SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the [X]
Registrant
Filed by a [ ]
Party other than the
Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant
to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Fidelity Destiny Portfolios
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below
per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of
securities to which
transaction applies:
(2) Aggregate number of
securities to which
transaction applies:
(3) Per unit price or other
underlying value of
transaction
computed pursuant to Exchange
Act Rule 0-11:
(4) Proposed maximum aggregate
value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with
preliminary materials.
[ ] Check box if any part of the
fee is offset as provided by
Exchange Act Rule 0-11(a) (2)
and identify the filing for
which the offsetting fee was
paid previously. Identify the
previous filing by
registration statement
number, or the Form or
Schedule and the date of
its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or
Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
FIDELITY DESTINY PORTFOLIOS:
DESTINY I
DESTINY II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800- 225-5270
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Destiny Portfolios:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Destiny Portfolios (the trust): Destiny I and
Destiny II (the funds) will be held at the office of the trust, 82
Devonshire Street, Boston, Massachusetts 02109 on June 16, 1999, at
10:45 a.m. The purpose of the Meeting is to consider and act
upon the following proposals, and to transact such other business as
may properly come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of Deloitte & Touche LLP as independent
accountants of the funds.
3. To authorize the Trustees to adopt an amended and restated
Declaration of Trust.
4. To amend the trust's Bylaws.
5. To adopt a new fundamental investment policy for each fund that
would permit it to invest all of its assets in another open-end
investment company managed by FMR or an affiliate with substantially
the same investment objective and policies.
6. To approve an amended management contract for Fidelity Destiny I.
7. To approve an amended management contract for Fidelity Destiny II.
8. To approve an amended sub-advisory agreement with FMR U.K. for
each fund.
9. To approve an amended sub-advisory agreement with FMR Far East for
each fund.
10. To approve a Distribution and Service Plan for each fund.
11. To eliminate a fundamental investment policy for each fund.
12. To amend each fund's diversification limitation to exclude
"securities of other investment companies" from issuer diversification
limitations.
The Board of Trustees has fixed the close of business on April 19,
1999 as the record date for the determination of the shareholders of
each of the funds and classes entitled to notice of, and to vote at,
such Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER Secretary
April 19, 1999
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee Ann B. Collins, Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY DESTINY PORTFOLIOS :
DESTINY I
DESTINY II
TO BE HELD ON JUNE 16, 1999
This Proxy Statement is furnished in connection with a solicitation
of proxies made by, and on behalf of, the Board of Trustees of
Fidelity Destiny Portfolios (the trust) to be used at the Special
Meeting of Shareholders of Destiny I and Destiny II (the funds) and at
any adjournments thereof (the Meeting), to be held on June 16, 1999 at
10:45 a.m. at 82 Devonshire Street, Boston, Massachusetts
02109, the principal executive office of the trust and Fidelity
Management & Research Company (FMR), the funds' investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is being made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about April 19, 1999.
Supplementary solicitations may be made by mail, telephone, telegraph,
facsimile, electronic means or by personal interview by
representatives of the trust. The expenses in connection with
preparing this Proxy Statement and its enclosures and of all
solicitations will be paid by the funds. The funds will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares. The
principal business address of Fidelity Distributors Corporation (FDC),
the funds' principal underwriter and distribution agent, and Fidelity
Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity Management &
Research (Far East) Inc. (FMR Far East), subadvisers to the funds, is
82 Devonshire Street, Boston, Massachusetts 02109.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, by the trust's receipt of a subsequent valid telephonic
vote, or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and are
not revoked, will be voted at the Meeting. Shares represented by such
proxies will be voted in accordance with the instructions thereon. If
no specification is made on a proxy card, it will be voted FOR the
matters specified on the proxy card. Only proxies that are voted will
be counted towards establishing a quorum. Broker non-votes are not
considered voted for this purpose. Shareholders should note that while
votes to ABSTAIN will count toward establishing a quorum, passage of
any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly,
votes to ABSTAIN and votes AGAINST will have the same effect in
determining whether the proposal is approved.
The funds may also arrange to have votes recorded by telephone. The
expenses in connection with telephone voting will be paid by the
funds. If the funds record votes by telephone, they will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance
with their instructions, and to confirm that their instructions have
been properly recorded. Proxies voted by telephone may be revoked at
any time before they are voted in the same manner that proxies voted
by mail may be revoked.
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
AGAINST the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
Shares of each fund are only publicly available through Fidelity
Systematic Investment Plans, 82 Devonshire Street, Boston,
Massachusetts 02109, a unit investment trust consisting of two series
for the accumulation of shares of the funds. Destiny Plans I and
Destiny Plans II (together, Destiny Plans) purchase shares of Destiny
I and Destiny II, respectively. Two new series of Fidelity Systematic
Investment Plans, Destiny Plans I: New and Destiny Plans II: New, will
purchase a new class of shares (Class N) of Destiny I and Destiny II,
respectively. The two new plans and the Class N shares in which they
will invest are expected to be offered to the public in May 1999.
On February 28, 1999, there were 271,366,064.194 shares of
Destiny I and 352,055,568.422 shares of Destiny II issued and
outstanding. On February 28, 1999, Destiny Plans owned
263,225,082 shares or 97 % of the shares of Destiny I
outstanding on that date and 348,535,012 shares or 99 %
of the shares of Destiny II outstanding on that date. As of
February 28, 1999, Class N shares were not in existence. To the
knowledge of the trust, no shareholder owned of record or beneficially
more than 5% of the outstanding shares of the funds on that date.
With respect to the shares owned by Destiny Plans, State Street
Bank and Trust Company (Custodian) will vote those fund shares for
which instructions have been received from planholders only in
accordance with such instructions. The Custodian will vote fund shares
for which instructions have not been received in the same proportion
as it votes the shares for which it has received instructions from
other planholders.
Shareholders of record at the close of business on April 19, 1999
will be entitled to vote at the Meeting. Each such shareholder will be
entitled to one vote for each dollar of net asset value held on that
date.
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1998 CALL 800- 225-5270 OR WRITE TO FIDELITY
DISTRIBUTORS CORPORATION AT 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE
APPROPRIATE FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL
2. APPROVAL OF PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF
PROPOSAL 4 REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
OUTSTANDING SHARES OF THE ENTIRE TRUST. APPROVAL OF PROPOSALS 5
THROUGH 12 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE
OUTSTANDING VOTING SECURITIES" OF THE APPROPRIATE FUND. UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY
OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE
MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR
(B) MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES. BROKER
NON-VOTES ARE NOT CONSIDERED "PRESENT" FOR THIS PURPOSE.
The following table summarizes the proposals applicable to each fund.
Proposal # Proposal Description Applicable Fund(s)
1. To elect as Trustees the All
twelve nominees presented in
proposal 1.
2. To ratify the selection of All
Deloitte & Touche LLP as
independent accountants of
the fund.
3. To authorize the Trustees to All
adopt an amended and
restated Declaration of Trust.
4. To amend the trust's Bylaws All
to require only Trustee
approval of changes to the
Bylaws.
5. To adopt a new fundamental All
investment policy for the
fund that would permit it to
invest all of its assets in
another open-end investment
company managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
6. To approve an amended Destiny I
management contract for the
fund that would: (i)
eliminate the performance
adjustment component of the
management fee effective 18
months after the date the
amended contract takes
effect; (ii) reduce the
management fee payable to
FMR as FMR's assets under
management increase; and
(iii) allow FMR and the
trust, on behalf of the
fund, to modify the
management contract under
certain circumstances.
Proposal # Proposal Description Applicable Fund(s)
7. To approve an amended Destiny II
management contract for the
fund that would: (i)
eliminate the performance
adjustment component of the
management fee effective 18
months after the date the
amended contract takes
effect; (ii) reduce the
management fee payable to
FMR as FMR's assets under
management increase; and
(iii) allow FMR and the
trust, on behalf of the
fund, to modify the
management contract under
certain circumstances.
8. To approve an amended All
sub-advisory agreement with
FMR U.K. to provide
investment advice and
research services or
investment management
services.
9. To approve an amended All
sub-advisory agreement with
FMR Far East to provide
investment advice and
research services or
investment management
services.
10. To approve a Distribution and All
Service Plan for the fund
which describes all material
aspects of the proposed
financing for the
distribution of shares of
the fund.
11. To eliminate a fundamental All
investment policy for the
fund.
12. To amend the diversification All
limitation to exclude
"securities of other
investment companies" from
issuer diversification
limitations.
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the
trust. Pursuant to the provisions of the Declaration of Trust of
Fidelity Destiny Portfolios, the Trustees have determined that the
number of Trustees shall be fixed at twelve. It is intended that the
enclosed proxy card will be voted for the election as Trustees of the
twelve nominees listed below, unless such authority has been withheld
in the proxy card.
Except for Robert C. Pozen, all nominees named below are currently
Trustees of Fidelity Destiny Portfolios and have served in that
capacity continuously since originally elected or appointed. Robert M.
Gates, Peter S. Lynch, Marvin L. Mann and William O. McCoy were
selected by the trust's Nominating and Administration Committee (see
page 15 ) and were appointed to the Board in March 1997, May
1997, October 1993 and January 1997, respectively. None of the
nominees are related to one another. Those nominees indicated by an
asterisk (*) are "interested persons" of the trust by virtue of, among
other things, their affiliation with either the trust, the funds'
investment adviser (FMR, or the Adviser), or the funds' distribution
agent, FDC. The business address of each nominee who is an "interested
person" is 82 Devonshire Street, Boston, Massachusetts 02109, and the
business address of all other nominees is Fidelity Investments, P.O.
Box 9235, Boston, Massachusetts 02205-9235. Except for Robert M.
Gates, William O. McCoy and Robert C. Pozen, each of the nominees is
currently a Trustee of 57 registered investment companies advised by
FMR. Mr. Gates and Mr. McCoy are currently a Trustee of 54 registered
investment companies advised by FMR and Mr. Pozen is currently a
Trustee of 51 registered investment companies advised by FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is
present, shall be elected.
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Nominee (Age) Principal Occupation ** Year of Election or Appointment
Ralph F. Cox (66) President of RABAR 1991
Enterprises (management
consulting-engineering
industry, 1994). Prior to
February 1994, he was
President of Greenhill
Petroleum Corporation
(petroleum exploration and
production). Until March
1990, Mr. Cox was President
and Chief Operating Officer
of Union Pacific Resources
Company (exploration and
production). He is a
Director of USA Waste
Services, Inc.
(non-hazardous waste, 1993),
CH2M Hill Companies
(engineering), Rio Grande,
Inc. (oil and gas
production), and Daniel
Industries (petroleum
measurement equipment
manufacturer). In addition,
he is a member of advisory
boards of Texas A&M
University and the
University of Texas at Austin.
Phyllis Burke Davis (67) Prior to her retirement in 1992
September 1991, Mrs. Davis
was the Senior Vice
President of Corporate
Affairs of Avon Products,
Inc. She is currently a
Director of BellSouth
Corporation
(telecommunications), Eaton
Corporation (manufacturing,
1991), and the TJX
Companies, Inc. (retail
stores), and previously
served as a Director of
Hallmark Cards, Inc.
(1985-1991) and Nabisco
Brands, Inc. In addition,
she is a member of the
President's Advisory Council
of The University of Vermont
School of Business
Administration.
Robert M. Gates (55) Consultant, author, and 1997
lecturer (1993). Mr. Gates
was Director of the Central
Intelligence Agency (CIA)
from 1991-1993. From 1989 to
1991, Mr. Gates served as
Assistant to the President
of the United States and
Deputy National Security
Advisor. Mr. Gates is a
Director of LucasVarity PLC
(automotive components and
diesel engines), Charles
Stark Draper Laboratory
(non-profit), NACCO
Industries, Inc. (mining and
manufacturing), and TRW Inc.
(original equipment and
replacement products). Mr.
Gates also is a Trustee of
the Forum for International
Policy and of the Endowment
Association of the College
of William and Mary. In
addition, he is a member of
the National Executive Board
of the Boy Scouts of America.
*Edward C. Johnson 3d (68) President, is Chairman, Chief 1968
Executive Officer and a
Director of FMR Corp.; a
Director and Chairman of the
Board and of the Executive
Committee of FMR; Chairman
and a Director of Fidelity
Investments Money
Management, Inc. (1998),
Fidelity Management &
Research (U.K.) Inc., and
Fidelity Management &
Research (Far East) Inc.
E. Bradley Jones (71) Prior to his retirement in 1990
1984, Mr. Jones was Chairman
and Chief Executive Officer
of LTV Steel Company. He is
a Director of TRW Inc.
(original equipment and
replacement products),
Consolidated Rail
Corporation, Birmingham
Steel Corporation, and RPM,
Inc. (manufacturer of
chemical products), and he
previously served as a
Director of NACCO
Industries, Inc. (mining and
manufacturing, 1985-1995),
Hyster-Yale Materials
Handling, Inc. (1985-1995),
and Cleveland-Cliffs Inc
(mining), and as a Trustee
of First Union Real Estate
Investments. In addition, he
serves as a Trustee of the
Cleveland Clinic Foundation,
where he has also been a
member of the Executive
Committee as well as
Chairman of the Board and
President, a Trustee and
member of the Executive
Committee of University
School (Cleveland), and a
Trustee of Cleveland Clinic
Florida.
Donald J. Kirk (66) Executive-in-Residence (1995) 1987
at Columbia University
Graduate School of Business
and a financial consultant.
From 1987 to January 1995,
Mr. Kirk was a Professor at
Columbia University Graduate
School of Business. Prior to
1987, he was Chairman of the
Financial Accounting
Standards Board. Mr. Kirk
previously served as a
Director of General Re
Corporation (reinsurance,
1987-1998), and Valuation
Research Corp. (appraisals
and valuations, 1993-1995).
He serves as Chairman of the
Board of Directors of
National Arts Stabilization
Inc., Chairman of the Board
of Trustees of the Greenwich
Hospital Association,
Director of the Yale-New
Haven Health Services Corp.
(1998), a Member of the
Public Oversight Board of
the American Institute of
Certified Public
Accountants' SEC Practice
Section (1995), and as a
Public Governor of the
National Association of
Securities Dealers, Inc.
(1996).
*Peter S. Lynch (56) Vice Chairman and Director of 1997
FMR. Prior to May 31, 1990,
he was a Director of FMR and
Executive Vice President of
FMR (a position he held
until March 31, 1991); Vice
President of Fidelity
Magellan Fund and FMR Growth
Group Leader; and Managing
Director of FMR Corp. Mr.
Lynch was also Vice
President of Fidelity
Investments Corporate
Services (1991-1992). In
addition, he serves as a
Trustee of Boston College,
Massachusetts Eye & Ear
Infirmary, Historic
Deerfield (1989) and Society
for the Preservation of New
England Antiquities, and as
an Overseer of the Museum of
Fine Arts of Boston.
William O. McCoy (65) Vice President of Finance for 1997
the University of North
Carolina (16-school system,
1995). Prior to his
retirement in December 1994,
Mr. McCoy was Vice Chairman
of the Board of BellSouth
Corporation
(telecommunications, 1984)
and President of BellSouth
Enterprises (1986). He is
currently a Director of
Liberty Corporation (holding
company, 1984), Weeks
Corporation of Atlanta (real
estate, 1994), Carolina
Power and Light Company
(electric utility, 1996) and
the Kenan Transport Co.
(1996). Previously, he was a
Director of First American
Corporation (bank holding
company, 1979-1996). In
addition, Mr. McCoy serves
as a member of the Board of
Visitors for the University
of North Carolina at Chapel
Hill (1994) and for the
Kenan-Flager Business School
(University of North
Carolina at Chapel Hill,
1988).
Gerald C. McDonough (70) Chairman of G.M. Management 1989
Group (strategic advisory
services). Mr. McDonough is
a Director of York
International Corp. (air
conditioning and
refrigeration), Commercial
Intertech Corp. (hydraulic
systems, building systems,
and metal products, 1992),
CUNO, Inc. (liquid and gas
filtration products, 1996),
and Associated Estates
Realty Corporation (a real
estate investment trust,
1993). Mr. McDonough served
as a Director of
ACME-Cleveland Corp. (metal
working, telecommunications,
and electronic products)
from 1987-1996 and
Brush-Wellman Inc. (metal
refining) from 1983-1997).
Marvin L. Mann (66) Chairman of the Board of 1993
Lexmark International, Inc.
(office machines, 1991).
Prior to 1991, he held the
positions of Vice President
of International Business
Machines Corporation ("IBM")
and President and General
Manager of various IBM
divisions and subsidiaries.
Mr. Mann is a Director of
M.A. Hanna Company
(chemicals, 1993) and
Imation Corp. (imaging and
information storage, 1997).
*Robert C. Pozen (52) Senior Vice President, is N/A
also President and a
Director of FMR (1997); and
President and a Director of
Fidelity Investments Money
Management, Inc. (1998),
Fidelity Management &
Research (U.K.) Inc. (1997),
and Fidelity Management &
Research (Far East) Inc.
(1997). Previously, Mr.
Pozen served as General
Counsel, Managing Director,
and Senior Vice President of
FMR Corp.
Thomas R. Williams (70) President of The Wales Group, 1989
Inc. (management and
financial advisory
services). Prior to retiring
in 1987, Mr. Williams served
as Chairman of the Board of
First Wachovia Corporation
(bank holding company), and
Chairman and Chief Executive
Officer of The First
National Bank of Atlanta and
First Atlanta Corporation
(bank holding company). He
is currently a of Director
of ConAgra, Inc.
(agricultural products),
Georgia Power Company
(electric utility), National
Life Insurance Company of
Vermont, American Software,
Inc., and AppleSouth, Inc.
(restaurants, 1992).
</TABLE>
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of February 28, 1999, the nominees, Trustees and officers of the
trust and each fund owned, in the aggregate, less than 1% of each
fund's outstanding shares.
If elected, the Trustees will hold office without limit in time
except that (a) any Trustee may resign; (b) any Trustee may be removed
by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal; (c) any Trustee who requests to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees; and (d) a Trustee may be removed at any Special Meeting of
shareholders by a two-thirds vote of the outstanding voting securities
of the trust. In case a vacancy shall for any reason exist, the
remaining Trustees will fill such vacancy by appointing another
Trustee, so long as, immediately after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. If, at
any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly
call a shareholders' meeting for the purpose of electing a Board of
Trustees. Otherwise, there will normally be no meeting of shareholders
for the purpose of electing Trustees.
The trust's Board, which is currently composed of two interested and
nine non-interested Trustees, met 11 times during the twelve months
ended September 30, 1998. It is expected that the Trustees will meet
at least ten times a year at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are
not interested persons of the trust, FMR or its affiliates and
normally meets four times a year, or as required, prior to meetings of
the Board of Trustees. Currently, Messrs. Kirk (Chairman), Gates and
McCoy, and Mrs. Davis are members of the Committee. The committee
oversees and monitors the trust's internal control structure, its
auditing function and its financial reporting process, including the
resolution of material reporting issues. The committee recommends to
the Board of Trustees the appointment of auditors for the trust. It
reviews audit plans, fees and other material arrangements in respect
of the engagement of auditors, including non-audit services to be
performed. It reviews the qualifications of key personnel involved in
the foregoing activities. The committee plays an oversight role in
respect of the trust's investment compliance procedures and the code
of ethics. During the twelve months ended September 30, 1998, the
committee held 4 meetings.
The trust's Nominating and Administration Committee is currently
composed of Messrs. McDonough (Chairman), Jones and Williams. The
committee members confer periodically and hold meetings as required.
The committee makes nominations for independent trustees, and for
membership on committees. The committee periodically reviews
procedures and policies of the Board of Trustees and committees. It
acts as the administrative committee under the Retirement Plan for
non-interested trustees who retired prior to December 30, 1996. It
monitors the performance of legal counsel employed by the trust and
the independent trustees. The committee in the first instance monitors
compliance with, and acts as the administrator of the provisions of
the code of ethics applicable to the independent trustees. During the
twelve months ended September 30, 1998, the committee held no
meetings. The Nominating and Administration Committee will consider
nominees recommended by shareholders. Recommendations should be
submitted to the committee in care of the Secretary of the Trust. The
trust does not have a compensation committee; such matters are
considered by the Nominating and Administration Committee.
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board of each
fund for his or her services for the fiscal year ended September 30,
1998, or calendar year ended December 31, 1998, as applicable.
<TABLE>
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COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Aggregate Compensation from Total Compensation from the
Advisory Board Destiny IB,C,E Destiny IIB,D,E Fund Complex*,A
J. Gary Burkhead**,# $ 0 $ 0 $ 0
Ralph F. Cox $ 2,265 $ 1,426 $ 223,500
Phyllis Burke Davis $ 2,250 $ 1,416 $ 220,500
Robert M. Gates $ 2,285 $ 1,439 $ 223,500
Edward C. Johnson 3d** $ 0 $ 0 $ 0
E. Bradley Jones $ 2,265 $ 1,426 $ 222,000
Donald J. Kirk $ 2,296 $ 1,447 $ 226,500
Peter S. Lynch** $ 0 $ 0 $ 0
William O. McCoy $ 2,285 $ 1,439 $ 223,500
Gerald C. McDonough $ 2,821 $ 1,776 $ 273,500
Marvin L. Mann $ 2,249 $ 1,417 $ 220,500
Thomas R. Williams $ 2,281 $ 1,436 $ 223,500
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
# J. Gary Burkhead served on the Board of Trustees through July 31,
1997. Effective August 1, 1997, Mr. Burkhead serves as a Member of the
Advisory Board of the trust.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; William O. McCoy, $55,039; Marvin L.
