFOLIOS:
DESTINY I: CLASS N AND DESTINY II: CLASS N
APRIL 26, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES PARAGRAPH (1) IN THE "INVESTMENT
POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INFORMATION REPLACES PARAGRAPH (III) IN THE "INVESTMENT
POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(iii) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
THE FOLLOWING INFORMATION REPLACES PARAGRAPH (V) IN THE "INVESTMENT
POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
(v) Each fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION UNDER THE HEADING
"EXPOSURE TO FOREIGN MARKETS" BEGINNING ON PAGE 3.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION IN THE
"MANAGEMENT CONTRACTS" SECTION BEGINNING ON PAGE 22.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for each
fund is subject to downward adjustment, depending upon whether, and to
what extent, the fund's Class O investment performance for the
performance period is exceeded by the record of the S&P 500 (the
Index) over the same period. The performance period consists of the
most recent month plus the previous 35 months. After December 31,
2000, no performance adjustment will be applied to the basic fee for
each of Destiny I and Destiny II.
Each percentage point of difference, calculated to the nearest
1.00% (up to a maximum difference of -10.00) is multiplied by a
performance adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets for the entire performance period, giving a dollar amount which
will be subtracted from the basic fee.
The maximum annualized performance adjustment rate is limited to
- -0.24% of each fund's average net assets up to and including
$100,000,000 and -0.20% of each fund's average net assets in excess of
$100,000,000 over the performance period.
A class's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the class are treated as if
reinvested in that class's shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the Index, the
controlling factor is not whether the fund's performance is up or down
per se, but whether it is up or down more or less than the record of
the Index. Moreover, the comparative investment performance of each
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of
time.
The following table shows the amount of management fees paid by
each fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Years Ended September Performance Adjustment Management Fees Paid to FMR
30#
Destiny I 1998 $ (9,828,127) $ 19,657,092*
1997 $ (5,561,177) $ 19,154,944*
1996 $ 6,251,818 $ 26,878,078*
Destiny II 1998 $ (5,588,522) $ 18,377,658*
1997 $ (3,137,435) $ 15,305,746*
1996 $ 2,752,964 $ 16,685,378*
</TABLE>
* Including the amount of the performance adjustment.
# Prior to July 1, 1999, each of Destiny I and Destiny II paid FMR
a monthly management fee with two components: a basic fee and a
performance adjustment. The basic fee was subject to upward or
downward adjustment, depending on whether, and to what extent, the
fund's investment performance for the performance period exceeded, or
was exceeded by, the record over the same period of the S&P 500. The
maximum annualized performance adjustment rate for each fund was
limited to (plus/minus)0.24% of the fund's average net assets up to
and including $100,000,000 and (plus/minus)0.20% of the fund's average
net assets in excess of $100,000,000 over the performance period.
During the reporting period, FMR voluntarily modified the
breakpoints in the group fee rate schedule on January 1, 1996 to
provide for lower management fee rates as FMR's assets under
management increase.
FMR may, from time to time, voluntarily reimburse all or a portion
of a class's operating expenses (exclusive of interest, taxes,
brokerage commissions, and extraordinary expenses). FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
Expense reimbursements by FMR will increase a class's total
returns, and repayment of the reimbursement by a fund will lower its
total returns.