Mann, $55,039; and Thomas R. Williams, $63,433.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $1,053, Phyllis Burke Davis, $1,053, Robert M. Gates, $1,054, E.
Bradley Jones, $1,053, Donald J. Kirk, $1,053, William O. McCoy,
$1,053, Gerald C. McDonough, $ 1,229 , Marvin L. Mann,
$ 1,053 , and Thomas R. Williams, $ 1,053 .
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $663, Phyllis Burke Davis, $663, Robert M. Gates, $663, E.
Bradley Jones, $663, Donald J. Kirk, $663, William O. McCoy,
$ 663 , Gerald C. McDonough, $774, Marvin L. Mann, $663, and
Thomas R. Williams, $663.
E For the fiscal year ended September 30, 1998, certain of the
non-interested Trustees' aggregate compensation from a fund includes
accrued voluntary deferred compensation as follows: Ralph F. Cox,
$895, Destiny I; Ralph F. Cox, $564, Destiny II; Marvin L. Mann, $895,
Destiny I; Marvin L. Mann, $564, Destiny II; William O. McCoy, $669,
Destiny I; William O. McCoy, $427, Destiny II; Thomas R. Williams,
$895, Destiny I; Thomas R. William s , $564, Destiny II.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
2. TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firm of Deloitte &
Touche LLP has been selected as independent accountants for each fund
to sign or certify any financial statements of each fund required by
any law or regulation to be certified by an independent accountant and
filed with the Securities and Exchange Commission (SEC) or any state.
Pursuant to the 1940 Act, such selection requires the ratification of
shareholders. In addition, as required by the 1940 Act, the vote of
the Trustees is subject to the right of each fund, by vote of a
majority of its outstanding voting securities at any meeting called
for the purpose of voting on such action, to terminate such employment
without penalty. Deloitte & Touche LLP has advised each fund that it
has no direct or material indirect ownership interest in each fund.
During the funds' two most recently completed fiscal years,
PricewaterhouseCoopers LLP (PwC) served as the funds' independent
accountants. PwC's audit reports for such years did not contain an
adverse opinion or disclaimer of opinion; nor were such reports
qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there were no disagreements between the funds and
PwC on accounting principles or practices , financial statement
disclosures or audit scope or procedures , which if not resolved
to the satisfaction of PwC would have caused it to make reference to
the subject matter of the disagreements in connection with its
report on the financial statement for such years.
Effective February 18, 1999, the non-interested Trustees selected
Deloitte & Touche LLP as auditor for the funds beginning with fiscal
years ending September 30, 1999, upon the recommendation of the funds'
Audit Committee.
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. In
recommending the selection of each fund's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives
of Deloitte & Touche LLP and PwC are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if
they so desire and will be available should any matter arise requiring
their presence.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST.
The Board of Trustees has approved and recommends that the
shareholders of the trust authorize them to adopt and execute an
Amended and Restated Declaration of Trust for the trust and the funds
of the trust in the form attached to this Proxy Statement as Exhibit 1
(New Declaration of Trust). The attached New Declaration of Trust has
been marked to show changes from the trust's existing Declaration of
Trust (Current Declaration of Trust). The New Declaration of Trust is
a more modern form of trust instrument for a Massachusetts business
trust, and, going forward, will be used as the standard Declaration of
Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts
law, broader authority to act. This increased flexibility may allow
the Trustees to react more quickly to changes in competitive and
regulatory conditions and, as a consequence, may allow the funds to
operate in a more efficient and economical manner. ADOPTION OF THE NEW
DECLARATION OF TRUST WILL NOT ALTER IN ANY WAY THE TRUSTEES' EXISTING
FIDUCIARY OBLIGATIONS TO ACT WITH DUE CARE AND IN THE SHAREHOLDERS'
INTERESTS. BEFORE UTILIZING ANY NEW FLEXIBILITY THAT THE NEW
DECLARATION OF TRUST MAY AFFORD, THE TRUSTEES MUST FIRST CONSIDER THE
SHAREHOLDERS' INTERESTS AND THEN ACT IN ACCORDANCE WITH SUCH
INTERESTS.
Adoption of the New Declaration of Trust will NOT result in any
changes in the funds' Trustees or officers or in the investment
policies and shareholder services described in the funds' current
prospectuses.
Generally, a majority of the Trustees may amend the Current
Declaration of Trust when authorized by a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the trust. On
October 16, 1997, the Trustees approved the form of the New
Declaration of Trust. On December 18, 1997, the Board approved several
additional changes to the form of the New Declaration of Trust, which
changes have been incorporated into the form attached to this Proxy
Statement. On October 16, 1997, the Board authorized the submission of
the New Declaration of Trust to the trust's shareholders for their
authorization at this Meeting.
The New Declaration of Trust amends the Current Declaration of Trust
in a number of significant ways. The following discussion summarizes
some of the more significant amendments to the Current Declaration of
Trust effected by the New Declaration of Trust.
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER
SUBSTANTIVE AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF
TRUST AND THE CURRENT DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE NEW DECLARATION OF TRUST
ITSELF, WHICH IS ATTACHED AS EXHIBIT 1 TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES. Unlike the
Current Declaration of Trust, the New Declaration of Trust generally
permits the Trustees, subject to applicable Federal and state law, to
reorganize or terminate the trust or any of its series. The Current
Declaration of Trust requires shareholder approval in order to
reorganize or terminate the trust or any of its series.
Under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the trust or a
fund to reorganize into another entity. For example, in order to
reduce the cost and scope of state regulatory constraints or to take
advantage of a more favorable tax treatment offered by another state,
the Trustees may determine that it would be in the shareholders'
interests to reorganize a fund to domicile it in another state or to
change its legal form. Under the Current Declaration of Trust, the
Trustees cannot effectuate such a potentially beneficial
reorganization without first conducting a shareholder meeting and
incurring the attendant costs and delays. In contrast, the New
Declaration of Trust gives the Trustees the flexibility to reorganize
the trust or any of its series and achieve potential shareholder
benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust
and its funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the
shareholders' interest to require a shareholder meeting to permit the
Trustees to terminate a fund. For example, a fund may have
insufficient assets to invest effectively or excessively high expense
levels due to operational needs. Under such circumstances, absent
viable alternatives, the Trustees may determine that terminating the
fund is in the shareholders' interest and the only appropriate course
of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the
fund's liquidation and termination and, in general, will increase the
costs associated with the termination. In such a case, it may be in
the shareholders' interest to permit fund termination without
incurring the costs and delays of a shareholder meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have
a fiduciary responsibility to first determine that the proposed
transaction is in the shareholders' interest. Any exercise of the
Trustees' increased authority under the New Declaration of Trust is
also subject to any applicable requirements of the 1940 Act and
Massachusetts law. Of course, in all cases, the New Declaration of
Trust would require that shareholders receive written notification of
any proposed transaction.
The New Declaration of Trust does NOT give the Trustees the authority
to merge a fund with another operating mutual fund or sell all of a
fund's assets to another operating mutual fund without first seeking
shareholder approval. Under the New Declaration of Trust, shareholder
approval is still required for these transactions.
FUTURE AMENDMENTS OF THE DECLARATION OF TRUST. The New Declaration of
Trust permits the Trustees, with certain exceptions, to amend the
Declaration of Trust without shareholder approval. Under the New
Declaration of Trust, shareholders generally have the right to vote on
any amendment affecting their right to vote, on any amendment altering
the maximum number of permitted Trustees, on any amendment affecting
the New Declaration of Trust's amendment provisions, on any amendment
required by law or the trust's registration statement, and on any
matter submitted to shareholders by the Trustees. The Current
Declaration of Trust, on the other hand, generally gives shareholders
the exclusive power to amend the Declaration of Trust. By allowing
amendment of the Declaration of Trust without shareholder approval,
the New Declaration of Trust gives the Trustees the necessary
authority to react quickly to future contingencies. As mentioned
above, such increased authority remains subordinate to the Trustees'
continuing fiduciary obligations to act with due care and in the
shareholders' interest.
MASTER FEEDER AUTHORITY. The New Declaration of Trust clarifies that
the Trustees may authorize the investment of all of a fund's assets in
another open-end investment company (Master Feeder Fund Structure).
The current Declaration of Trust does not specifically provide the
Trustees the ability to authorize the Master Feeder Fund Structure.
The purpose of a Master Feeder Fund Structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. In order
to implement a Master Feeder Fund Structure, both the Declaration of
Trust and the funds' policies must permit the structure. Currently,
each fund's policies do not allow for such investments. Proposal 5 on
page 22 seeks the approval of each fund's shareholders to adopt
a fundamental investment policy to permit investment in another
open-end investment company with substantially the same investment
objective and policies.
A number of mutual funds have developed so called Master-Feeder Fund
Structures under which several "feeder" funds invest
substantially all of their assets in a single pooled investment,
or "master" fund. For example, an institutional equity fund with a
high initial minimum investment amount for large investors might pool
its investments with an equity fund with low minimums designed for
retail investors. This structure allows several feeder funds with
substantially the same objective, but different distribution and
servicing features to combine their investments and manage them as one
master fund instead of managing them separately. The feeder funds
combine their investments by investing all of their assets in one
master fund. (Each feeder fund invested in a single master fund
retains its own characteristics, but may be able to achieve
operational efficiencies by investing together with the other feeder
funds in the Master Feeder Fund Structure.)
FMR and the Board of Trustees continually review methods of
structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees has determined that a
fund should invest in a master fund, the Trustees believe it could be
in the best interest of each fund to adopt such a structure at a
future date. If approved, the New Declaration of Trust would provide
the Trustees with the power to authorize a fund to invest all of its
assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Master Feeder Fund Structure is
permitted under the fund's investment policies (see Proposal 5), if
they determine that a Master Feeder Fund Structure is in the best
interest of a fund, and if, upon advice of counsel, they determine
that the investment will not have material adverse tax consequences to
each fund or its shareholders. The Trustees will specifically consider
the impact, if any, on fees paid by the fund as a result of adopting a
Master Feeder Fund Structure.
SHAREHOLDER NOTIFICATION OF TRUSTEE APPOINTMENT. The New Declaration
of Trust generally provides that, in the case of a vacancy on the
Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion, see fit, consistent
with the limitations of the 1940 Act. Section 16 of the 1940 Act
states that a vacancy may be filled by the Trustees if, after filling
the vacancy, at least two-thirds of the Trustees then holding office
were elected by the holders of the outstanding voting securities of
the trust. It also states that if at any time less than 50% of the
Trustees were elected by shareholders, a shareholder meeting must be
called within 60 days for the purposes of electing Trustees to fill
the existing vacancies. Trustees may also appoint a Trustee in
anticipation of a current Trustee's retirement or resignation or in
the event of an increase in the number of Trustees. The Current
Declaration of Trust requires, that within three months of a Trustee
appointment, notification of such appointment be mailed to each
shareholder of the trust. The New Declaration of Trust eliminates this
notification requirement.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification
to all shareholders of a trust may be costly. If the New Declaration
of Trust is approved, shareholders would normally be notified of
future Trustee appointments in the next financial report for the fund
following the appointment.
OTHER CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
In addition to the significant changes above, the New Declaration of
Trust modifies the Current Declaration of Trust in a number of
important ways, including the following:
1. The New Declaration of Trust modifies the Current Declaration of
Trust to allow FMR and the trust, on behalf of each fund, to amend the
fund's respective Management Contract subject to the provisions of
Section 15 of the 1940 Act, as modified or interpreted by the SEC. In
contrast, the Current Declaration of Trust explicitly requires the
vote of a majority of the outstanding voting securities of a fund to
authorize all such amendments. A corresponding change is also proposed
for the funds' Management Contracts. For more information on this
topic generally, see "Modification of Management Contract Amendment
Provisions" on pages 28 and 32 .
2. The New Declaration of Trust clarifies that the Trustees may
impose other fees (for example, purchase fees) in addition to sales
charges upon investment in a fund and clarifies that deferred sales
charges and other fees (for example, redemption fees) may be imposed
upon redemption of a fund's shares.
3. The New Declaration of Trust confirms and clarifies various
existing Trustee powers. For example, the New Declaration of Trust
clarifies that the Trustees, in addition to banks and trust companies,
may employ as fund custodians companies that are members of a national
securities exchange or other entities permitted under the 1940 Act;
delegate authority to investment advisers and other agents; adopt and
offer dividend reinvestment and related plans; operate and carry on
the business of an investment company; and interpret the investment
policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a
trust series shall have a claim on the assets of another series and
further clarifies that, by virtue of investing in a fund, a
shareholder is deemed to have assented to and agreed to be bound by
the terms of the New Declaration of Trust.
5. The New Declaration of Trust deletes various technical and/or
antiquated requirements from the Current Declaration of Trust,
including existing requirements that a Trustee vacancy be deemed to
occur when a Trustee is absent from his or her state of residence,
that Trustee vacancies must be filled within six calendar months, and
that portfolio securities be held pursuant to safeguards prescribed by
usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the
Current Declaration of Trust to incorporate appropriate references to
classes of shares.
7. Lastly, the New Declaration of Trust generally expands various
1940 Act defined terms to encompass SEC modifications and
interpretations. Specific references to discrete sections of the 1940
Act that are contained in the New Declaration of Trust have likewise
been expanded to include SEC modifications and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed
adoption of the New Declaration of Trust is in the best interests of
the trust's shareholders. Accordingly, the Trustees unanimously
recommend that the shareholders vote FOR the proposal to authorize
them to adopt and execute the New Declaration of Trust. If the
proposal is not approved, the Current Declaration of Trust will remain
unchanged and in effect.
4. TO AMEND THE BYLAWS OF THE TRUST TO REQUIRE ONLY TRUSTEE APPROVAL
OF CHANGES TO THE BYLAWS.
The Board of Trustees has approved, and recommends that shareholders
of the trust approve, a proposal to amend the Bylaws of the trust to
allow the Trustees to approve any changes to the Bylaws without
seeking shareholder approval. Currently, shareholder approval is
required to amend certain provisions of the trust's Bylaws. If the
shareholders vote in favor of this proposal, the Trustees intend to
adopt bylaws that are standard for most Fidelity funds. See Exhibit 2
beginning on page 51 for the standard Bylaws.
In the past, certain state securities authorities required that
various operational and investment restrictions be included in a
charter or Bylaw provision amendable only by shareholder vote. These
state securities requirements have been eliminated. The Trustees
believe that the funds will be able to respond to changing conditions
more rapidly, and without the expense of a special shareholder
meeting, if the Trustees have the power to amend the Bylaws without
shareholder approval.
Current Article X of the trust's Bylaws allows amendments to the
Bylaws by majority vote of the Trustees, provided, however, that any
amendment which changes or affects the provisions of Articles VII, X,
or XII must be approved by vote of a majority of the outstanding
shares of the trust entitled to vote. The proposed amendment to
Article X eliminates the requirement for a shareholder vote to amend
Articles VII, X, and XII.
Current Article VII contains provisions which are to be included in
any contract between the trust and a custodian, provisions governing
termination of custodian agreements and the appointment of successors
or custodians, and provisions governing sub-custodian arrangements.
The 1940 Act, and the rules and regulations thereunder, impose various
requirements with respect to custodians for registered investment
companies. These requirements apply to the trust regardless of whether
they are set forth in the Bylaws. The Trustees believe that it would
be in the best interests of the trust and its shareholders for the
Trustees to have the authority to amend or delete any provisions in
the trust's custodian contracts as they deem necessary, consistent
with the 1940 Act, in order to maintain maximum flexibility in the
operation of the funds.
Current Article XII requires that the Trustees, at least
semiannually, submit to shareholders a written financial report of the
transactions of the funds, including financial statements which must
be certified by independent public accountants, at least annually.
These requirements currently are contained in rules promulgated under
the 1940 Act and, therefore, permit the Trustees to furnish more
limited financial statements if such rules are modified, or if
permitted by order of the SEC.
AMENDMENT TO THE BYLAWS. If the proposal is approved, Article X of
the trust's Bylaws will be amended as follows (material to be deleted
is [bracketed]):
ARTICLE X
Amendments
"These Bylaws may be amended at any meeting of the Trustees of the
Trust by a majority vote[; provided, however, that any amendment which
changes or affects the provisions of Article VII, Article X, or
Article XII shall be approved by vote of a majority of the outstanding
shares of the Trust entitled to vote]."
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit the trust and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the Trustees will
adopt the standard Fidelity Bylaws. If the proposal is not approved by
shareholders of the trust, the Bylaws will remain unchanged.
5. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND
PERMITTING EACH FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY MANAGED BY FMR OR AN AFFILIATE WITH SUBSTANTIALLY
THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders
of each fund approve, the adoption of a new fundamental investment
policy that would permit each fund to invest all of its assets in
another open-end investment company managed by FMR or an affiliate
with substantially the same investment objective and policies.
Adoption of the policy would allow each f und to participate in
a so-called "Master Feeder Fund" organizational format (Master Feeder
Fund Structure).
Participation in a Master Feeder Fund Structure would allow each fund
to combine its assets with other funds having substantially the same
investment objective and policies, but differing distribution or
servicing arrangements. By combining its assets in a central "Master
Fund" with other participating "Feeder Funds," each fund would be able
to maintain its unique distribution and servicing structure while
potentially achieving operational efficiencies through the
consolidation of portfolio management. For example, if FMR managed
three funds all with the same investment objective and policies, a
Master Feeder Fund Structure would allow FMR to manage one combined
fund (rather than three), but still offer three distinct products,
each having different servicing features and pricing (e.g., one
distinct product for retail investors, a second for institutional
investors and a third for foreign investors). The purpose of a Master
Feeder Fund Structure would be to allow FMR to manage only one fund in
each investment discipline (Master Fund), but still be able to offer
that investment discipline with a variety of different servicing
features and pricing (Feeder Funds). The Master Feeder Fund Structure
is explained in more detail below. A diagram comparing a typical
"stand alone" fund structure to a Master Feeder Fund Structure is
attached to this Proxy Statement as Exhibit 3.
If the proposal is approved by shareholders, THE TRUSTEES WILL ONLY
AUTHORIZE INVESTING EACH FUND'S ASSETS IN A MASTER FUND IF THEY
DETERMINE THA T A M ASTER FEEDER FUND STRUCTURE IS IN THE BEST
INTERESTS OF EACH FUND SHAREHOLDERS, and if, upon advice of counsel,
they determine that the investment will not have material adverse tax
consequence s to each fund or its shareholders.
THE MASTER FEEDER FUND STRUCTURE. The term "Master Feeder Fund
Structure" refers to a two-tiered arrangement in which typically one
or more mutual funds with substantially identical investment
objectives (the Feeder Funds) combine their assets by investing in a
single investment company having the same investment objective (the
Master Fund). The Feeder Funds sell their shares to the public and
invest all of their assets in shares of the Master Fund. In turn, the
Master Fund, in accordance with its and the Feeder Funds' common
investment objective, invests its assets in appropriate portfolio
securities (e.g., stocks, bonds, or money market instruments). The
Master Fund is not offered to the public: it sells its shares only to
the Feeder Funds. The individual Feeder Funds are generally sold
through different distribution channels to discrete targeted markets,
such as retail investors, institutional investors or foreign
investors. Administrative and service features will vary among Feeder
Funds depending upon the level of service sought by the fund's
investors. Simply stated, the Master Feeder Fund Structure
consolidates portfolio management and related functions at the Master
Fund (or bottom tier) level and segregates marketing and distribution
to the Feeder Fund (or top tier) level.
The Master Feeder Fund Structure may offer certain advantages over
more traditional "stand alone" funds. For example, participating
Feeder Funds may achieve economies of scale by sharing among a greater
number of investment dollars fixed expenses of portfolio management
and fund administration. Feeder Funds may also be able to achieve
greater diversification by means of a larger portfolio of securities
than could be achieved by individual funds. In short, the Master
Feeder Fund Structure gives participating Feeder Funds the ability to
tailor services and fees for particular market segments while
providing the economies of scale available to a larger fund.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually
review methods of structuring mutual funds to take advantage of
potential efficiencies. While neither the Board nor FMR has determined
that each fund should invest in a Master Fund, the Trustees believe it
could be in the best interests of each fund to adopt such a structure
at a future date.
At present, certain of each fund's fundamental investment policies
and limitations would prevent each fund from investing all of its
assets in a Master Fund and would require a vote of shareholders
before each fund could participate in a Master Feeder Fund Structure.
These policies include each fund's limitations on concentration,
diversification, and underwriting. To avoid the costs associated with
a subsequent shareholder meeting, the Trustees recommend that
shareholders approve the proposal to permit each fund to invest its
assets in a single Master Fund, without a further vote of
shareholders. If shareholders approve this proposal, the
above-mentioned restrictive policies would no longer preclude each
fund's investment in a Master Fund.
To allow possible future implementation of a Master Feeder Fund
Structure, an amendment to the Declaration of Trust is also proposed.
Proposal 3 requests approval for the adoption of an amended and
restated Declaration of Trust (New Declaration of Trust) that would
allow the Trustees to authorize each fund's conversion to a Master
Feeder Fund Structure when permitted by its policies. This proposal
would add a fundamental policy for each fund that permits the Master
Feeder Fund Structure.
DISCUSSION. As discussed above, FMR may manage a number of mutual
funds with similar investment objectives, policies, and limitations,
but with different features and services. Were these comparable funds
to combine their assets, operational efficiencies could be achieved,
offering the opportunity to reduce costs. Similarly, FMR anticipates
that a Master Feeder Fund Structure would facilitate the introduction
of new Fidelity mutual funds, increasing the investment options
available to shareholders.
Each fund's method of operation and shareholder services would not be
materially affected by its investment in a Master Fund, except that
the assets of each fund would be managed as part of a larger fund.
Were each fund to invest all of its assets in a Master Fund, it would
hold only a single investment security (i.e., shares of the Master
Fund). The Master Fund, in turn, would directly invest in individual
securities pursuant to its investment objective (which would be
identical to each fund's investment objective). The Master Fund would
be managed by FMR or an affiliate, such as Fidelity Investments Money
Management, Inc. in the case of a money market fund.
The Trustees would retain the right to withdraw each fund's
investments from a Master Fund at any time and would do so if the
Master Fund's investment objective and policies were no longer
appropriate for each fund. Each fund would then resume investing
directly in individual securities as it does currently.
If, as a Feeder Fund, each fund is asked to vote at a shareholder
meeting of the Master Fund, the fund, if required by applicable law or
its policies, would hold a meeting of its shareholders to vote on the
matters to be considered at the Master Fund shareholder meeting. Each
fund would cast its votes at the Master Fund meeting in the same
proportion as each fund's shareholders voted at their meeting.
At present, the Trustees have not considered any specific proposal to
authorize a Master Feeder Fund Structure. As mentioned, the Trustees
will authorize investing each fund's assets in a Master Fund only if
they determine that a Master Feeder Fund Structure is in the best
interests of each fund's shareholders and if, upon advice of counsel,
they determine that the investment will not have material adverse tax
consequences to each fund or its shareholders. In determining whether
to invest in a Master Fund, the Trustees will consider, among other
things, the opportunity to reduce costs and to achieve operational
efficiencies. The Trustees will not authorize investment in a Master
Fund if doing so would materially increase costs (including fees) to
shareholders.
FMR may benefit from the use of a Master Feeder Fund Structure if
overall assets under management are increased (since FMR's fees are
based on assets). Also, FMR's expenses of providing investment and
other services to each fund may be reduced. If a fund's investment in
a Master Fund were to reduce FMR's expenses materially, the Trustees
would consider whether a reduction in FMR's management fee would be
appropriate if and when a Master Feeder Fund Structure is implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Master
Fund at a future date, the Trustees recommend that each fund adopt the
following fundamental policy:
"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."
If the proposal is adopted, the Trustees intend to adopt a
non-fundamental investment limitation for each fund that states:
"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."
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. Upon shareholder approval, the fundamental
limitation will become effective when disclosure is revised to reflect
the changes. If the proposal is not approved by the shareholders of a
fund, that fund's current fundamental investment policies will remain
unchanged with respect to potential investment in Master Funds.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR DESTINY I.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The most significant difference of the Amended Contract is
that it eliminates the performance adjustment component of the
management fee that FMR receives from the fund for managing its
investments and business affairs under the fund's existing management
contract with FMR (the Present Contract). The Amended Contract also
modifies the management fee to provide for lower fees when FMR's
assets under management exceed certain levels. In addition, the
Amended Contract allows FMR and the trust, on behalf of the fund, to
modify the Management Contract subject to the requirements of the 1940
Act. The Present Contract currently requires the vote of a majority of
the fund's outstanding voting securities to authorize all amendments.
See "Modification of Management Contract Amendment Provisions" on page
31 for more details. (For information on FMR, see the section
entitled "Activities and Management of FMR," on page .)
CURRENT MANAGEMENT FEE. The management fee is calculated and paid
monthly, and is normally expressed as an annual percentage of the
fund's average net assets. The current fee has two components: a Basic
Fee and a Performance Adjustment. The Basic Fee is an annual
percentage of the fund's average net assets for the current month. The
Basic Fee rate is the sum of a Group Fee rate, which declines as FMR's
fund assets under management increase, and a fixed individual fund fee
rate of 0.17%. The Basic Fee rate for the fund's fiscal year ended
September 30, 1998 was 0.4794%.
The Performance Adjustment is a positive or negative dollar amount
based on the fund's performance and assets for the most recent 36
months. If the fund outperforms the Standard & Poor's 500 Index (the
Index) over 36 months, FMR receives a positive Performance Adjustment,
and if the fund underperforms the Index, the management fee is reduced
by a negative Performance Adjustment. The Performance Adjustment is an
annual percentage of the fund's average net assets over the 36-month
performance period. The Performance Adjustment rate is 0.02% for each
percentage point of outperformance or underperformance, subject to a
maximum of 0.24% of the average net assets up to and including
$100,000,000 and of 0.20% of the average net assets in excess of
$100,000,000.
PROPOSED MANAGEMENT FEE AMENDMENTS. A copy of the form of Amended
Contract, marked to indicate the proposed amendments, is attached as
Exhibit 4 on page 62 . The Amended Contract would (1) eliminate
the Performance Adjustment component of the management fee effective
18 months after the date that the Amended Contract takes effect (2)
reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion, and (3) allow FMR and the trust, on behalf
of the fund, to modify the Management Contract subject to the
requirements of the 1940 Act. For a detailed discussion of the fund's
Present Contract, refer to the section entitled "Present Management
Contracts" beginning on page .
Except for the modifications discussed above, the Amended Contract is
substantially identical to the fund's Present Contract with FMR. If
approved by shareholders, the Amended Contract will take effect on the
first day of the first month following approval, with the Performance
Adjustment being eliminated over 18 months, as discussed below. The
Amended Contract, if approved, will remain in effect through July 31,
2000 and thereafter, but only as long as its continuance is approved
at least annually by (i) the vote, cast in person at a meeting called
for the purpose, of a majority of the Independent Trustees and (ii)
the vote of either a majority of the Trustees or a majority of the
outstanding shares of the fund. If the Amended Contract is not
approved, the Present Contract will continue in effect through July
31, 1999, and thereafter only as long as its continuance is approved
at least annually as described above.
IMPACT OF ELIMINATING THE PERFORMANCE ADJUSTMENT. If the proposal is
approved, after an 18-month "phase-out" period (described in detail
below) during which the Performance Adjustment will be eliminated, the
fund's aggregate management fee rate will equal the Basic Fee rate .
T he Basic Fee rate will no longer be increased or decreased based
on the fund's performance relative to the Index. It would be
impossible to predict the impact of eliminating the Performance
Adjustment, if approved, beyond the 18-month phase-out period. The
future impact of eliminating the Performance Adjustment will depend on
many different factors and may represent an increase or decrease from
the fund's aggregate management fee under the Present Contract,
depending on the fund's performance relative to the Index.
During the fiscal year ended September 30, 1998, the fund's aggregate
management fee rate was 0.3071%, composed of a Basic Fee rate of
0.4607% reduced by a negative Performance Adjustment of 0.1536%. Thus,
the Performance Adjustment resulted in a lower aggregate management
fee under the Present Contract than would have resulted under the
Amended Contract, assuming the Performance Adjustment had been
eliminated.
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets
under management (approximately $708 billion as of February, 1999),
the changes to the Group Fee rate reduce the management fee. FMR has
voluntarily implemented the Group Fee reductions pending shareholder
approval, and the f und has paid lower management fees as a
result. For the fund's fiscal year ended September 30, 1998, the
management fee using the proposed Group Fee reductions (including the
Performance Adjustment) was 0.3071% of the f und's average net
assets. The Group Fee reductions lowered the management fee rate by
0.0187%, compared to the 0.3258% FMR was entitled to receive under the
Present Contract.
FMR voluntarily adopted various additional Group Fee breakpoints for
group assets over $174 billion in 1994 and 1996. Although the new fee
breakpoints have not been added to the management contract pending
shareholder approval, FMR has voluntarily based its management fee on
the Group Fee schedule contained in the Amended Contract since January
1, 1996.
COMBINED EFFECT OF FEE CHANGES. For the fiscal year ended September
30, 1998, the combined effect of the Group Fee reductions and the
elimination of the Performance Adjustment would have resulted in a
0.1349% increase in the total management fee. The future impact will
depend on many different factors, and may represent an increase or
decrease from the management fee under the Present Contract. The Group
Fee rate reductions will either reduce the management fee or leave it
unchanged, depending on the level of FMR's assets under management.
Elimination of the Performance Adjustment will either reduce or
increase the management fee depending on the fund's performance
relative to the Index.
ELIMINATION OF PERFORMANCE ADJUSTMENT. Performance adjustments are
intended to reward a fund's investment adviser for good investment
performance and penalize a fund's investment adviser for bad
investment performance. The Securities and Exchange Commission (SEC)
rules for calculating performance adjustments generally ensure
that positive or negative adjustments result from the adviser's
management skill and not random or irrelevant factors.
In May 1999, the fund expects to launch a second class
of shares, which will be designated Class N. When the Present
Contract was adopted in 1993, the fund had one class of shares,
which, on or about the launch date of the new class of shares, is
expected to be designated Class O. The contract did not
contemplate the introduction of additional classes, and does not
specifically require that their performance be taken into account.
Unlike the initial class (Class O), Class N shares will pay
12b-1 fees, which lower performance, of .25%.
The SEC rules for calculating performance adjustments provide for the
exclusion of sales loads from the calculation because sales loads are
irrelevant in measuring an investment adviser's performance. However,
12b-1 fees, which lower performance and generally represent
alternatives to sales loads or other commission-based compensation,
are included in the calculation. FMR believes that 12b-1 fees, like
sales loads, are dictated by sales and servicing characteristics
unrelated to investment performance, and should not be considered in
determining performance adjustments.
Furthermore, a performance adjustment is meant to unite the interests
of the investment adviser and the shareholders in achieving
performance superior to the Index. Regardless of the number of classes
of a fund, the investment adviser is managing a single portfolio and
is providing the same investment management services to each class. In
light of the inconsistencies in the SEC rules for calculating
performance adjustment s , FMR recommended and the Board
approved, a proposal to eliminate the performance adjustment rather
than use the performance of a single class or adopt a different
methodology to account for the introduction of Class N.
PHASE-OUT PERIOD. If the proposal is approved, to prevent unfairness
to the fund, the Performance Adjustment will be phased out over a
period equal to one-half the period used to calculate the Performance
Adjustment. Because the Performance Adjustment is based on a 36 month
performance period, FMR will continue to calculate the Performance
Adjustment for an 18-month period beginning on the first day of the
first month following shareholder approval of the proposal. During
this period, FMR will not receive any positive Performance Adjustments
but instead will receive the lower of the Basic Fee or the Basic Fee
less the Performance Adjustment. Thus, during the phase-out period,
the Performance Adjustment can decrease, but not increase, the
management fee owed by the fund. During the phase-out period, which
is expected to begin after the launch of the new class of shares,
FMR will calculate the Performance Adjustment for Class O and
Class N shares of the fund by using the performance of the fund's
Class O shares relative to the performance of the Index. FMR believes
this simplified methodology is reasonable since it is unlikely that
Class N shares will gather significant assets during this period.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but under the Amended Contract, it declines faster.
Group Fee rates that are lower than those contained in the fund's
Present Contract have been voluntarily implemented by FMR on August 1,
1994 and January 1, 1996.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract would add ten new, lower breakpoints
applicable when group assets are above $210 billion as illustrated in
the following table. (For an explanation of how the Group Fee rate is
used to calculate the management fee, see the section entitled
"Present Management Contracts" on page .)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE BreakpointS
Average Group Assets ($ Present Contract Average Group Assets ($ Amended Contract
billions) billions)
Over 174 .3000% 174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
Over 534 .2500%
</TABLE>
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contracts" on page .)
EFFECTIVE GROUP FEE RATES
Group Assets ($ billions) Present Contract Amended Contract
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee as calculated under the terms of the Present
Contract (not including FMR's voluntary implementation of the Group
Fee reductions) for the fiscal year ended September 30, 1998 to the
management fee that the fund would have incurred under the Amended
Contract if the Amended Contract (but not the Performance Adjustment)
had been in effect during that same period. Management fees are
expressed in dollars and as percentages of the fund's average net
assets for the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Present Contract Amended Contract Difference
$ % $ % $ %
Basic Fee 30,677,379 .4794 29,485,219 .4607 (1,192,160) (.0187)
Performance Adjustment (9,828,127) (.1536) 0 0 9,828,127 .1536
Total 20,849,252 .3258 29,485,219 .4607 8,635,967 .1349
</TABLE>
The following tables provide data concerning each class's management
fees and expenses as a percentage of average net assets for the fiscal
year ended September 30, 1998 under the Present Contract (not
including FMR's voluntary implementation of the Group Fee reductions)
and if the Amended Contract (but not the Performance Adjustment) had
been in effect during that same period.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
The following figures are based on historical expenses adjusted to
reflect current fees of the fund and are calculated as a percentage of
average net assets.
Present Contract Amended Contract
Management Fee .33% .46%
12b-1 Fee None None
Other Expenses .02% .02%
Total Fund Operating Expenses .35% .48%
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. In addition, the fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total operating expenses presented in the table would have been 0.35%
under the Present Contract and 0.48% under the Amended Contract.
EXAMPLE: The following illustrates the expenses on a $1,000
investment under the fees and expenses stated above, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Present Contract $4 $11 $20 $44
Amended Contract $5 $15 $27 $60
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the SEC . In contrast,
the Present Contract explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to the Present Contract's
amendment provisions will allow FMR and the trust, on behalf of the
fund, to amend the Management Contract without shareholder vote IF THE
1940 ACT PERMITS THEM TO DO SO. For example, under current
interpretations of Section 15 of the 1940 Act, the Amended Contract
would give FMR and the trust the ability to amend the Management
Contract to immediately reflect a management fee decrease without the
delay of having to first conduct a proxy solicitation. In short, the
proposed modification gives FMR and the trust added flexibility to
amend the Management Contract subject to 1940 Act constraints. Of
course, any future amendments to the Management Contract would require
the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on October 16, 1997, July 16, 1998 and January
14, 1999. The Board of Trustees considered and approved the
modifications to the Group Fee Rate schedule during the two month
periods from November to December 1995, June to July 1994 and
September to October 1993, and the elimination of the Performance
Adjustment in January 1999. The Board of Trustees received materials
relating to the Amended Contract in advance of the meeting at which
the Amended Contract was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their monthly meetings, the Trustees received materials specifically
relating to the Amended Contract. These materials included: (i)
information on the investment performance of the fund, a peer group of
funds and an appropriate index or combination of indices, (ii) sales
and redemption data in respect of the fund, and (iii) the economic
outlook and the general investment outlook in the markets in which the
fund invests. The Board of Trustees and the Independent Trustees also
consider periodically other material facts such as (1) FMR's results
and financial condition, (2) arrangements in respect of the
distribution of the fund's shares, (3) the procedures employed to
determine the value of the fund's assets, (4) the allocation of the
fund's brokerage, if any, including allocations to brokers affiliated
with FMR and the use of "soft" commission dollars to pay fund expenses
and to pay for research and other similar services, (5) FMR's
management of the relationships with the fund's custodian and
subcustodians, (6) the resources devoted to and the record of
compliance with the fund's investment policies and restrictions and
with policies on personal securities transactions and (7) the nature,
cost, and character of non-investment management services provided by
FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all of the matters considered. Matters considered by the Board
of Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent
Trustees considered the benefit to shareholders of investing in a fund
that is part of a large family of funds offering a variety of
investment disciplines and providing for a large variety of fund and
shareholder services. With regard to the proposed elimination of the
Performance Adjustment, the Board of Trustees and the Independent
Trustees considered the management fee formulas of other comparable
funds, the performance of the fund and mutual funds generally relative
to the I ndex, both before and after expenses, including 12b-1
fees, and advantages to investors, including the fund's shareholders,
of distributing fund shares through distribution channels that require
payment of 12b-1 fees. With regard to the proposed modification to the
Present Contract's amendment provisions, the Board of Trustees and the
Independent Trustees considered the benefit to shareholders of FMR's
and the trust's increased flexibility (within 1940 Act constraints) to
amend the Management Contract without the delays and potential costs
of a proxy solicitation.
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices. In particular, the Board of Trustees and the
Independent Trustees reviewed the performance of the fund as compared
to the Index on a monthly and rolling 36-month performance basis for
the three years ended November 30, 1998 and as compared to a Lipper
peer group of mutual funds. The Board of Trustees and the Independent
Trustees also considered the impact of eliminating the fund's
Performance Adjustment on the fund's management fee for the year ended
November 30, 1998 and considered how rolling 36-month returns would be
affected during an 18-month wind-down period, assuming the fund's
performance matched the Index during that period.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of the
fund's portfolio manager, and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations, and
the senior management of Fidelity's equity group. Among other
things , they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to
recruiting, training and retaining portfolio managers and other
research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with the fund.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee rates,
that is the elimination of the Performance Adjustment, the reduction
of the Group Fee Rate schedule, and the proposed modification to the
Present Contract's amendment provisions, are in the best interest of
the fund's shareholders. The Board of Trustees, including the
Independent Trustees, voted to approve the submission of the Amended
Contract to shareholders of the fund and recommends that shareholders
of the fund vote FOR the Amended Contract. If approved, the Amended
Contract will take effect on the first day of the month following
shareholder approval.
7. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR DESTINY II .
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The most significant difference of the Amended Contract is
that it eliminates the performance adjustment component of the
management fee that FMR receives from the fund for managing its
investments and business affairs under the fund's existing management
contract with FMR (the Present Contract). The Amended Contract also
modifies the management fee to provide for lower fees when FMR's
assets under management exceed certain levels. In addition, the
Amended Contract allows FMR and the trust, on behalf of the fund, to
modify the Management Contract subject to the requirements of the 1940
Act. The Present Contract currently requires the vote of a majority of
the fund's outstanding voting securities to authorize all amendments.
See "Modification of Management Contract Amendment Provisions" on
page 41 for more details. (For information on FMR, see the
section entitled "Activities and Management of FMR," on page .)
CURRENT MANAGEMENT FEE. The management fee is calculated and paid
monthly, and is normally expressed as an annual percentage of the
fund's average net assets. The fee has two components: a Basic Fee and
a Performance Adjustment. The Basic Fee is an annual percentage of the
fund's average net assets for the current month. The Basic Fee rate is
the sum of a Group Fee rate, which declines as FMR's fund assets under
management increase, and a fixed individual fund fee rate of 0.30%.
The Basic Fee rate for the fund's fiscal year ended September 30, 1998
was 0.6092%.
The Performance Adjustment is a positive or negative dollar amount
based on the fund's performance and assets for the most recent 36
months. If the fund outperforms the Standard & Poor's 500 Index (the
Index) over 36 months, FMR receives a positive Performance Adjustment,
and if the fund underperforms the Index, the management fee is reduced
by a negative Performance Adjustment. The Performance Adjustment is an
annual percentage of the fund's average net assets over the 36-month
performance period. The Performance Adjustment rate is 0.02% for each
percentage point of outperformance or underperformance, subject to a
maximum of 0.24% of the average net assets up to and including
$100,000,000 and of 0.20% of the average net assets in excess of
$100,000,000.
PROPOSED MANAGEMENT FEE AMENDMENTS. A copy of the form of Amended
Contract, marked to indicate the proposed amendments, is attached as
Exhibit 4 on page 67 . The Amended Contract would (1) eliminate
the Performance Adjustment component of the management fee effective
18 months after the date that the Amended Contract takes effect (2)
reduce the Group Fee rate further if FMR's assets under management
remain over $210 billion, and (3) allow FMR and the trust, on behalf
of the fund, to modify the Management Contract subject to the
requirements of the 1940 Act. For a detailed discussion of the fund's
Present Contract, refer to the section entitled "Present Management
Contracts" beginning on page .
Except for the modifications discussed above, the Amended Contract is
substantially identical to the fund's Present Contract with FMR. If
approved by shareholders, the Amended Contract will take effect on the
first day of the first month following approval, with the Performance
Adjustment being eliminated over 18 months, as discussed below. The
Amended Contract, if approved, will remain in effect through July 31,
2000 and thereafter, but only as long as its continuance is approved
at least annually by (i) the vote, cast in person at a meeting called
for the purpose, of a majority of the Independent Trustees and (ii)
the vote of either a majority of the Trustees or a majority of the
outstanding shares of the fund. If the Amended Contract is not
approved, the Present Contract will continue in effect through July
31, 1999, and thereafter only as long as its continuance is approved
at least annually as described above.
IMPACT OF ELIMINATING THE PERFORMANCE ADJUSTMENT. If the proposal is
approved, after an 18-month "phase-out" period (described in detail
below) during which the Performance Adjustment will be eliminated, the
fund's aggregate management fee rate will equal the Basic Fee rate .
T he Basic Fee rate will no longer be increased or decreased based
on the fund's performance relative to the Index. It would be
impossible to predict the impact of eliminating the Performance
Adjustment, if approved, beyond the 18-month phase-out period. The
future impact of eliminating the Performance Adjustment will depend on
many different factors and may represent an increase or decrease from
the fund's aggregate management fee under the Present Contract,
depending on the fund's performance relative to the Index.
During the fiscal year ended September 30, 1998, the fund's aggregate
management fee rate was 0.4528%, composed of a Basic Fee rate of
0.5905% reduced by a negative Performance Adjustment of 0.1377%. Thus,
the Performance Adjustment resulted in a lower aggregate management
fee under the Present Contract than would have resulted under the
Amended Contract, assuming the Performance Adjustment had been
eliminated.
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets
under management (approximately $708 billion as of February 1999), the
changes to the Group Fee rate reduce the management fee. FMR has
voluntarily implemented the Group Fee reductions pending shareholder
approval, and the Fund has paid lower management fees as a result. For
the fund's fiscal year ended September 30, 1998, the management fee
using the proposed Group Fee reductions (including the Performance
Adjustment) was 0.4528% of the Fund's average net assets. The Group
Fee reductions lowered the management fee rate by 0.0187%, compared to
the 0.4715% FMR was entitled to receive under the Present Contract.
FMR voluntarily adopted various additional Group Fee breakpoints for
group assets over $174 billion in 1994 and 1996. Although the new fee
breakpoints have not been added to the management contract pending
shareholder approval, FMR has voluntarily based its management fee on
the Group Fee schedule contained in the Amended Contract since January
1, 1996.
COMBINED EFFECT OF FEE CHANGES. For the fiscal year ended September
30, 1998, the combined effect of the Group Fee reductions and the
elimination of the Performance Adjustment would have resulted in a
0.1190% increase in the total management fee. The future impact will
depend on many different factors, and may represent an increase or
decrease from the management fee under the Present Contract. The Group
Fee rate reductions will either reduce the management fee or leave it
unchanged, depending on the level of FMR's assets under management.
Elimination of the Performance Adjustment will either reduce or
increase the management fee depending on the fund's performance
relative to the Index.
ELIMINATION OF PERFORMANCE ADJUSTMENT. Performance adjustments are
intended to reward a fund's investment adviser for good investment
performance and penalize a fund's investment adviser for bad
investment performance. The Securities and Exchange Commission (SEC)
rules for calculating performance adjustments generally ensure
that positive or negative adjustments result from the adviser's
management skill and not random or irrelevant factors.
In May 1999, the fund expects to launch a second class
of shares, which will be designated Class N. When the Present
Contract was adopted in 1993, the fund had one class of shares,
which, on or about the launch date of the new class of shares, is
expected to be designated Class O. The contract did not
contemplate the introduction of additional classes, and does not
specifically require that their performance be taken into account.
Unlike the initial class (Class O), Class N shares will pay
12b-1 fees, which lower performance, of .25%.
The SEC rules for calculating performance adjustments provide for the
exclusion of sales loads from the calculation because sales loads are
irrelevant in measuring an investment adviser's performance. However,
12b-1 fees, which lower performance and generally represent
alternatives to sales loads or other commission-based compensation,
are included in the calculation. FMR believes that 12b-1 fees, like
sales loads, are dictated by sales and servicing characteristics
unrelated to investment performance, and should not be considered in
determining performance adjustments.
Furthermore, a performance adjustment is meant to unite the interests
of the investment adviser and the shareholders in achieving
performance superior to the Index. Regardless of the number of classes
of a fund, the investment adviser is managing a single portfolio and
is providing the same investment management services to each class. In
light of the inconsistencies in the SEC rules for calculating
performance adjustment s , FMR recommended and the Board
approved, a proposal to eliminate the performance adjustment rather
than use the performance of a single class or adopt a different
methodology to account for the introduction of Class N.
PHASE-OUT PERIOD. If the proposal is approved, to prevent unfairness
to the fund, the Performance Adjustment will be phased out over a
period equal to one-half the period used to calculate the Performance
Adjustment. Because the Performance Adjustment is based on a 36 month
performance period, FMR will continue to calculate the Performance
Adjustment for an 18-month period beginning on the first day of the
first month following shareholder approval of the proposal. During
this period, FMR will not receive any positive Performance Adjustments
but instead will receive the lower of the Basic Fee or the Basic Fee
less the Performance Adjustment. Thus, during the phase-out period,
the Performance Adjustment can decrease, but not increase, the
management fee owed by the fund. During the phase-out period, which
is expected to begin after the launch of the new class of shares,
FMR will calculate the Performance Adjustment for Class O and
Class N shares of the fund by using the performance of the fund's
Class O shares relative to the performance of the Index. FMR believes
this simplified methodology is reasonable since it is unlikely that
Class N shares will gather significant assets during this period.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on
the aggregate net assets of all registered investment companies having
management contracts with FMR (group assets). As group assets
increase, the Group Fee rate declines. The Amended Contract would not
change the Group Fee rate if group assets are $210 billion or less.
Above $210 billion in group assets, the Group Fee rate declines under
both contracts, but under the Amended Contract, it declines faster.
Group Fee rates that are lower than those contained in the fund's
Present Contract have been voluntarily implemented by FMR on August 1,
1994 and January 1, 1996.
The Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets.
The rate at which the Group Fee rate declines is determined by fee
"breakpoints" that provide for lower fee rates when group assets
increase. The Amended Contract would add ten new, lower breakpoints
applicable when group assets are above $210 billion as illustrated in
the following table. (For an explanation of how the Group Fee rate is
used to calculate the management fee, see the section entitled
"Present Management Contracts" on page .)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE BreakpointS
Average Group Assets ($ Present Contract Average Group Assets ($ Amended Contract
billions) billions)
Over 174 .3000% 174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
390 - 426 .2700%
426 - 462 .2650%
462 - 498 .2600%
498 - 534 .2550%
Over 534 .2500%
</TABLE>
The resulting Group Fee rates at various levels of group assets are
indicated below. (For an explanation of how the breakpoints are
combined to arrive at the Group Fee rate, see "Present Management
Contracts" on page .)
EFFECTIVE GROUP FEE RATES
Group Assets ($ billions) Present Contract Amended Contract
150 .3371% .3371%
200 .3284% .3284%
250 .3227% .3219%
300 .3190% .3163%
350 .3162% .3113%
400 .3142% .3067%
450 .3126% .3024%
500 .3114% .2982%
550 .3103% .2942%
COMPARISON OF MANAGEMENT FEES. The following table compares the
fund's management fee as calculated under the terms of the Present
Contract (not including FMR's voluntary implementation of the Group
Fee reductions) for the fiscal year ended September 30, 1998 to the
management fee that the fund would have incurred under the Amended
Contract if the Amended Contract (but not the Performance Adjustment)
had been in effect during that same period. Management fees are
expressed in dollars and as percentages of the fund's average net
assets for the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Present Contract Amended Contract Difference
$ % $ % $ %
Basic Fee 24,723,882 .6092 23,966,180 .5905 (757,702) (.0187)
Performance Adjustment (5,588,522) (.1377) 0 0 5,588,522 .1377
Total 19,135,360 .4715 23,966,180 .5905 4,830,820 .1190
</TABLE>
The following tables provide data concerning each class's management
fees and expenses as a percentage of average net assets for the fiscal
year ended September 30, 1998 under the Present Contract (not
including FMR's voluntary implementation of the Group Fee reductions)
and if the Amended Contract (but not the Performance Adjustment) had
been in effect during that same period.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
The following figures are based on historical expenses adjusted to
reflect current fees of the fund and are calculated as a percentage of
average net assets.
Present Contract Amended Contract
Management Fee .47% .59%
12b-1 Fee None None
Other Expenses .03% .03%
Total Fund Operating Expenses .50% .62%
A portion of the brokerage commissions that the fund pays is used to
reduce the fund's expenses. In addition, the fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total operating expenses presented in the table would have been 0.50%
under the Present Contract and 0.62% under the Amended Contract.
EXAMPLE: The following illustrates the expenses on a $1,000
investment under the fees and expenses stated above, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Present Contract $5 $16 $28 $63
Amended Contract $6 $20 $35 $77
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of
the fund. The example above should not be considered a representation
of past or future expenses of the fund. Actual expenses may vary from
year to year and may be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the SEC . In contrast,
the Present Contract explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to the Present Contract's
amendment provisions will allow FMR and the trust, on behalf of the
fund, to amend the Management Contract without shareholder vote IF THE
1940 ACT PERMITS THEM TO DO SO. For example, under current
interpretations of Section 15 of the 1940 Act, the Amended Contract
would give FMR and the trust the ability to amend the Management
Contract to immediately reflect a management fee decrease without the
delay of having to first conduct a proxy solicitation. In short, the
proposed modification gives FMR and the trust added flexibility to
amend the Management Contract subject to 1940 Act constraints. Of
course, any future amendments to the Management Contract would require
the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees, on October 16, 1997, July 16, 1998 and January
14, 1999. The Board of Trustees considered and approved the
modifications to the Group Fee Rate schedule during the two month
periods from November to December 1995, June to July 1994, and
September to October 1993 and the elimination of the Performance
Adjustment in January 1999. The Board of Trustees received materials
relating to the Amended Contract in advance of the meeting at which
the Amended Contract was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their monthly meetings, the Trustees received materials specifically
relating to the Amended Contract. These materials included: (i)
information on the investment performance of the fund, a peer group of
funds and an appropriate index or combination of indices, (ii) sales
and redemption data in respect of the fund, and (iii) the economic
outlook and the general investment outlook in the markets in which the
fund invests. The Board of Trustees and the Independent Trustees also
consider periodically other material facts such as (1) FMR's results
and financial condition, (2) arrangements in respect of the
distribution of the fund's shares, (3) the procedures employed to
determine the value of the fund's assets, (4) the allocation of the
fund's brokerage, if any, including allocations to brokers affiliated
with FMR and the use of "soft" commission dollars to pay fund expenses
and to pay for research and other similar services, (5) FMR's
management of the relationships with the fund's custodian and
subcustodians, (6) the resources devoted to and the record of
compliance with the fund's investment policies and restrictions and
with policies on personal securities transactions and (7) the nature,
cost, and character of non-investment management services provided by
FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the impact of performance adjustments to management fees, (c)
the choice of performance indices and benchmarks, (d) the composition
of peer groups of funds, (e) transfer agency and bookkeeping fees paid
to affiliates of FMR, (f) investment performance, (g) investment
management staffing, (h) the potential for achieving further economies
of scale, (i) operating expenses paid to third parties, and (j) the
information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all of the matters considered. Matters considered by the Board
of Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent
Trustees considered the benefit to shareholders of investing in a fund
that is part of a large family of funds offering a variety of
investment disciplines and providing for a large variety of fund and
shareholder services. With regard to the proposed elimination of the
Performance Adjustment, the Board of Trustees and the Independent
Trustees considered the management fee formulas of other comparable
funds, the performance of the fund and mutual funds generally relative
to the I ndex, both before and after expenses, including 12b-1
fees, and advantages to investors, including the fund's shareholders,
of distributing fund shares through distribution channels that require
payment of 12b-1 fees. With regard to the proposed modification to the
Present Contract's amendment provisions, the Board of Trustees and the
Independent Trustees considered the benefit to shareholders of FMR's
and the trust's increased flexibility (within 1940 Act constraints) to
amend the Management Contract without the delays and potential costs
of a proxy solicitation.
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed monthly the fund's
investment performance as well as the performance of a peer group of
mutual funds, and the performance of an appropriate index or
combination of indices. In particular, the Board of Trustees and the
Independent Trustees reviewed the performance of the fund as compared
to the Index on a monthly and rolling 36-month performance basis for
the three years ended November 30, 1998 and as compared to a Lipper
peer group of mutual funds. The Board of Trustees and the Independent
Trustees also considered the impact of eliminating the fund's
Performance Adjustment on the fund's management fee for the year ended
November 30, 1998 and considered how rolling 36-month returns would be
affected during an 18-month wind-down period, assuming the fund's
performance matched the Index during that period.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the
Independent Trustees review at least annually the background of the
fund's portfolio manager, and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations, and
the senior management of Fidelity's equity group. Among other
things , they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to
recruiting, training and retaining portfolio managers and other
research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Present Contract and the Amended
Contract and under separate agreements covering transfer agency
functions and pricing, bookkeeping and securities lending services, if
any. The Board of Trustees and the Independent Trustees have also
considered the nature and extent of FMR's supervision of third party
service providers, principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses which may benefit from or be related to the fund's
business. The Board of Trustees and the Independent Trustees also
considered FMR's profit margins in comparison with available industry
data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent
Trustees considered whether there have been economies of scale in
respect of the management of the Fidelity funds, whether the Fidelity
funds (including the fund) have appropriately benefitted from any
economies of scale, and whether there is potential for realization of
any further economies of scale. The Board of Trustees and the
Independent Trustees have concluded that FMR's mutual fund business
presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and
FMR in an appropriate manner. The Independent Trustees have also
concluded that the existing group fee structure should be continued
but determined that it would be appropriate to change the group fee
structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing,
real estate, international research and investment funds, and others.
The Board of Trustees and the Independent Trustees considered the
intangible benefits that accrue to FMR and its affiliates by virtue of
their relationship with the fund.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee rates,
that is the elimination of the Performance Adjustment, the reduction
of the Group Fee Rate schedule, and the proposed modification to the
Present Contract's amendment provisions, are in the best interest of
the fund's shareholders. The Board of Trustees, including the
Independent Trustees, voted to approve the submission of the Amended
Contract to shareholders of the fund and recommends that shareholders
of the fund vote FOR the Amended Contract. If approved, the Amended
Contract will take effect on the first day of the month following
shareholder approval.
8. TO APPROVE AN AMENDED SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR EACH
FUND .
In conjunction with its portfolio management responsibilities on
behalf of each of the funds, FMR has entered into sub-advisory
agreements with affiliates whose offices are geographically dispersed
around the world. To strengthen these relationships, the Board of
Trustees proposes that shareholders of each fund approve a new
sub-advisory agreement (the Proposed Agreement) between FMR U.K. and
FMR with respect to the fund to replace FMR's existing agreement with
FMR U.K. The Proposed Agreement would allow FMR not only to receive
investment advice and research services from FMR U.K., but also would
permit FMR to grant FMR U.K. investment management authority if FMR
believes it would be beneficial to each fund and its shareholders. In
addition, the Proposed Agreement would allow FMR, FMR U.K., and the
trust, on behalf of each fund, to modify the Proposed Agreement
subject to the requirements of the 1940 Act. The existing sub-advisory
agreement currently in effect with FMR U.K. requires the vote of a
majority of each fund's outstanding voting securities to authorize all
amendments. Because FMR pays all of FMR U.K.'s fees, the Proposed
Agreement would not affect the fees paid by each fund to FMR.
On October 16, 1997 and July 16, 1998, the Board of Trustees agreed
to submit the Proposed Agreement to shareholders of each fund pursuant
to a unanimous vote of both the full Board of Trustees and those
Trustees who were not "interested persons" of the trust or FMR. FMR
provided substantial information to the Trustees to assist them in
their deliberations. The Trustees determined that allowing FMR to
grant investment management authority to FMR U.K. would provide FMR
increased flexibility in the assignment of portfolio managers and give
each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders
may benefit from giving FMR, through FMR U.K., the ability to execute
portfolio transactions from points in Europe that are physically
closer to foreign issuers and the primary markets in which their
securities are traded. Increasing FMR's proximity to foreign markets
should enable each fund to participate more readily in full trading
sessions on foreign exchanges, and to react more quickly to changing
market conditions. With regard to the proposed modification to the
existing sub-advisory agreement's amendment provisions, the Trustees
considered the benefit to shareholders of FMR's, FMR U.K.'s, and the
trust's increased flexibility (within 1940 Act constraints) to amend
the agreement without the delays and potential costs of a proxy
solicitation.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR U.K. with respect
to each fund (the Current Agreement). The Current Agreement for each
fund, dated November 1, 1993, was approved by each fund's shareholders
on October 20, 1993. A copy of the Proposed Agreement for each fund is
attached to this proxy statement as Exhibit 6.
FMR U.K., with its principal office in London, England, is a
wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This
research complements other research on foreign securities produced by
FMR's U.S.-based research analysts and portfolio managers, or obtained
from broker-dealers or other sources.
FMR U.K. may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR U.K.'s only
client other than FMR is Fidelity International Limited (FIL), an
affiliate of FMR organized under the laws of Bermuda. FIL provides
investment advisory services to non-U.S. investment companies and
institutional investors investing in securities of issuers throughout
the world. Edward C. Johnson 3d, President and a Trustee of the trust,
is Chairman and a Director of FMR U.K., Chairman and a Director of
FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR U.K., see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page .
Under the Current Agreement, FMR U.K. acts as an investment
consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests
on behalf of each fund. FMR U.K. provides investment advice and
research services with respect to issuers located outside of the
United States, focusing primarily on companies based in Europe. Under
the Current Agreement with FMR U.K., FMR, NOT EACH FUND, pays FMR
U.K.'s fee equal to 110% of its costs incurred in connection with the
agreement.
For the fiscal year ended September 30, 1998, FMR paid FMR U.K.
$325,286 and $173,011, on behalf of Destiny I and Destiny II,
respectively. Fees paid to the sub-adviser are not reduced to reflect
expense reimbursements or fee waivers by FMR, if any, in effect from
time to time.
Under the Current Agreement, FMR U.K. has no authority to make
investment decisions on behalf of the funds. Under the Proposed
Agreement, FMR would continue to receive investment advice from FMR
U.K., but it could also grant investment management authority to FMR
U.K. with respect to all or a portion of each fund's assets. If FMR
U.K. were to exercise investment management authority on behalf of the
fund, it would be required, subject to the supervision of FMR, to
direct the investments of the fund in accordance with the fund's
investment objective, policies, and limitations as provided in each
fund's Prospectus or other governing instruments and such other
limitations as each fund may impose by notice in writing to FMR or FMR
U.K. If FMR grants investment management authority to FMR U.K. with
respect to all or a portion of the fund's assets, FMR U.K. would be
authorized to buy or sell stocks, bonds, and other securities for the
fund subject to the overall supervision of FMR and the Board of
Trustees. In addition, the Proposed Agreement would authorize FMR to
delegate other investment management services to FMR U.K., including,
but not limited to, currency management services (including buying and
selling currency options and entering into currency forward and
futures contracts on behalf of each fund), other transactions in
futures contracts and options, and borrowing or lending portfolio
securities. If any of these investment management services were
delegated, FMR U.K. would continue to be subject to the control and
direction of FMR and the Board of Trustees and to be bound by the
investment objective, policies, and limitations of each fund.
The Proposed Agreement would also allow FMR, FMR U.K., and the trust,
on behalf of each fund, to amend the Proposed Agreement subject to the
provisions of Section 15 of the 1940 Act, as modified or interpreted
by the Securities and Exchange Commission. In contrast, the Current
Agreement explicitly requires the vote of a majority of the
outstanding voting securities of each fund to authorize all
amendments. Generally, the proposed modification to the Current
Agreement's amendment provisions would allow amendment of the
sub-advisory agreement without shareholder vote ONLY IF THE 1940 ACT
SO PERMITS. In short, the proposed modification gives FMR, FMR U.K.,
and the trust added flexibility to amend the sub-advisory agreement
subject to 1940 Act constraints. Of course, any future amendments to
the sub-advisory agreement would require the approval of the Board of
Trustees.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY
EACH FUND. The fees paid by FMR to FMR U.K. for investment advice as
described above would remain unchanged. However, to the extent that
FMR granted investment management authority to FMR U.K., FMR would pay
FMR U.K. 50% of its monthly management fee with respect to the average
net assets managed on a discretionary basis by FMR U.K. for investment
management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following approval and would
continue in force until July 31, 2000 and from year to year
thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested
persons" of the trust or FMR and (ii) the vote of either a majority of
the Trustees or by the vote of a majority of the outstanding shares of
each fund.
The Proposed Agreement could be transferred to a successor of FMR
U.K. without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment
under applicable securities laws or regulations. The Proposed
Agreement would be terminable on 60 days' written notice by either
party to the agreement and the Proposed Agreement would terminate
automatically in the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. With respect to each fund, if the Proposed
Agreement is approved by shareholders, the Proposed Agreement will
take effect on the first day of the first month following approval.
With respect to each fund, if the Proposed Agreement is not approved,
FMR will continue to manage that fund under its current Management
Contract and the Current Agreement with FMR U.K. will remain in
effect.
9. TO APPROVE AN AMENDED SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR
EACH FUND.
In conjunction with its portfolio management responsibilities on
behalf of each of the funds, FMR has entered into sub-advisory
agreements with affiliates whose offices are geographically dispersed
around the world. To strengthen these relationships, the Board of
Trustees proposes that shareholders of each fund approve a new
sub-advisory agreement (the Proposed Agreement) between FMR Far East
and FMR with respect to the fund to replace FMR's existing agreement
with FMR Far East. The Proposed Agreement would allow FMR not only to
receive investment advice and research services from FMR Far East, but
also would permit FMR to grant FMR Far East investment management
authority if FMR believes it would be beneficial to each fund and its
shareholders. In addition, the Proposed Agreement would allow FMR, FMR
Far East, and the trust, on behalf of each fund, to modify the
Proposed Agreement subject to the requirements of the 1940 Act. The
existing sub-advisory agreement currently in effect with FMR Far East
requires the vote of a majority of each fund's outstanding voting
securities to authorize all amendments. Because FMR pays all of FMR
Far East's fees, the Proposed Agreement would not affect the fees paid
by each fund to FMR.
On October 16, 1997 and July 16, 1998, the Board of Trustees agreed
to submit the Proposed Agreement to shareholders of each fund pursuant
to a unanimous vote of both the full Board of Trustees and those
Trustees who were not "interested persons" of the trust or FMR. FMR
provided substantial information to the Trustees to assist them in
their deliberations. The Trustees determined that allowing FMR to
grant investment management authority to FMR Far East would provide
FMR increased flexibility in the assignment of portfolio managers and
give each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders
may benefit from giving FMR, through FMR Far East, the ability to
execute portfolio transactions from points in the Far East that are
physically closer to foreign issuers and the primary markets in which
their securities are traded. Increasing FMR's proximity to foreign
markets should enable each fund to participate more readily in full
trading sessions on foreign exchanges and to react more quickly to
changing market conditions. With regard to the proposed modification
to the existing sub-advisory agreement's amendment provisions, the
Trustees considered the benefit to shareholders of FMR's, FMR Far
East's, and the trust's increased flexibility (within 1940 Act
constraints) to amend the agreement without delays and potential costs
of a proxy solicitation.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR Far East with
respect to each fund (the Current Agreement). The Current Agreement
for each fund, dated November 1, 1993, was approved by each fund's
shareholders on October 20, 1993. A copy of the Proposed Agreement for
each fund is attached to this proxy statement as Exhibit 7.
FMR Far East, with its principal office in Tokyo, Japan, is a
wholly-owned subsidiary of FMR established in 1986 to provide
investment research to FMR with respect to foreign securities. This
research complements other research on foreign securities produced by
FMR's U.S.-based research analysts and portfolio managers, or obtained
from broker-dealers or other sources.
FMR Far East may also provide investment advisory services to FMR
with respect to other investment companies for which FMR serves as
investment adviser, and to other clients. Currently, FMR Far East's
only client other than FMR is Fidelity International Limited (FIL), an
affiliate of FMR organized under the laws of Bermuda. FIL provides
investment advisory services to non-U.S. investment companies and
institutional investors investing in securities of issuers throughout
the world. Edward C. Johnson 3d, President and a Trustee of the trust,
is Chairman and a Director of FMR Far East, Chairman and a Director of
FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR Far East, see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page .
Under the Current Agreement, FMR Far East acts as an investment
consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests
on behalf of each fund. FMR Far East provides investment advice and
research services with respect to issuers located outside of the
United States, focusing primarily on companies based in the Far East.
Under the Current Agreement with FMR Far East, FMR, NOT EACH FUND,
pays FMR Far East's fee equal to 105% of its costs incurred in
connection with the agreement.
For the fiscal year ended September 30, 1998, FMR paid FMR Far East
$311,961 and $165,398, on behalf of Destiny I and Destiny II,
respectively. Fees paid to the sub-adviser are not reduced to reflect
expense reimbursements or fee waivers by FMR, if any, in effect from
time to time.
Under the Current Agreement, FMR Far East has no authority to make
investment decisions on behalf of the funds. Under the Proposed
Agreement, FMR would continue to receive investment advice from FMR
Far East, but it could also grant investment management authority to
FMR Far East with respect to all or a portion of each fund's assets.
If FMR Far East were to exercise investment management authority on
behalf of the fund, it would be required, subject to the supervision
of FMR, to direct the investments of the fund in accordance with the
fund's investment objective, policies, and limitations as provided in
each fund's Prospectus or other governing instruments and such other
limitations as each fund may impose by notice in writing to FMR or FMR
Far East. If FMR grants investment management authority to FMR Far
East with respect to all or a portion of the fund's assets, FMR Far
East would be authorized to buy or sell stocks, bonds, and other
securities for the fund subject to the overall supervision of FMR and
the Board of Trustees. In addition, the Proposed Agreement would
authorize FMR to delegate other investment management services to FMR
Far East, including, but not limited to, currency management services
(including buying and selling currency options and entering into
currency forward and futures contracts on behalf of each fund), other
transactions in futures contracts and options, and borrowing or
lending portfolio securities. If any of these investment management
services were delegated, FMR Far East would continue to be subject to
the control and direction of FMR and the Board of Trustees and to be
bound by the investment objective, policies, and limitations of each
fund.
The Proposed Agreement would also allow FMR, FMR Far East, and the
trust, on behalf of each fund, to amend the Proposed Agreement subject
to the provisions of Section 15 of the 1940 Act, as modified or
interpreted by the Securities and Exchange Commission. In contrast,
the Current Agreement explicitly requires the vote of a majority of
the outstanding voting securities of each fund to authorize all
amendments. Generally, the proposed modification to the Current
Agreement's amendment provisions would allow amendment of the
sub-advisory agreement without shareholder vote ONLY IF THE 1940 ACT
SO PERMITS. In short, the proposed modification gives FMR, FMR Far
East, and the trust added flexibility to amend the sub-advisory
agreement subject to 1940 Act constraints. Of course, any future
amendments to the sub-advisory agreement would require the approval of
the Board of Trustees.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY
EACH FUND. The fees paid by FMR to FMR Far East for investment advice
as described above would remain unchanged. However, to the extent that
FMR granted investment management authority to FMR Far East, FMR would
pay FMR Far East 50% of its monthly management fee with respect to the
average net assets managed on a discretionary basis by FMR Far East
for investment management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following approval and would
continue in force until July 31, 2000 and from year to year
thereafter, but only as long as its continuance was approved at least
annually by (i) the vote, cast in person at a meeting called for the
purpose, of a majority of those Trustees who are not "interested
persons" of the trust or FMR and (ii) the vote of either a majority of
the Trustees or by the vote of a majority of the outstanding shares of
each fund.
The Proposed Agreement could be transferred to a successor of FMR Far
East without resulting in its termination and without shareholder
approval, as long as the transfer did not constitute an assignment
under applicable securities laws or regulations. The Proposed
Agreement would be terminable on 60 days' written notice by either
party to the agreement and the Proposed Agreement would terminate
automatically in the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal
will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. With respect to each fund, if the Proposed
Agreement is approved by shareholders, the Proposed Agreement will
take effect on the first day of the first month following approval.
With respect to each fund, if the Proposed Agreement is not approved,
FMR will continue to manage that fund under its current Management
Contract and the Current Agreement with FMR Far East will remain in
effect.
10. TO APPROVE A DISTRIBUTION AND SERVICE PLAN PURSUANT TO RULE 12B-1
FOR EACH FUND.
The Board of Trustees has approved, and recommends that shareholders
of Destiny I and Destiny II approve, a Distribution and Service Plan
(the Plan) for shares of each fund. FMR anticipates
launching a new class of shares of each fund in May 1999, which will
be designated Class N. On or about the launch date of the new class of
shares, existing shares of each fund are expected to be designated
Class O. The following proposal will affect only existing shares of
each fund, referred to herein as Class O shares. A copy of the
form of Plan , marked to reflect the proposed designation of
existing shares as Class O shares, is attached to this Proxy
Statement as Exhibit 8.
THE PLAN. The Plan was approved by the Board as provided for by Rule
12b-1 (the Rule) promulgated by the Securities and Exchange Commission
(SEC) under the 1940 Act. The Rule provides that, an investment
company (e.g., a mutual fund) acting as a distributor of its shares
must do so pursuant to a written Plan "describing all material aspects
of the proposed financing of distribution.'' Under the Rule, an
investment company is deemed to be acting as a distributor of its
shares if it engages "directly or indirectly in financing any activity
which is primarily intended to result in the sale of shares issued by
such company, including, but not necessarily limited to, advertising,
compensation of underwriters, dealers, and sales personnel, the
printing and mailing of prospectuses to other than current
shareholders, and the printing and mailing of sales literature.''
The Plan is designed to avoid legal uncertainties which may arise
from the ambiguity of the phrase "primarily intended to result in the
sale of shares'' and from the term "indirectly'' as used in the Rule.
The SEC has neither approved nor disapproved the Plan.
The Plan contemplates that all expenses relating to the distribution
of Class O shares shall be paid for by FMR, or Fidelity Distributors
Corporation (FDC), a wholly owned subsidiary of FMR Corp., out of past
profits and other resources, including management fees paid by each
fund to FMR. The Plan also recognizes that FMR, either directly or
through FDC, may make payments from these sources to securities
dealers and to other third parties who engage in the sale of Class O
shares or who render shareholder services. The Plan provides that, to
the extent that a fund's payment of management fees to FMR might be
considered to constitute the "indirect'' financing of activities
"primarily intended to result in the sale of shares,'' such payment is
expressly authorized. THE PLAN DOES NOT AUTHORIZE PAYMENTS BY EACH
FUND OTHER THAN THOSE THAT ARE TO BE MADE TO FMR UNDER ITS MANAGEMENT
CONTRACT.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plan. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any
specific type of distribution activity or to incur any specific level
of expense for such activities.
The Plan contains a number of provisions relating to reporting
obligations and to its amendment and termination as required by the
Rule. If approved by shareholders, the Plan will continue in
effect as long as its continuance is specifically approved at least
annually by a majority of the Board of Trustees, including a majority
of the Trustees who are not "interested persons'' of the trust and who
have no direct or indirect financial interest in the operation of the
Plan or any agreement related to the Plan (the non-interested
Trustees), cast in person at a meeting called for the purpose of
voting on the Plan. The Plan may be amended at any time by the
Trustees, except that it may not be amended to authorize direct
payments by each fund to finance any activity primarily intended to
result in the sale of Class O shares issued by each fund or to
increase materially the amount spent by each fund for distribution
without the approval of a majority of the outstanding Class O shares
of each fund and the Trustees. In addition, any amendment of each
fund's Management Contract to increase the amount paid by the fund to
FMR shall be effective only upon approval by vote of a majority of the
outstanding voting securities of the fund. All material amendments to
the Plan also must be approved by a majority of the non-interested
Trustees. The Plan, and any agreements related to the Plan, may be
terminated at any time by a vote of the majority of the non-interested
Trustees or by a vote of the majority of the outstanding Class O
shares of each fund. The Plan requires that the Trustees receive, at
least quarterly, a written report as to the amounts expended during
the quarter by FMR, or FDC, in connection with financing any activity
primarily intended to result in the sale of Class O shares issued by
each fund, and the purposes for which such expenditures were made. As
required by the Rule, while the Plan is in effect, the selection and
nomination of those Trustees who are not "interested persons" shall be
committed to the discretion of the non-interested Trustees then in
office.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of
the Plan, the Board considered a variety of factors and was advised by
counsel who are not counsel to FMR or FDC. The Trustees believe that
the fees paid by each fund to FMR under the Management Contracts are
fair and reasonable, that the services provided thereunder are
necessary and appropriate for each fund and its shareholders, and that
each fund does not indirectly finance the distribution of its Class O
shares in contravention of the Rule. Nonetheless, the Trustees
concluded that adoption of the Plan would avoid legal uncertainties
which might arise as a result of what they and FMR believes to be
potentially subjective and ambiguous language contained in the Rule
and in public releases issued by the SEC in connection with the
proposal and adoption of the Rule (SEC Releases). The Trustees believe
that the adoption of the Plan is advisable to minimize such legal
uncertainties and to provide other benefits to each fund and its
shareholders.
The Trustees noted that each fund's Plan does not involve any direct
payment by the fund to finance any activity primarily intended to
result in the sale of Class O shares issued by the fund, and that any
amendment of each fund's Management Contract with FMR to increase the
amount paid by the fund thereunder would require approval of both the
Trustees and the fund's shareholders. The Trustees also considered the
factors suggested in the SEC Releases including: the need for
independent counsel or experts to assist the Trustees in reaching a
determination; the nature and causes of the problems and circumstances
which made consideration of a Plan appropriate; the way in which a
Plan would resolve or alleviate the problems, including the nature and
approximate amount of the expenditures contemplated by the Plan; the
merits of possible alternatives to the Plan; the interrelationship
between the Plan and the activities of FMR in financing the
distribution of each fund's Class O shares; the possible benefits of
the Plan to FMR and its affiliates relative to those expected to
accrue to each fund; and consequently the effects of the Plan on
existing shareholders.
The reduction in legal uncertainties arising from the potentially
subjective and ambiguous language that appears in the Rule and in the
SEC Releases enables the Trustees, in connection with their review of
each fund's Management Contract with FMR, to consider the full range
of services provided by FMR and FDC, including services which may be
related to the distribution of each fund's Class O shares. In
addition, the Board of Trustees considered alternatives to the Plan,
including direct payments by each fund to FDC and/or third parties and
the implementation of a sales load. The Trustees believe it is
appropriate to ensure that FMR and FDC have the flexibility to direct
their distribution activities in a manner consistent with prevailing
market conditions by using, subject to approval of the Trustees, their
resources, including the current management fee, to make payments to
third parties. To the extent that FMR has greater flexibility under
the Plan, additional sales of each fund's Class O shares may result.
The Trustees believe that this flexibility has the potential to
benefit each fund by reducing the possibility that each fund would
experience net redemptions, which might require the liquidation of
portfolio securities in amounts and at times that could be
disadvantageous for investment purposes. Of course, there can be no
assurance that these events will occur.
The Board of Trustees recognized that a greater level of fund assets
benefits FMR by increasing its management fee revenues. The Board
noted the high quality of investment management services and the
expansion of, and many innovations in, investor services that have
been provided by FMR over the years. The Board believes that revenues
received by FMR contribute to its continuing ability to attract and
retain a high caliber of investment and other personnel and to develop
and implement new systems for providing services and information to
shareholders. The Board considers this ability to be an important
benefit to each fund and its shareholders.
CONCLUSION. For the reasons stated above, the members of the Board of
Trustees unanimously concluded in the exercise of their business
judgment and in light of their fiduciary duties under state law and
the 1940 Act that there is a reasonable likelihood that the Plan will
benefit each fund and its shareholders. The Trustees recommend that
shareholders of each fund vote FOR approval of the Plan. With respect
to each fund, if the Plan is not approved, the Board and FMR will
consider alternative means of obtaining the services that are to be
provided under the Plan.
11. TO ELIMINATE A FUNDAMENTAL INVESTMENT POLICY OF EACH FUND.
The Board of Trustees has approved, and recommends that shareholders
of each fund approve, a proposal that would eliminate a fundamental
investment policy of each fund. The elimination of this policy will
allow each fund to more clearly communicate its investment
strateg ies in conformity with the requirements of newly revised
Form N-1A (the form used by open-end investment companies like the
funds to register under the 1940 Act and the Securities Act of 1933).
The elimination of this investment policy is not expected to affect
the way each fund is managed.
DISCUSSION OF PROPOSED MODIFICATION. Each fund's investment objective
is to seek capital growth. The funds currently have an investment
policy that reads as follows:
"Although many of the securities in each fund's portfolio at any
given time may be income-producing, income generally will not be a
consideration in the selection of securities."
Because the forgoing investment policy is fundamental, it cannot be
eliminated without a vote of the fund's shareholders.
Eliminating this policy will allow each fund to better comply with
the requirements of revised Form N-1A for concise, understandable
descriptions of its investment strategies , will allow each fund
to more clearly communicate its investment strateg ies to
shareholders and will allow FMR to standardize investment disclosure
across Fidelity funds with similar investment disciplines.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental policy will benefit each fund
and its shareholders. Accordingly, the Trustees recommend that
shareholders of each fund vote FOR the proposal. If approved by
shareholders, the elimination of the policy will become effective when
disclosure is revised to reflect the change. If the proposal is not
approved by a fund's shareholders, that fund's current investment
policy will remain unchanged.
12. TO AMEND EACH FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION.
The primary purpose of this proposal is to revise an investment
limitation of each fund to conform to a limitation which is standard
for similar types of funds managed by FMR. The Board of Trustees asked
FMR to analyze the various fundamental and non-fundamental investment
limitations of the Fidelity funds, and, where practical and
appropriate to a fund's investment objective and policies, propose to
shareholders adoption of standard fundamental limitations and
elimination of certain other fundamental limitations.
It is not anticipated that this proposal will substantially affect
the way a fund is currently managed. However, FMR is presenting it to
you for your approval because FMR believes that increased
standardization will help to promote operational efficiencies and
facilitate monitoring of compliance with fundamental and
non-fundamental investment limitations. Although adoption of a new or
revised limitation is not likely to have any impact on the current
investment techniques employed by a fund, it will contribute to the
overall objectives of standardization.
Each fund's current fundamental investment limitation concerning
diversification is as follows:
"The fund may not 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) 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 Trustees recommend that shareholders of each fund vote to replace
each fund's current fundamental investment limitation with the
following amended fundamental investment limitation governing
diversification (additional language is ((underlined)) and deleted
language is [bracketed]):
"The fund may not 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. [g]((G))overnment 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 percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies. The amended
fundamental diversification limitation makes one change from the
current limitation: subject to applicable 1940 Act requirements, it
would permit each fund to invest without limit in the securities of
other investment companies.
Pursuant to an order of exemption granted by the SEC, each fund may
invest up to 25% of total assets in non-publicly offered money market
or short-term bond funds (the Central Funds) managed by FMR or an
affiliate of FMR. The Central Funds do not currently pay investment
advisory, management, or transfer agent fees, but do pay minimal fees
for services, such as custodian, auditor, and Independent Trustees
fees. FMR anticipates that making use of the Central Funds will
benefit each fund by enhancing the efficiency of cash management and
by providing increased short-term investment opportunities. If the
proposal is approved, the Central Funds are expected to serve as a
principal option for cash investment for each fund.
If this proposal is approved, this fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the shareholders of a fund, that
fund's current fundamental diversification limitation will remain
unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the
Meeting, it is the intention that proxies that do not contain specific
instructions to the contrary will be voted on such matters in
accordance with the judgment of the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to
a number of investment companies. Information concerning the advisory
fees and average net assets of funds with investment objectives
similar to Destiny I and Destiny II and advised by FMR is contained in
the Table of Average Net Assets and Expense Ratios in Exhibit 9
beginning on page 92 .
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions that have occurred to date have included mortgages
and personal and general business loans. In the judgment of FMR, the
terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. With the exception of Robert C. Pozen, who is
proposed for election as a Trustee, each of the Directors is also a
Trustee of the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead,
John H. Costello, Eric D. Roiter, Richard A. Silver, Leonard M. Rush,
Abigail Johnson, Beth F. Terrana (Destiny II) and George A.
Vanderheiden (Destiny I) are currently officers of the trust and
officers or employees of FMR or FMR Corp. With the exception of Mr.
Costello and Mr. Silver, all of these persons hold or have
options to acquire stock of FMR Corp. The principal business address
of each of the Directors of FMR is 82 Devonshire Street, Boston,
Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period October 1, 1997 through February 28, 1999, no
transactions were entered into by Trustees and nominees as Trustee of
the trust involving more than 1% of the voting common, non-voting
common and equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed
in 1986 to provide research and investment advice with respect to
companies based outside the United States for certain funds for which
FMR acts as investment adviser. FMR may also grant the sub-advisers
investment management authority as well as authority to buy and sell
securities for certain of the funds for which it acts as investment
adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to Destiny I and Destiny II
managed by FMR with respect to which FMR currently has sub-advisory
agreements with either FMR U.K. or FMR Far East, and the net assets of
each of these funds, are indicated in the Table of Average Net Assets
and Expense Ratios in Exhibit 9 beginning on page 93 .
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is
President and a Trustee of the trust and other funds advised by FMR;
Chairman and a Director of Fidelity Investments Money Management, Inc.
(FIMM); Chairman, Chief Executive Officer, President, and a Director
of FMR Corp., and a Director and Chairman of the Board and of the
Executive Committee of FMR. In addition, Mr. Pozen is Senior Vice
President of the trust and of other funds advised by FMR; President
and a Director of FMR; and President and a Director of FIMM. Each of
the Directors is a stockholder of FMR Corp. The principal business
address of the Directors is 82 Devonshire Street, Boston,
Massachusetts 02109.
PRESENT MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other
services. Under its management contract with each fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of each fund in accordance with its
investment objective, policies, and limitations. FMR also provides
each fund with all necessary office facilities and personnel for
servicing each fund's investments, compensates all officers of each
fund and all Trustees who are "interested persons" of the trust or of
FMR, and all personnel of each fund or FMR performing services
relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal and state laws;
developing management and shareholder services for each fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contract described in Proposals 6 and 7.
In addition to the management fee payable to FMR, each fund pays
transfer agent and pricing and bookkeeping fees to Fidelity Service
Company, Inc.(FSC), an affiliate of FMR, its transfer, dividend
disbursing, and shareholder servicing agent. Although each fund's
current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders, the
trust, on behalf of each fund has entered into a revised transfer
agent agreement with FSC, pursuant to which FSC bears the costs of
providing these services to existing shareholders. Other expenses paid
by each fund include interest, taxes, brokerage commissions, and each
fund's proportionate share of insurance premiums and Investment
Company Institute dues. Each fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation
to which each fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FSC by Destiny I and
Destiny II for fiscal year 1998 amounted to $1,207,512, and
$1,023,397, respectively.
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. Each
distribution agreement calls 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 net asset value per share.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
FMR is each fund's manager pursuant to management contracts each
dated November 1, 1993, which were approved by shareholders on October
20, 1993. For Destiny I, shareholder approval had been requested to
bring Destiny I's management fee more in line with fees paid by
similar Fidelity funds by increasing the fee. For Destiny II,
shareholder approval had been requested to change the management fee
calculation to provide for lower fees when FMR's assets under
management exceeded certain levels, and to include a paragraph
clarifying the contract's fee computation procedures in the event of
termination.
For the services of FMR under the management contract, each fund pays
FMR a monthly management fee which has two components: a basic fee,
which is the sum of a group fee rate and an individual fund fee rate,
and a performance adjustment based on a comparison of each fund's
performance to that of the Standard & Poor's 500 Index (S&P 500).
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $591 billion of group net assets - the approximate level for
September 1998 - was .2911%, which is the weighted average of the
respective fee rates for each level of group net assets up to $591
billion.
On January 1, 1996 and August 1, 1994, FMR voluntarily modified the
breakpoints in the group fee rate schedules. The revised group fee
rate schedules, depicted below, provides for lower management fee
rates as FMR's assets under management increase.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .5200% $0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
</TABLE>
The individual fund fee rate is 0.17% for Destiny I and 0.30% for
Destiny II. Based on the average group net assets of the funds advised
by FMR for September 1998, each fund's annual basic fee rate would be
calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management/Basic Fee Rate
Destiny I .2911% + .1700% = .4611%
Destiny II .2911% + .3000% = .5911%
</TABLE>
One-twelfth of this annual basic fee rate is applied to each fund's
net assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Destiny I and
Destiny II is subject to upward or downward adjustment, depending upon
whether, and to what extent, the fund's investment performance for the
performance period exceeds, or 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. Each percentage
point of difference, calculated to the nearest 1.00% is multiplied by
a performance adjustment rate of 0.02%. The maximum adjustment rate is
limited to +/-0.24% of the average net assets up to and including
$100,000,000 and +/-0.20% of the average net assets in excess of
$100,000,000. This 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 added to (or subtracted from) the basic fee.
Each fund's performance is calculated based on change in net asset
value (NAV). For purposes of calculating the performance adjustment,
any dividends or capital gain distributions paid by each fund are
treated as if reinvested in 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 Destiny I's and
Destiny II's performance compared to the investment record of the
Index, the controlling factor is not whether Destiny I's and Destiny
II's performance is up or down, but whether it is up or down more or
less than the record of the Index. Moreover, the comparative
investment performance of Destiny I and Destiny II is based solely on
the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
During fiscal 1998, FMR received $19,657,092 and $18,377,658,
respectively, for its services as investment adviser to Destiny I and
Destiny II. These fees, which include both the basic fee and the
performance adjustment, were equivalent to .3071% and .4528%,
respectively, of the average net assets of Destiny I and Destiny II.
For 1998, the downward performance adjustments amounted to $9,828,127,
and $5,588,522, respectively, for Destiny I and Destiny II.
FMR may, from time to time, agree to reimburse all or a portion of
each fund's total 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.
SUB-ADVISORY AGREEMENTS
On behalf of Destiny I and Destiny II, FMR has entered into
sub-advisory agreements with FMR U.K. and FMR Far East. Pursuant to
the sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisers. The
funds' sub-advisory agreements, each dated November 1, 1993 were
approved by shareholders of each fund on October 20, 1993.
Currently, FMR U.K. and FMR Far East each focus on issuers in
countries other than the United States such as those in Europe, Asia,
and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. Under the sub-advisory agreements FMR pays
the fees of FMR U.K. and FMR Far East. For providing non-discretionary
investment advice and research services, FMR pays FMR U.K. and FMR Far
East fees equal to 110% and 105%, respectively, of FMR U.K.'s and FMR
Far East's costs incurred in connection with providing investment
advice and research services.
For providing investment advice and research services on behalf of
each fund, the fees paid to the sub-advisers for the fiscal year ended
1998 were as follows:
FMR U.K. FMR Far East
Destiny I $ 325,286 $ 311,961
Destiny II $ 173,011 $ 165,398
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained
in the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (Japan), LLC
(FBSJ), indirect subsidiaries of FMR Corp., if the commissions are
fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior
to December 9, 1997, FMR used research services provided by and placed
agency transactions with Fidelity Brokerage Services (FBS), an
indirect subsidiary of FMR Corp.
The brokerage commissions paid to NFSC and FBS by each fund for
fiscal 1998 are listed in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Brokerage Commissions
Paid to % of Aggregate Commissions Brokerage Commissions Paid to % of Aggregate Commissions
NFSC Paid to NFSC FBS Paid to FBS
Destiny I $ 379,953 14.78% $ 6,480 0.25%
Destiny II $ 737,785 14.81% $ 3,960 0.08%
</TABLE>
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, by calling your Destiny Portfolios'
representative at 1-800-225-5270 , whether other persons are
beneficial owners of shares for which proxies are being solicited and,
if so, the number of copies of the Proxy Statement and Annual Reports
you wish to receive in order to supply copies to the beneficial owners
of the respective shares.
EXHIBIT 1
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
The language to be added to the current Declaration of Trust is
((underlined)), and the language to be deleted is set forth in
[brackets]. Headings that were underlined in the trust's current
Declaration of Trust remain underlined in this Exhibit.
[DECLARATION OF TRUST]
[DATED JUNE 20, 1984]
((AMENDED AND RESTATED)) DECLARATION OF TRUST, made [June 20, 1984]
_______, ((1999)) by [Edward C. Johnson 3d, Caleb Loring, Jr., and
Frank Nesvet] ((each of the Trustees whose signature is affixed
hereto)) (the "Trustees")((.))
((WHEREAS, the Trustees desire to amend and restate this Declaration
of Trust for the sole purpose of supplementing the Declaration of
Trust to incorporate amendments duly adopted; and))
((WHEREAS, this Trust was initially made on June 20, 1984 by Edward
C. Johnson 3d, Caleb Loring, Jr., and Frank Nesvet, in order to
establish a trust fund for the investment and reinvestment of funds
contributed thereto;))
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
trust under this ((Amended and Restated)) Declaration of Trust [IN
TRUST] as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
SECTION 1. This Trust shall be known as "Fidelity Destiny
Portfolios."
DEFINITIONS
SECTION 2. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The [T]((t))erms "Affiliated Person((,))"[,] "Assignment((,))"[,]
"Commission((,))"[,] "Interested Person((,))"[,] "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable)((,)) and
"Principal Underwriter" shall have the meanings given them in the 1940
Act, as [amended from time to time] ((modified by or interpreted by
any applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission
thereunder;))
(((b) "Bylaws" shall mean the bylaws of the Trust, if any, as amended
from time to time;))
(((c) "Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III;))
(((d) "Declaration of Trust" means this Amended and Restated
Declaration of Trust, as further amended or restated, from time to
time;))
[(c)](((e))) "Net Asset Value" means the net asset value of each
Series of the Trust ((or Class thereof)) determined in the manner
provided in Article X, Section 3;
[(d)](((f))) "Shareholder" means a record owner of Shares of the
Trust;
[(f)](((g))) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest of ((the Trust
or)) each Series shall be divided from time to time, [and includes]
((including such Class or Classes of Shares as the Trustees may from
time to time create and establish and including)) fractions of
[s]((S))hares as well as whole [s]((S))hares as consistent with the
requirements of Federal and/or [other] ((state)) securities laws;
[and]
(h) "Series" refers to ((any)) series of Shares of the Trust
established in accordance with the provisions of Article III[.]((;))
[(b)](((i))) [The] "Trust" refers to Fidelity Destiny Portfolios and
reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;
[(e)](((j))) [The] "Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their successor
or successors for the time being in office as such trustee or
trustees; ((and))
[(g)](((k))) [The] "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source
of managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
SECTION 1. The beneficial interest in the Trust shall be divided into
such transferable Shares of one or more separate and distinct Series
((or Classes of Series)) as the Trustees shall((,)) from time to
time((,)) create and establish. The number of ((authorized)) Shares
((of each Series, and Class thereof,)) is unlimited((.)) [and each]
((Each)) Share shall be without par value and shall be fully paid and
nonassessable. The Trustees shall have full power and authority, in
their sole discretion((,)) and without obtaining any prior
authorization or vote of the Shareholders ((of any Series or Class))
of the Trust (((a))) to create and establish (and to change in any
manner) Shares ((or any Series or Classes thereof)) with such
preferences, voting powers, rights((,)) and privileges as the Trustees
may((,)) from time to time((,)) determine[,]((;)) (((b))) to divide or
combine the Shares ((or any Series or Classes thereof)) into a greater
or lesser number[,]((;)) (((c))) to classify or reclassify any issued
Shares into one or more Series ((or Classes)) of Shares[,]((;))
(((d))) to abolish any one or more Series ((or Classes)) of
Shares[,]((;)) and (((e))) to take such other action with respect to
the Shares as the Trustees may deem desirable.
ESTABLISHMENT OF SERIES AND CLASSES
SECTION 2. The establishment of any Series ((or Class thereof)) shall
be effective upon the adoption of a resolution by a majority of the
then Trustees setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series ((or
Class)). At any time that there are no Shares outstanding of any
particular Series ((or Class)) previously established and designated,
the Trustees may by a majority vote abolish [that] ((such)) Series
((or Class)) and the establishment and designation thereof.
OWNERSHIP OF SHARES
SECTION 3. The ownership of Shares shall be recorded in the books of
the Trust ((or a transfer or similar agent)). The Trustees may make
such rules as they consider appropriate for the transfer of Shares and
similar matters. The record books of the Trust ((as kept by the Trust
or by any transfer or similar agent, as the case may be,)) shall be
conclusive as to who are the holders of Shares and as to the number of
Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
SECTION 4. The Trustees shall accept investments in the Trust from
such persons and on such terms as they may, from time to time((,))
authorize. Such investments may be in the form of cash((,)) [or]
securities((, or other property)) in which the appropriate Series is
authorized to invest, valued as provided in Article X, Section 3.
After the date of the initial contribution of capital, the number of
Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding((,)) and the amount received
by the Trustees on account of the contribution shall be treated as an
asset of the Trust. Subsequent investments in the Trust shall be
credited to each Shareholder's account in the form of full Shares at
the Net Asset Value per Share next determined after the investment is
received; provided, however, that the Trustees may, in their sole
discretion[,] (a) impose a sales charge ((or other fee)) upon
investments in the Trust ((or Series or any Classes thereof,)) and (b)
issue fractional Shares.
[ASSETS AND LIABILITIES OF SERIES]
((ASSETS AND LIABILITIES OF SERIES AND CLASSES))
SECTION 5. All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange((,)) or liquidation of such assets,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall be referred to as
"assets belonging to" that Series. In addition((,)) any assets,
income, earnings, profits, and proceeds thereof, funds, or payments
[which] ((that)) are not readily identifiable as belonging to any
particular Series ((or Class)), shall be allocated by the Trustees
between and among one or more of the Series ((or Classes)) in such
manner as they, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the
Shareholders of all Series ((or Classes)) for all purposes[,] and
shall be referred to as assets belonging to that Series ((or Class)).
The assets belonging to a particular Series shall be so recorded upon
the books of the Trust[,] ((or of its agent or agents)) and shall be
held by the Trustees in trust for the benefit of the holders of Shares
of that Series.
The assets belonging to each particular Series shall be charged with
the liabilities of that Series and all expenses, costs, charges((,))
and reserves attributable to that Series((, except that liabilities
and expenses may, in the Trustees' discretion, be allocated solely to
a particular Class and, in which case, shall be borne by that Class)).
Any general liabilities, expenses, costs, charges((,)) or reserves of
the Trust [which] ((that)) are not readily identifiable as belonging
to any particular Series ((or Class)) shall be allocated and charged
by the Trustees between or among any one or more of the Series ((or
Classes)) in such manner as the Trustees((,)) in their sole
discretion((,)) deem fair and equitable[,] ((and shall be referred to
as "liabilities belonging to" that Series or Class)). Each such
allocation shall be conclusive and binding upon the Shareholders of
all Series ((or Classes)) for all purposes. Any creditor of any Series
may look only to the assets of that Series to satisfy such creditor's
debt. ((No Shareholder or former Shareholder of any Series shall have
a claim on or any right to any assets allocated or belonging to any
other Series.))
NO PREEMPTIVE RIGHTS
SECTION 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the
Trust or the Trustees.
[LIMITATION OF PERSONAL LIABILITY]
((STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY))
SECTION 7. ((Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every shareholder by
virtue of having become a shareholder shall be held to have expressly
assented and agreed to be bound by the terms hereof. No Shareholder of
the Trust and of each Series shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or by or on behalf of
any Series.)) The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum
of money or assessment whatsoever other than such as the Shareholder
may((,)) at any time((,)) personally agree to pay by way of
subscription for any Shares or otherwise. Every note, bond,
contract((,)) or other undertaking issued by or on behalf of the Trust
or the Trustees relating to the Trust ((or to a Series)) shall include
a recitation limiting the obligation represented thereby to the Trust
((or to one or more Series)) and its ((or their)) assets (but the
omission of such a recitation shall not operate to bind any
Shareholder ((or Trustee))).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
SECTION 1. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable
to carry out that responsibility.
[ELECTION: INITIAL TRUSTEES]
((INITIAL TRUSTEES; ELECTION))
SECTION 2. ((The initial Trustees shall be at least three individuals
who shall affix their signatures hereto.)) On a date fixed by the
Trustees, the Shareholders shall elect not less than three Trustees. A
Trustee shall not be required to be a Shareholder of the Trust. [The
initial Trustees shall be Edward C. Johnson 3d, Caleb Loring, Jr. and
Frank Nesvet and such other individuals as the Board of Trustees shall
appoint pursuant to Section 4 of the Article IV.]
TERM OF OFFICE OF TRUSTEES
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a)
that any Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds (((2/3))) of the number of Trustees
prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be
retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may
be removed at any [S]((s))pecial [M]((m))eeting of the Trust by a vote
of two-thirds (((2/3))) of the outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
SECTION 4. In case of the declination, death, resignation,
retirement, ((or)) removal [, incapacity, or inability] of any of the
Trustees, ((or)) in case a vacancy shall, by reason of an increase in
number ((of the Trustees)), or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the
limitations under the [Investment Company Act of] 1940 ((Act)). Such
appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by recording in the records of
the Trust, whereupon the appointment shall take effect. [Within three
months of such appointment the Trustees shall cause notice of such
appointment to be mailed to each Shareholder at his address as
recorded on the books of the Trust.] An appointment of a Trustee may
be made by the Trustees then in office [and notice thereof mailed to
Shareholders as aforesaid] in anticipation of a vacancy to occur by
reason of retirement, resignation((,)) or increase in number of
Trustees effective at a later date, provided that said appointment
shall become effective only at or after the effective date of said
retirement, resignation((,)) or increase in number of Trustees. As
soon as any Trustee so appointed shall have accepted this
[t]((T))rust, the [t]((T))rust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further
act or conveyance, and he shall be deemed a Trustee hereunder. The
((foregoing)) power of appointment is subject to the provisions of
Section 16(a) of the 1940 Act((, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or
regulations adopted or interpretative releases of the Commission)).
[TEMPORARY ABSENCE OF TRUSTEE]
((TEMPORARY ABSENCE OF TRUSTEES))
SECTION 5. Any Trustee may, by power of attorney, delegate his power
for a period not exceeding six (((6))) months at any one time to any
other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as
herein otherwise expressly provided.
NUMBER OF TRUSTEES
SECTION 6. The number of Trustees, not less than three (3) nor more
than twelve (12), serving hereunder at any time shall be determined by
the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee [is absent from the
Commonwealth of Massachusetts or, if not a domiciliary of
Massachusetts, is absent from his state of domicile, or] is physically
or mentally incapacitated by reason of disease or otherwise, the other
Trustees shall have all the powers hereunder and the certificate of
the other Trustees of such vacancy[, absence] or incapacity[,] shall
be conclusive[, provided, however, that no vacancy shall remain
unfilled for a period longer than six calendar months].
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
SECTION 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 8. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in
the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
SECTION 1. The Trustees, in all instances, shall act as principals[,]
and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts
and to make and execute any and all contracts and instruments that
they may consider necessary or appropriate in connection with the
management of the Trust. ((Except as otherwise provided herein or in
the 1940 Act,)) [T]((t))he Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to trust
investments, but shall have full authority and power to make any and
all investments [which] ((that)) they, in their [uncontrolled]
discretion, shall deem proper to accomplish the purpose of this Trust.
Subject to any applicable limitation in [the] ((this)) Declaration of
Trust or the Bylaws of the Trust, ((if any,)) the Trustees shall have
power and authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested[,] without((,)) in any event((,)) being
bound or limited by any present or future law or custom in regard to
investments by Trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on((,)) and lease any or all of
the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to
the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ [a] ((one or more)) bank((s,)) [or] trust [company]
((companies, companies that are members of a national securities
exchange, or other entities permitted under the 1940 Act, as modified
by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretative releases of the
Commission thereunder,)) as custodian((s)) of any assets of the Trust
subject to any conditions set forth in this Declaration of Trust or in
the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or
both.
(f) To provide for the distribution of interests of the Trust either
through a [p]((P))rincipal [u]((U))nderwriter in the manner
hereinafter provided for or by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any
officers of the Trust and to any [agent] ((investment adviser,
manager,)) custodian((,)) [or] underwriter, ((or other agent or
independent contractor)).
(i) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XII, Section 4[(b)] hereof.
(j) To vote or give assent[,] or exercise any rights of ownership[,]
with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered((,)) or other negotiable form;
or either in its own name or in the name of a custodian or a nominee
or nominees[, subject in either case to proper safeguards according to
the usual practice of Massachusetts trust companies or investment
companies].
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III ((and to establish
Classes of such Series having relative rights, powers, and duties as
the Trustees may provide consistent with applicable laws)).
(n) To allocate assets, liabilities((,)) and expenses of the Trust to
a particular Series ((or Class, as appropriate,)) or to apportion the
same between or among two or more Series ((or Classes, as
appropriate)), provided that any liabilities or expenses incurred by a
particular Series ((or Class)) shall be payable solely out of the
assets belonging to that Series as provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation((,)) or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including, but not
limited to, claims for taxes.
(q) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for.
(r) To borrow money and to pledge, mortgage((,)) [and] ((or))
hypothecate the assets of the Trust subject to ((the)) applicable
requirements of the 1940 Act.
(s) To establish, from time to time, a minimum total investment for
Shareholders[,] and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving
notice to such Shareholder.
(((t) To operate as and carry on the business of an investment
company and to exercise all the powers necessary and appropriate to
the conduct of such operations.))
(((u) To interpret the investment policies, practices or limitations
of any Series.))
(((v) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or
powers.))
(((w) Notwithstanding any other provision hereof, to invest all of
the assets of any Series in a single open-end investment company,
including investment by means of transfer of such assets in exchange
for an interest or interests in such investment company.))
((The foregoing clauses shall be construed both as objects and
powers, and the foregoing enumeration of specific powers shall not be
held to limit or restrict in any manner the general powers of the
Trustees. Any action by one or more of the Trustees in their capacity
as such hereunder shall be deemed an action on behalf of the Trust or
the applicable Series and not an action in an individual capacity.))
((The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust or any Series or
Class thereof.))
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see
to the application of any payments made or property transferred to the
Trustees or upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
SECTION 2. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any
such person of any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and
purchase of such Shares; and all subject to any restrictions which may
be contained in the Bylaws((,)) ((if any)).
ACTION BY THE TRUSTEES
SECTION 3. ((Except as otherwise provided herein or in the 1940
Act,)) [T]((t))he Trustees shall act by majority vote at a meeting
duly called or by unanimous written consent without a meeting or by
telephone consent provided a quorum of Trustees participate in any
such telephonic meeting, unless the 1940 Act requires that a
particular action be taken only at a meeting ((at which)) [of] the
Trustees ((are present in person)). At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the
Trustees or by any two other Trustees. Notice of the time, date((,))
and place of all meetings of the Trustees shall be given by the party
calling the meeting to each Trustee by telephone((,)) ((telefax)),
[or] telegram((,)) ((or other electro-mechanical means)) sent to his
home or business address at least twenty-four (((24))) hours in
advance of the meeting or by written notice mailed to his home or
business address at least seventy-two (((72))) hours in advance of the
meeting. Notice need not be given to any Trustee who attends the
meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one of their number their authority to approve
particular matters or take particular actions on behalf of the Trust.
((Written consents or waivers of Trustees may be executed in one or
more counterparts. Execution of a written consent or waiver and
delivery thereof to the Trust may be accomplished by telefax or other
electro-mechanical means.))
CHAIRMAN OF THE TRUSTEES
SECTION 4. The Trustees may appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the
Trust, and may be the chief executive, financial and accounting
officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
SECTION 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets
belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, fees and expenses of
Trustees who are not Interested Persons of the Trust[,]((;)) interest
expense, taxes, fees and commissions of every kind[,]((;)) expenses of
pricing Trust portfolio securities[,]((;)) expenses of issue,
repurchase and redemption of shares including expenses attributable to
a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and
[S]((s))tate laws and regulations[,]((;)) charges of custodians,
transfer agents, and registrars[,]((;)) expenses of preparing and
setting up in type [P]((p))rospectuses and [S]((s))tatements of
[A]((a))dditional [I]((i))nformation[,]((;)) expenses of printing and
distributing prospectuses sent to existing Shareholders[,]((;))
auditing and legal expenses[,]((;)) reports to Shareholders[,]((;))
expenses of meetings of Shareholders and proxy solicitations
therefor[,]((;)) insurance expense[,]((;)) association membership
dues((;)) and for such non-recurring items as may arise, including
litigation to which the Trust is a party[,]((;)) and for all losses
and liabilities by them incurred in administering the Trust, and for
the payment of such expenses, disbursements, losses((,)) and
liabilities the Trustees shall have a lien on the assets belonging to
the appropriate Series prior to any rights or interests of the
Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
INVESTMENT ADVISER
SECTION 1. Subject to a Majority Shareholder Vote, the Trustees
may((,)) in their discretion ((and)) from time to time((,)) enter into
an investment advisory or management contract(s) with respect to the
Trust or any Series thereof whereby the other party(ies) to such
contract(s) shall undertake to furnish the Trustees such management,
investment advisory, statistical((,)) and research facilities and
services and such other facilities and services, if any, and all upon
such terms and conditions, as the Trustees may((,)) in their
discretion((,)) determine. Notwithstanding any provisions of this
Declaration of Trust, the Trustees may authorize the investment
adviser(s) (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales or
exchanges of portfolio securities and other investment instruments of
the Trust on behalf of the Trustees or may authorize any officer,
agent, or Trustee to effect such purchases, sales((,)) or exchanges
pursuant to recommendations of the investment adviser (and all without
further action by the Trustees). Any such purchases, sales((,)) and
exchanges shall be deemed to have been authorized by all of the
Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
((as modified by or interpreted by any applicable order or orders of
the Commission or any rules or regulations adopted or interpretative
releases of the Commission thereunder,)) including those relating to
Shareholder approval, authorize the investment adviser to employ one
or more sub-advisers from time to time to perform such of the acts and
services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and
sub-adviser.
PRINCIPAL UNDERWRITER
SECTION 2. The Trustees may in their discretion from time to time
enter into [a] ((an exclusive or non-exclusive)) contract(s) ((on
behalf of the Trust or any Series or Class thereof)) providing for the
sale of the Shares, whereby the Trust may either agree to sell the
Shares to the other party to the contract or appoint such other party
its sales agent for such Shares. In either case, the contract shall be
on such terms and conditions as may be prescribed in the Bylaws, if
any, and such further terms and conditions as the Trustees may((,)) in
their discretion((,)) determine not inconsistent with the provisions
of this Article VII[,] or of the Bylaws, if any[;]((.)) [and]
[s]((S))uch contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust.
TRANSFER AGENT
SECTION 3. The Trustees may((,)) in their discretion ((and)) from
time to time((,)) enter into ((one or more)) [a] transfer agency and
Shareholder service contract((s)) whereby the other party shall
undertake to furnish the Trustees with transfer agency and Shareholder
services. [The] ((Such)) contract((s)) shall be on such terms and
conditions as the Trustees may((,)) in their discretion((,)) determine
not inconsistent with the provisions of this Declaration of Trust or
of the Bylaws, if any. Such services may be provided by one or more
entities.
PARTIES TO CONTRACT
SECTION 4. Any contract of the character described in Sections 1, 2
and 3 of this Article VII or in Article IX hereof may be entered into
with any corporation, firm, partnership, trust or association,
although one or more of the Trustees or officers of the Trust may be
an officer, director, trustee, shareholder, or member of such other
party to the contract, and no such contract shall be invalidated or
rendered voidable by reason of the existence of any relationship, nor
shall any person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when
entered into was reasonable and fair and not inconsistent with the
provisions of this Article VII or the Bylaws, if any. The same person
(including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections
1, 2 and 3 above or Article IX, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any
or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
SECTION 5. Any contract entered into pursuant to Sections 1 and 2 of
this Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act((, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretative releases of the
Commission)) ([including any amendments thereof] or other applicable
Act of Congress hereafter enacted)((,)) with respect to its
continuance in effect, ((its amendment,)) its termination, and the
method of authorization and approval of such contract or renewal
thereof[, and no amendment to any contract, entered into pursuant to
Section 1 shall be effective unless assented to by a Majority
Shareholder Vote].
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote [(i)](((a))) for
the election of Trustees as provided in Article IV, Section 2[,
(ii)]((; (b))) for the removal of Trustees as provided in Article IV,
Section 3(d)[, (iii)]((; (c))) with respect to any investment advisory
or management contract as provided in Article VII, Section((s)) 1
((and 5))[, (iv)]((; (d) with respect to any termination, merger,
consolidation, reorganization, or sale of assets of the Trust or any
of its Series or Classes as provided in Article XII, Section 4; (e)))
with respect to the amendment of this Declaration of Trust as provided
in Article XII, Section 7[, (v)]((; (f))) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or
not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or
the Shareholders, provided, however, that a Shareholder of a
particular Series shall not be entitled to bring any derivative or
class action on behalf of any other Series of the Trust[,]((;)) and
[(vi)](((g))) with respect to such additional matters relating to the
Trust as may be required or authorized by law, by this Declaration of
Trust, or the Bylaws of the Trust, if any, or any registration of the
Trust with the [Securities and Exchange] Commission [(the
"Commission")] or any [S]((s))tate, as the Trustees may consider
desirable.
On any matter submitted to a vote of the Shareholders, all
[s]((S))hares shall be voted by individual Series, ((except as
provided in the following sentence and)) except [(i)](((a))) when
required by the 1940 Act, Shares shall be voted in the aggregate and
not by individual Series; and [(ii)](((b))) when the Trustees have
determined that the matter affects only the interests of one or more
Series, then only the Shareholders of such Series shall be entitled to
vote thereon. ((The Trustees may also determine that a matter affects
only the interests of one or more Classes of a Series, in which case,
any such matter shall be voted on by such Class or Classes.)) A
[s]((S))hareholder of each Series ((or Class thereof)) shall be
entitled to one vote for each dollar of net asset value (number of
Shares owned times net asset value per [S]((s))hare) [share] of such
[s]((S))eries, ((or Class thereof)) on any matter on which such
Shareholder is entitled to vote((,)) and each fractional dollar amount
shall be entitled to a proportionate fractional vote. There shall be
no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required
or permitted by law, this Declaration of Trust or any Bylaws of the
Trust((, if any,)) to be taken by Shareholders.
MEETINGS
SECTION 2. The first Shareholders' meeting shall be held as specified
in Section 2 of Article IV at the principal office of the Trust or
such other place as the Trustees may designate. Special meetings of
the Shareholders of any Series may be called by the Trustees and shall
be called by the Trustees upon the written request of Shareholders
owning at least one-tenth (((1/10))) of the outstanding Shares
entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act, as
((modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretative
releases of the Commission,)) [the same may be amended from time to
time,] seek the opportunity of furnishing materials to the other
Shareholders with a view to obtaining signatures on such a request for
a meeting, the Trustees shall comply with the provisions of said
Section 16(c) with respect to providing such Shareholders access to
the list of the Shareholders of record of the Trust or the mailing of
such materials to such Shareholders of record. Shareholders shall be
entitled to at least fifteen (((15))) days' notice of any meeting.
QUORUM AND REQUIRED VOTE
SECTION 3. A majority of Shares entitled to vote in person or by
proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of
this Declaration of Trust permits or requires that holders of any
Series ((or Class)) shall vote as a Series ((or Class))[,] then a
majority of the aggregate number of Shares of that Series ((or Class))
entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series ((or Class)). Any lesser number
shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except
when a larger vote is required ((by applicable law or)) by any
provision of this Declaration of Trust or the Bylaws, ((if any,)) a
majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Declaration of Trust permits or
requires that the holders of any Series ((or Class)) shall vote as a
Series ((or Class)), then a majority of the Shares of that Series ((or
Class)) voted on the matter shall decide that matter insofar as that
Series ((or Class)) is concerned. ((Shareholders may act by unanimous
written consent. Actions taken by a Series or Class may be consented
to unanimously in writing by Shareholders of that Series or Class.))
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
SECTION 1. The Trustees shall at all times employ a bank((,)) [or]
((a company that is a member of a national securities exchange,))
trust company, ((or other entity permitted under the 1940 Act, as
modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretative
releases of the Commission thereunder,)) having capital, surplus((,))
and undivided profits of at least two million dollars ($2,000,000), or
such other amount [or such other entity] as shall be allowed by the
Commission or by the 1940 Act, as custodian with authority as its
agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the
Trust((, if any)):
(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust
and the custodian, if such procedures have been authorized in writing
by the Trust;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(2) to compute, if authorized to do so [by the Trustees], the Net
Asset Value of any Series ((or Class thereof)) in accordance with the
provisions hereof; all upon such basis of compensation as may be
agreed upon between the Trustees and the custodian. [If so directed by
a Majority Shareholder Vote, the custodian shall deliver and pay over
all property of the Trust held by it as specified in such vote.]
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may
be agreed upon between the custodian and such sub-custodian and
approved by the Trustees, provided that in every case such
sub-custodian shall be a bank((,)) [or] ((a company that is a member
of a national securities exchange,)) trust company [organized under
the laws of the United States or one of the states thereof and] ((, or
other entity permitted under the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretative releases of the
Commission thereunder,)) having capital, surplus((,)) and undivided
profits of at least two million dollars ($2,000,000)((,)) or such
other [person] ((amount)) as [may] ((shall)) be [permitted]
((allowed)) by the Commission[, or otherwise in accordance with] ((or
by)) the 1940 Act [as from time to time amended].
[CENTRAL CERTIFICATE SYSTEM]
((CENTRAL DEPOSITORY SYSTEM))
SECTION 2. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit
all or any part of the securities owned by the Trust in a system for
the central handling of securities established by a national
securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934[,] or
such other person as may be permitted by the Commission[,] or
otherwise in accordance with the 1940 Act [as from time to time
amended], pursuant to which system all securities of any particular
class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities[,]((;)) provided that all
such deposits shall be subject to withdrawal only upon the order of
the Trust ((or its custodian, subcustodians, or other authorized
agents)).
ARTICLE X
[DISTRIBUTIONS AND REDEMPTIONS]
((DISTRIBUTIONS, REDEMPTIONS AND DETERMINATION OF NET ASSET VALUE))
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees shall have the power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare and
cause to be paid dividends on Shares of a particular Series, from the
assets belonging to that Series, which dividends, at the election of
the Trustees, may be paid daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, and may be payable in Shares of that
Series((, or Classes thereof,)) at the election of each Shareholder of
that Series.
((The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as
the Trustees shall deem appropriate.))
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute ((a stock dividend))
pro rata among the Shareholders of a particular Series((, or Class
thereof,)) as of the record date of that Series ((or Class)) fixed as
provided in ((Article XII,)) Section 3[hereof a "stock dividend"].
REDEMPTIONS
SECTION 2. In case any holder of record of Shares of a particular
Series ((or Class of a Series)) desires to dispose of his Shares, he
may deposit at the office of the transfer agent or other authorized
agent of that Series a written request or such other form of request
as the Trustees may((,)) from time to time((,)) authorize, requesting
that the Series purchase the Shares in accordance with this Section 2;
and the Shareholder so requesting shall be entitled to require the
Series to purchase, and the Series or the principal underwriter of the
Series shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series((,)) and payment for such
Shares ((less any applicable deferred sales charges and/or fees))
shall be made by the Series or the principal underwriter of the Series
to the Shareholder of record within seven (7) days after the date upon
which the request is effective.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
SECTION 3. The term "Net Asset Value" of any Series ((or Class))
shall mean that amount by which the assets of that Series[,] ((or
Class)) exceed its liabilities, all as determined by or under the
direction of the Trustees. Such value per Share shall be determined
separately for each Series ((or Class)) of Shares and shall be
determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to securities
for which market quotations are readily available, at the market value
of such securities; and with respect to other securities and assets,
at the fair value as determined in good faith by the Trustees,
provided, however, that the Trustees, without Shareholder approval,
may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations((,)) and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any [O]((o))rder of the Commission applicable
to the Series. The Trustees may delegate any of its powers and duties
under this Section 3 with respect to appraisal of assets and
liabilities. At any time((,)) the Trustees may cause the value [par]
per Share last determined to be determined again in ((a)) similar
manner and may fix the time when such redetermined value shall become
effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
SECTION 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees
shall specify((,)) but not later than the close of business on the
business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment until the
Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the
Net Asset Value per Share existing after the termination of the
suspension. ((In the event that any Series is divided into Classes,
the provisions of this Section, to the extent applicable as determined
in the discretion of the Trustees and consistent with applicable law,
may be equally applied to each such Class.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
SECTION 1. Provided they have exercised reasonable care and have
acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees shall not be responsible for or
liable in any event for neglect or wrongdoing of them or any officer,
agent, employee((,)) or investment adviser of the Trust, but nothing
contained herein shall protect any Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence((,)) or reckless disregard of the duties
involved in the conduct of his office.
[INDEMNIFICATION]
((INDEMNIFICATION OF COVERED PERSONS))
Section 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent permitted
by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit((,)) or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office; or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
[i]((I))nterested [p]((P))ersons of the Trust nor are parties to the
matter based upon a review of readily available facts (as opposed to a
full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be such Trustee or officer((,)) and shall inure to
the benefit of the heirs, executors((,)) and administrators of such a
person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise
under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit((,)) or proceeding of the character
described in [p]((P))aragraph (a) of this Section 2 may be paid by the
applicable Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the applicable Series if
it is ultimately determined that he is not entitled to indemnification
under this Section 2; provided, however, that either [a](((i))) such
Covered Person shall have provided appropriate security for such
undertaking[, (b)]((; (ii))) the Trust is insured against losses
arising out of any such advance payments((;)) or [(c)](((iii))) either
a majority of the Trustees who are neither interested persons of the
Trust nor parties to the matter, or independent legal counsel in a
written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section 2.
[SHAREHOLDERS]
((INDEMNIFICATION OF SHAREHOLDERS))
SECTION 3. In case any Shareholder or former Shareholder of any
Series of the Trust shall be held to be personally liable solely by
reason of his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators((,)) or
other legal representatives or((,)) in the case of a corporation or
other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense
arising from such liability. The Series shall, upon request by the
Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any
judgment thereon.
ARTICLE XII
MISCELLANEOUS
[TRUST NOT A PARTNERSHIP]
((TRUST NOT A PARTNERSHIP, ETC.))
SECTION 1. It is hereby expressly declared that a trust [and not
partnership] is created hereby ((and not a partnership, joint stock
association, corporation, bailment, or any form of a legal
relationship other than a trust)). No Trustee hereunder shall have any
power to personally bind either the Trust's officers or any
Shareholder. All persons extending credit to, contracting with((,)) or
having any claim against the Trust or the Trustees shall look only to
the assets of the appropriate Series for payment under such credit,
contract((,)) or claim; and neither the Shareholders nor the Trustees,
nor any of their agents, whether past, present, or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall
protect a Trustee against any liability to which the Trustee would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence((,)) or reckless disregard of the duties involved in
the conduct of the office of Trustee hereunder.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 2. The exercise by the Trustees of their powers and
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing, shall be binding upon everyone
interested. Subject to the provisions of Section 1 of this Article XII
and to Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1
of this Article XII and to Article XI, shall be under no liability for
any act or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
SECTION 3. The Trustees may close the stock transfer books of the
Trust for a period not exceeding sixty (60) days preceding the date of
any meeting of Shareholders, or the date for the payment of any
dividends, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect;
or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for
payment of any dividends, or the date for the allotment of rights, or
the date when any change or conversion or exchange of Shares shall go
into effect, as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting,
or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of
record on the date so fixed shall be entitled to such notice of, and
to vote at, such meeting, or to receive payment of such dividend, or
to receive such allotment or rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any Shares on the
books of the Trust after any such record date fixed or aforesaid.
[TERMINATION OF TRUST]
((DURATION; TERMINATION OF TRUST, A SERIES OR A CLASS; MERGERS, ETC.))
SECTION 4 ((1. DURATION.)) [(a) This] ((The)) Trust shall continue
without limitation of time((,)) but subject to the provisions of
[sub-section (b) of] this [Section 4] ((Article XII)).
[(b) Subject to a Majority Shareholder Vote of each Series affected
by the matter or, if applicable, to a Majority Shareholder Vote of the
Trust, the Trustees may]
((SECTION 4.2.TERMINATION OF THE TRUST, A SERIES OR A CLASS. (a)
Subject to applicable Federal and state law, the Trust or any Series
or Class thereof may be terminated (i) by Majority Shareholder Vote of
the Trust, each Series affected, or each Class affected, as the case
may be; or (ii) without the vote or consent of Shareholders by a
majority of the Trustees either at a meeting or by written consent.
The Trustees shall provide written notice to the affected Shareholders
of a termination effected under clause (ii) above. Upon the
termination of the Trust or the Series or Class,))
(((i) the Trust or the Series or Class shall carry on no business
except for the purpose of winding up its affairs;))
[(i) sell and convey the assets of the Trust or any affected Series
to another trust, partnership, association or corporation organized
under the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act, for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of
beneficial interest or stock of such trust, partnership, association
or corporation; or]
(((ii) the Trustees shall proceed to wind up the affairs of the
Trust or the Series or Class, and all of the powers of the Trustees
under this Declaration of Trust shall continue until the affairs of
the Trust shall have been wound up, including the power to fulfill or
discharge the contracts of the Trust or the Series or Class thereof;
collect its assets; sell, convey, assign, exchange, transfer, or
otherwise dispose of all or any part of the remaining Trust property
or Trust property allocated or belonging to such Series or Class to
one or more persons at public or private sale for consideration that
may consist in whole or in part of cash, securities, or other property
of any kind; discharge or pay its liabilities; and do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer, or other disposition of
all or substantially all the Trust property or Trust property
allocated or belonging to such Series or Class (other than as provided
in (iii) below) shall require Shareholder approval in accordance with
Section 4.3 below; and))
[(ii) at any time sell and convert into money all of the assets of
the Trust or any affected Series.]
[Upon making provision for the payment of all such liabilities in
either (i) or (ii), by such assumption or otherwise, the Trustees
shall distribute the remaining proceeds or assets (as the case may be)
ratably among the holders of the Shares of the Trust or any affected
Series then outstanding.]
[(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in sub-section (b), the Trust or any
affected Series shall terminate and the Trustees shall be discharged
of any and all further liabilities and duties hereunder and the right,
title and interest of all parties shall be cancelled and discharged.]
(((iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust property or the remaining
property of the terminated Series or Class, in cash or in kind or
partly each, among the Shareholders of the Trust or the Series or
Class according to their respective rights; and))
(((b) after termination of the Trust or the Series or Class and
distribution to the Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust and
file with the Secretary of The Commonwealth of Massachusetts, as
appropriate, an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties with respect to the Trust or the
terminated Series or Class, and the rights and interests of all
Shareholders of the Trust or the terminated Series or Class shall
thereupon cease.))
((SECTION 4.3. MERGER, CONSOLIDATION, AND SALE OF ASSETS. Subject to
applicable Federal and state law and except as otherwise provided in
Section 4.4 below, the Trust or any Series thereof may merge or
consolidate with any other corporation, association, trust, or other
organization or may sell, lease, or exchange all or substantially all
of the Trust property or Trust property allocated or belonging to such
Series, including its good will, upon such terms and conditions and
for such consideration when and as authorized at any meeting of
Shareholders called for such purpose by a Majority Shareholder Vote of
the Trust or affected Series, as the case may be. Any such merger,
consolidation, sale, lease, or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to Massachusetts
law.))
((SECTION 4.4. INCORPORATION; REORGANIZATION. Subject to applicable
Federal and state law, the Trustees may without the vote or consent of
Shareholders cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any
other trust, partnership, limited liability company, association, or
other organization to take over all of the Trust property or the Trust
property allocated or belonging to such Series or to carry on any
business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust property or the
Trust property allocated or belonging to such Series to any such
corporation, trust, limited liability company, partnership,
association, or organization in exchange for the shares or securities
thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such
corporation, trust, partnership, limited liability company,
association, or organization, or any corporation, partnership, limited
liability company, trust, association, or organization in which the
Trust or such Series holds or is about to acquire shares or any other
interest. Subject to applicable Federal and state law, the Trustees
may also cause a merger or consolidation between the Trust or any
successor thereto and any such corporation, trust, partnership,
limited liability company, association, or other organization. Nothing
contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one
or more corporations, trusts, partnerships, limited liability
companies, associations, or other organizations and selling,
conveying, or transferring the Trust property or a portion of the
Trust property to such organization or entities; provided, however,
that the Trustees shall provide written notice to the affected
Shareholders of any transaction whereby, pursuant to this Section 4.4,
the Trust or any Series thereof sells, conveys, or transfers
substantially all of its assets to another entity or merges or
consolidates with another entity.))
FILING OF COPIES, REFERENCES, AND HEADINGS
SECTION 5. The original or a copy of this instrument and of each
[d]((D))eclaration of [t]((T))rust supplemental hereto shall be kept
at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each supplemental
[d]((D))eclaration of [t]((T))rust shall be filed by the Trustees with
the Secretary of [t]((T))he Commonwealth of Massachusetts and the
Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the
Trust may rely on a certificate by an officer or Trustee of the Trust
as to whether or not any such supplemental [d]((D))eclarations of
[t]((T))rust have been made and as to any matters in connection with
the Trust hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer or Trustee of the
Trust to be a copy of this instrument or of any such supplemental
[d]((D))eclaration of [t]((T))rust. In this instrument or in any such
supplemental [d]((D))eclaration of [t]((T))rust, references to this
instrument and all expressions like "herein," "hereof" and
"hereunder," shall be deemed to refer to this instrument as amended or
affected by any such supplemental [d]((D))eclaration of [t]((T))rust.
Headings are placed herein for convenience of reference only and in
case of any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in any number
of counterparts each of which shall be deemed an original.
APPLICABLE LAW
SECTION 6. The Trust set forth in this instrument is made in
[t]((T))he Commonwealth of Massachusetts, and it is created under and
is to be governed by and construed and administered according to the
laws of said Commonwealth. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust((, and the absence of a specific
reference herein to any such power, privilege, or action shall not
imply that the Trust may not exercise such power or privilege or take
such actions)).
AMENDMENTS
SECTION 7. [If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by
applicable law or this Declaration of Trust in any particular case,]
((Except as specifically provided herein,)) the Trustees [shall]
((may, without shareholder vote,)) amend or otherwise supplement this
[instrument,] ((Declaration of Trust)) by making ((an amendment,)) a
[d]((D))eclaration of [t]((T))rust supplemental hereto[, which
thereafter shall form apart hereof, except that an amendment which
shall affect the Shareholders of one or more Series but not the
Shareholders of all outstanding Series shall be authorized by vote of
the Shareholders holding a majority of the Shares entitled to vote of
each Series affected and no vote of Shareholders of a Series not
affected shall be required. Amendments having the purpose of changing
the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require
authorization by Shareholder vote. Copies of the supplemental
declaration of trust shall be filed as specified in Section 5 of this
Article XII.] ((or an amended and restated Declaration of Trust.
Shareholders shall have the right to vote (a) on any amendment that
would affect their right to vote granted in Section 1 of Article VIII;
(b) on any amendment that would alter the maximum number of Trustees
permitted under Section 6 of Article IV; (c) on any amendment to this
Section 7; (d) on any amendment as may be required by law or by the
Trust's registration statement filed with the Commission; and (e) on
any amendment submitted to them by the Trustees. Any amendment
required or permitted to be submitted to Shareholders that, as the
Trustees determine, shall affect the Shareholders of one or more
Series or Classes shall be authorized by vote of the Shareholders of
each Series or Class affected and no vote of shareholders of a Series
or Class not affected shall be required. Notwithstanding anything else
herein, any amendment to Article XI shall not limit the rights to
indemnification or insurance provided therein with respect to action
or omission of Covered Persons prior to such amendment.))
FISCAL YEAR
SECTION 8. The fiscal year of the Trust shall end on a specified date
as set forth in the Bylaws, ((if any,)) provided, however, that the
Trustees may, without Shareholder approval, change the fiscal year of
the Trust.
USE OF THE WORD "FIDELITY"
SECTION 9. Fidelity Management & Research Company ("FMR") has
consented to the use by any Series of the Trust of the identifying
word "Fidelity" in the name of any Series of the Trust at some future
date. Such consent is conditioned upon the employment of FMR ((or a
subsidiary or affiliate thereof)) as investment adviser of each Series
of the Trust. As between the Trust and itself, FMR controls the use of
the name of the Trust insofar as such name contains the identifying
word "Fidelity((.))"[.] FMR may from time to time use the identifying
word "Fidelity" in other connections and for other purposes,
including, without limitation, in the names of other investment
companies, corporations((,)) or businesses [which] ((that)) it may
manage, advise, sponsor or own or in which it may have a financial
interest. FMR may require the Trust or any Series thereof to cease
using the identifying word "Fidelity" in the name of the Trust or any
Series thereof if the Trust or any Series thereof ceases to employ FMR
or a subsidiary or affiliate thereof as investment adviser.
PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
((SECTION 10. (a)The provisions of this Declaration of Trust are
severable, and, if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of this
Declaration of Trust; provided, however, that such determination shall
not affect any of the remaining provisions of this Declaration of
Trust or render invalid or improper any action taken or omitted prior
to such determination.))
(((b) If any provision of this Declaration Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any
other jurisdiction or any other provision of this Declaration of Trust
in any jurisdiction.))
IN WITNESS WHEREOF, the undersigned, being all of the [initial]
Trustees of the Trust, have executed this instrument this [20th day]
((day of)) , 1999 [of June, 1994].
[SIGNATURE LINES OMITTED]
EXHIBIT 2
May 19, 1994
BYLAWS
OF
FIDELITY MASSACHUSETTS BUSINESS TRUSTS
These Bylaws of Fidelity Massachusetts business trusts (individually
the "Trust") are subject to the Declaration of Trust of the Trust, as
from time to time amended, supplemented or restated (the "Declaration
of Trust"). Capitalized terms used herein which are defined in the
Declaration of Trust are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in Boston,
Massachusetts, or such other location as the Trustees may, from time
to time, determine. The Trust may establish and maintain such other
offices and places of business as the Trustees may, from time to time,
determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
OFFICERS
Section 1. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may
from time to time elect. The Trustees may delegate to any officer or
committee the power to appoint any subordinate officers or agents. It
shall not be necessary for any Trustee or other officer to be a holder
of Shares in the Trust.
ELECTION OF OFFICERS
Section 2. The Treasurer and Secretary shall be chosen by the
Trustees. The President shall be chosen by and from the Trustees. Two
or more offices may be held by a single person except the offices of
President and Secretary. Subject to the provisions of Section 13 of
Article III hereof, the President, the Treasurer and the Secretary
shall each hold office until their successors are chosen and qualified
and all other officers shall hold office at the pleasure of the
Trustees.
RESIGNATIONS
Section 3. Any officer of the Trust may resign, notwithstanding
Section 2 hereof, by filing a written resignation with the President,
the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
MANAGEMENT OF THE TRUST-GENERAL
Section 1. The business and affairs of the Trust shall be managed by,
or under the direction of, the Trustees, and they shall have all
powers necessary and desirable to carry out their responsibilities, so
far as such powers are not inconsistent with the laws of the
Commonwealth of Massachusetts, the Declaration of Trust or with these
Bylaws.
EXECUTIVE AND OTHER COMMITTEES
Section 2. The Trustees may elect from their own number an executive
committee, which shall have any or all the powers of the Trustees
while the Trustees are not in session. The Trustees may also elect
from their own number other committees from time to time. The number
composing such committees and the powers conferred upon the same are
to be determined by vote of a majority of the Trustees. All members of
such committees shall hold such offices at the pleasure of the
Trustees. The Trustees may abolish any such committee at any time. Any
committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its actions to the
Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
COMPENSATION
Section 3. Each Trustee and each committee member may receive such
compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees shall appoint from among their number a
Chairman who shall serve as such at the pleasure of the Trustees. When
present, he shall preside at all meetings of the Shareholders and the
Trustees, and he may, subject to the approval of the Trustees, appoint
a Trustee to preside at such meetings in his absence. He shall perform
such other duties as the Trustees may from time to time designate.
PRESIDENT
Section 5. The President shall be the chief executive officer of the
Trust and, subject to the direction of the Trustees, shall have
general administration of the business and policies of the Trust.
Except as the Trustees may otherwise order, the President shall have
the power to grant, issue, execute or sign such powers of attorney,
proxies, agreements or other documents as may be deemed advisable or
necessary in the furtherance of the interests of the Trust or any
Series thereof. He shall also have the power to employ attorneys,
accountants and other advisers and agents and counsel for the Trust.
The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.
TREASURER
Section 6. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company
as the Trustees shall employ as Custodian in accordance with the
Declaration of Trust and applicable provisions of law. He shall make
annual reports regarding the business and condition of the Trust,
which reports shall be preserved in Trust records, and he shall
furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer
shall perform such additional duties as the Trustees may from time to
time designate.
SECRETARY
Section 7. The Secretary shall record in books kept for the purpose
all votes and proceedings of the Trustees and the Shareholders at
their respective meetings. He shall have the custody of the seal of
the Trust. The Secretary shall perform such additional duties as the
Trustees may from time to time designate.
VICE PRESIDENT
Section 8. Any Vice President of the Trust shall perform such duties
as the Trustees or the President may from time to time designate. At
the request or in the absence or disability of the President, the Vice
President (or, if there are two or more Vice Presidents, then the
senior of the Vice Presidents present and able to act) may perform all
the duties of the President and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
ASSISTANT TREASURER
Section 9. Any Assistant Treasurer of the Trust shall perform such
duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant
Treasurer, present and able to act, may perform all the duties of the
Treasurer.
ASSISTANT SECRETARY
Section 10. Any Assistant Secretary of the Trust shall perform such
duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant
Secretary, present and able to act, may perform all the duties of the
Secretary.
SUBORDINATE OFFICERS
Section 11. The Trustees from time to time may appoint such other
officers or agents as they may deem advisable, each of whom shall have
such title, hold office for such period, have such authority and
perform such duties as the Trustees may determine. The Trustees from
time to time may delegate to one or more officers or committees of
Trustees the power to appoint any such subordinate officers or agents
and to prescribe their respective terms of office, authorities and
duties.
SURETY BONDS
Section 12. The Trustees may require any officer or agent of the
Trust to execute a bond (including, without limitation, any bond
required by the Investment Company Act of 1940, as amended ("the 1940
Act") and the rules and regulations of the Securities and Exchange
Commission ("Commission")) to the Trust in such sum and with such
surety or sureties as the Trustees may determine, conditioned upon the
faithful performance of his duties to the Trust including
responsibility for negligence and for the accounting of any of the
Trust's property, funds or securities that may come into his hands.
REMOVAL
Section 13. Any officer may be removed from office whenever in the
judgment of the Trustees the best interest of the Trust will be served
thereby, by the vote of a majority of the Trustees given at any
regular meeting or any special meeting of the Trustees. In addition,
any officer or agent appointed in accordance with the provisions of
Section 11 hereof may be removed, either with or without cause, by any
officer upon whom such power of removal shall have been conferred by
the Trustees.
REMUNERATION
Section 14. The salaries or other compensation, if any, of the
officers of the Trust shall be fixed from time to time by resolution
of the Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
SPECIAL MEETINGS
Section 1. A special meeting of the shareholders shall be called by
the Secretary whenever (i) ordered by the Trustees or (ii) requested
in writing by the holder or holders of at least 10% of the Outstanding
Shares entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than 30 days to call such
special meeting, the Trustees or the Shareholders so requesting, may,
in the name of the Secretary, call the meeting by giving notice
thereof in the manner required when notice is given by the Secretary.
If the meeting is a meeting of the Shareholders of one or more Series
or classes of Shares, but not a meeting of all Shareholders of the
Trust, then only special meetings of the Shareholders of such one or
more Series or Classes shall be called and only the shareholders of
such one or more Series or Classes shall be entitled to notice of and
to vote at such meeting.
NOTICES
Section 2. Except as above provided, notices of any meeting of the
Shareholders shall be given by the Secretary by delivering or mailing,
postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least fifteen days
before the meeting, to such address as may be registered with the
Trust by the Shareholder. Notice of any Shareholder meeting need not
be given to any Shareholder if a written waiver of notice, executed
before or after such meeting, is filed with the record of such
meeting, or to any Shareholder who shall attend such meeting in person
or by proxy. Notice of adjournment of a Shareholders' meeting to
another time or place need not be given, if such time and place are
announced at the meeting or reasonable notice is given to persons
present at the meeting and the adjourned meeting is held within a
reasonable time after the date set for the original meeting.
VOTING-PROXIES
Section 3. Subject to the provisions of the Declaration of Trust,
shareholders entitled to vote may vote either in person or by proxy,
provided that either (i) an instrument authorizing such proxy to act
is executed in writing by the Shareholder and dated not more than
eleven months before the meeting, unless the instrument specifically
provides for a longer period or (ii) the Trustees adopt by resolution
an electronic, telephonic, computerized or other alternative form of
execution authorizing the proxy to act which authorization is received
not more than eleven months before the meeting. Proxies shall be
delivered to the Secretary of the Trust or other person responsible
for recording the proceedings before being voted. A proxy with respect
to Shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy
the Trust receives a specific written notice to the contrary from any
one of them. Unless otherwise specifically limited by their terms,
proxies shall entitle the holder thereof to vote at any adjournment of
a meeting. A proxy purporting to be exercised by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden or proving invalidity shall rest on the
challenger. At all meetings of the Shareholders, unless the voting is
conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of
votes shall be decided by the Chairman of the meeting. Except as
otherwise provided herein or in the Declaration of Trust, as these
Bylaws or such Declaration of Trust may be amended or supplemented
from time to time, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law
of the Commonwealth of Massachusetts relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Massachusetts
corporation and the Shareholders were shareholders of a Massachusetts
corporation.
PLACE OF MEETING
Section 4. All special meetings of the Shareholders shall be held at
the principal place of business of the Trust or at such other place in
the United States as the Trustees may designate.
ACTION WITHOUT A MEETING
Section 5. Any action to be taken by Shareholders may be taken
without a meeting if all Shareholders entitled to vote on the matter
consent to the action in writing and the written consents are filed
with the records of meetings of Shareholders of the Trust. Such
consent shall be treated for all purposes as a vote at a meeting of
the Shareholders held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
SPECIAL MEETINGS
Section 1. Special meetings of the Trustees may be called orally or
in writing by the Chairman of the Board of Trustees or any two other
Trustees.
REGULAR MEETINGS
Section 2. Regular meetings of the Trustees may be held at such
places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed
a party calling the meeting and no call or notice will be required to
such Trustee provided that any Trustee who is absent when such
determination is made shall be given notice of the determination by
the Chairman or any two other Trustees, as provided for in the
Declaration of Trust.
QUORUM
Section 3. A majority of the Trustees shall constitute a quorum for
the transaction of business and an action of a majority of the quorum
shall constitute action of the Trustees.
NOTICE
Section 4. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the party calling the
meeting to each Trustee, as provided for in the Declaration of Trust.
A written notice may be mailed, postage prepaid, addressed to him at
his address as registered on the books of the Trust or, if not so
registered, at his last known address.
PLACE OF MEETING
Section 5. All special meetings of the Trustees shall be held at the
principal place of business of the Trust or such other place as the
Trustees may designate. Any meeting may adjourn to any place.
SPECIAL ACTION
Section 6. When all the Trustees shall be present at any meeting,
however called or wherever held, or shall assent to the holding of the
meeting without notice, or shall sign a written assent thereto filed
with the record of such meeting, the acts of such meeting shall be
valid as if such meeting had been regularly held.
ACTION BY CONSENT
Section 7. Any action by the Trustees may be taken without a meeting
if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees' meeting. Such consent shall be
treated, for all purposes, as a vote at a meeting of the Trustees held
at the principal place of business of the Trustees.
PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE
Section 8. Trustees may participate in a meeting of Trustees by
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other,
and such participation shall constitute presence in person at such
meeting. Any meeting conducted by telephone shall be deemed to take
place at and from the principal office of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall at all times be
divided into such transferable Shares of one or more separate and
distinct Series, or classes thereof, as the Trustees shall from time
to time create and establish. The number of Shares is unlimited, and
each Share of each Series or class thereof shall be without par value
and shall represent an equal proportionate interest with each other
Share in the Series, none having priority or preference over another,
except to the extent that such priorities or preferences are
established with respect to one or more classes of shares consistent
with applicable law and any rule or order of the Commission.
TRANSFER OF SHARES
Section 2. The Shares of the Trust shall be transferable, so as to
affect the rights of the Trust, only by transfer recorded on the books
of the Trust, in person or by attorney.
EQUITABLE INTEREST NOT RECOGNIZED
Section 3. The Trust shall be entitled to treat the holder of record
of any Share or Shares of beneficial interest as the holder in fact
thereof, and shall not be bound to recognize any equitable or other
claim or interest in such Share or Shares on the part of any other
person except as may be otherwise expressly provided by law.
SHARE CERTIFICATE
Section 4. No certificates certifying the ownership of Shares shall
be issued except as the Trustees may otherwise authorize. The Trustees
may issue certificates to a Shareholder of any Series or class thereof
for any purpose and the issuance of a certificate to one or more
Shareholders shall not require the issuance of certificates generally.
In the event that the Trustees authorize the issuance of Share
certificates, such certificate shall be in the form proscribed from
time to time by the Trustees and shall be signed by the President or a
Vice President and by the Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary. Such signatures may be facsimiles if the
certificate is signed by a transfer or shareholder services agent or
by a registrar, other than a Trustee, officer or employee of the
Trust. In case any officer who has signed or whose facsimile signature
has been placed on such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the
Trust with the same effect as if he or she were such officer at the
time of its issue.
In lieu of issuing certificates for Shares, the Trustees or the
transfer or shareholder services agent may either issue receipts
therefor or may keep accounts upon the books of the Trust for the
record holders of such Shares, who shall in either case be deemed, for
all purposes hereunder, to be the holders of certificates for such
Shares as if they had accepted such certificates and shall be held to
have expressly assented and agreed to the terms hereof.
LOSS OF CERTIFICATE
Section 5. In the case of the alleged loss or destruction or the
mutilation of a Share certificate, a duplicate certificate may be
issued in place thereof, upon such terms as the Trustees may
prescribe.
DISCONTINUANCE OF ISSUANCE OF CERTIFICATES
Section 6. The Trustees may at any time discontinue the issuance of
Share certificates and may, by written notice to each Shareholder,
require the surrender of Share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the
ownership or transferability of Shares in the Trust.
ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust, shall be deemed
to hold legal and beneficial ownership of any income earned on
securities held by the Trust issued by any business entity formed,
organized or existing under the laws of any jurisdiction other than a
state, commonwealth, possession or colony of the United States or the
laws of the United States.
ARTICLE VIII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall
be open to the inspection of the Shareholders; and no Shareholder
shall have any right to inspect any account or book or document of the
Trust except as conferred by law or otherwise by the Trustees or by
resolution of the Shareholders.
ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any
Covered Person or employee of the Trust, including any Covered Person
or employee of the Trust who is or was serving at the request of the
Trust as a Trustee, officer or employee of a corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Trustees would
have the power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance that
protects or purports to protect any Trustee or officer of the Trust
against any liability to the Trust or its Shareholders to which he
would otherwise be subject by reason or willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved
in the conduct of his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form and bear the name of
the trust and the year of its organization. The form of the seal shall
be subject to alteration by the Trustees and the seal may be used by
causing it or a facsimile to be impressed or affixed or printed or
otherwise reproduced.
Any officer or Trustee of the Trust shall have authority to affix the
seal of the Trust to any document, instrument or other paper executed
and delivered by or on behalf of the Trust; however, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed
on and its absence shall not impair the validity of any document,
instrument, or other paper executed by or on behalf of the Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of each Series of the Trust shall end on such date as
the Trustees shall from time to time determine.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended at any meeting of the Trustees of the
Trust by a majority vote.
ARTICLE XIII
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders
a written financial report of the Trust including financial statements
which shall be certified at least annually by independent public
accountants.
XIV
HEADINGS
Headings are placed in these Bylaws for convenience of reference only
and in case of any conflict, the text of these Bylaws rather than the
headings shall control.
EXHIBIT 3
COMPARISON OF STAND ALONE FUND STRUCTURE
TO
MASTER FEEDER FUND STRUCTURE
EDGAR DESCRIPTION NO. 1 - FOR STAND ALONE FUND STRUCTURE
THE "STAND ALONE FUND STRUCTURE" DIAGRAM CONTAINS THREE CIRCLES
LABELED "INDIVIDUAL FUND A-1 (MANAGED BY FMR)," "INDIVIDUAL FUND A-2
(MANAGED BY FMR)," AND "INDIVIDUAL FUND A-3 (MANAGED BY FMR),"
RESPECTIVELY. ABOVE EACH CIRCLE ATTACHED BY A LINE IS A SINGLE
RECTANGULAR BOX. THE THREE RECTANGULAR BOXES ARE LABELED "RETAIL
INVESTORS," "INSTITUTIONAL INVESTORS," AND "RETIREMENT INVESTORS,"
RESPECTIVELY.
EDGAR DESCRIPTION NO. 2 - FOR MASTER FEEDER FUND STRUCTURE
THE "MASTER FEEDER FUND STRUCTURE" DIAGRAM CONTAINS A SINGLE CIRCLE
LABELED "MASTER FUND (MANAGED BY FMR)." SURROUNDING THE CIRCLE
ATTACHED BY LINES ARE THREE SQUARE BOXES LABELED "FEEDER FUND A-1,"
"FEEDER FUND A-2," AND "FEEDER FUND A-3," RESPECTIVELY. ATTACHED TO
EACH SQUARE BOX BY A LINE IS A SINGLE RECTANGULAR BOX. THE THREE
RECTANGULAR BOXES ARE LABELED "RETAIL INVESTORS," "INSTITUTIONAL
INVESTORS," AND RETIREMENT INVESTORS," RESPECTIVELY.
EXHIBIT 4
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY DESTINY PORTFOLIOS:
DESTINY I
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made ((as of)) this [1st] __ day of
_____ [November 1993] 1999, by and between Fidelity Destiny
Portfolios, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny I (hereinafter called the "Portfolio"),
and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser") ((as set forth in its
entirety below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [modified January 1, 1989] ((November 1,
1993)), to a modification of said Contract in the manner set forth
below. The [Modified] ((Amended)) Management Contract shall[,] when
executed by duly authorized officers of the Fund and the Adviser, take
effect on [the later of November 1, 1993 or the first day of the month
following approval] ((_____________, 1999)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio[,]((;)) and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to[;]((:)) (i) providing the Portfolio with office space, equipment
and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations
with, and monitoring the performance of((,)) custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed
to be necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser [, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Basic Fee
and((, while in effect,)) a Performance Adjustment to the Basic Fee
based upon the investment performance ((of the initial class))
of the Portfolio in relation to the Standard & Poor's Daily Stock
Price Index of 500 Common Stocks (the "Index"). ((The Performance
Adjustment will be in effect only through the last calendar day of the
18 month period beginning on the date that this amended Contract takes
effect. After that date, the management fee will be composed of a
Basic Fee only.)) The Basic Fee and((, while in effect,)) [and] the
Performance Adjustment will be [compared] ((computed)) as follows:
(a) Basic Fee Rate: The [A]((a))nnual Basic Fee Rate shall be the sum
of the Group Fee Rate and the Individual Fund Fee Rate calculated to
the nearest millionth decimal place as follows:
(i) Group Fee Rate. The [g]((G))roup [f]((F))ee [r]((R))ate shall be
based upon the monthly average of the net assets of the registered
investment companies having Advisory and Service or Management
Contracts with the Adviser (computed in the manner set forth in the
[charter of each investment company] ((Fund's Declaration of Trust or
other organizational document))) determined as of the close of
business on each business day throughout the month. The [g]((G))roup
[f]((F))ee [r]((R))ate shall be determined on a cumulative basis
pursuant to the following schedule:
Average Net Assets Annualized Fee Rate
([F]((f))or each level)
0 - $ 3 billion .52((00))%
3 - 6 .49((00))
6 - 9 .46((00))
9 - 12 .43((00))
12 - 15 .40((00))
15 - 18 .385((0))
18 - 21 .37((00))
21 - 24 .36((00))
24 - 30 .35((00))
30 - 36 .345((0))
36 - 42 .34((00))
42 - 48 .335((0))
48 - 66 .325((0))
66 - 84 .32((00))
84 - 102 .315((0))
102 - 138 .310((0))
138 - 174 .305((0))
[Over 174] [.300]
((174 - 210)) ((.3000))
((210 - 246)) ((.2950))
((246 - 282)) ((.2900))
((282 - 318)) ((.2850))
((318 - 354)) ((.2800))
((354 - 390)) ((.2750))
((390 - 426)) ((.2700))
((426 - 462)) ((.2650))
((462 - 498)) ((.2600))
((498 - 534)) ((.2550))
((Over 534)) ((.2500))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.17%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust ((or other organizational
document))) determined as of the close of business on each business
day throughout the month. The resulting dollar amount comprises the
Basic Fee. [The Basic Fee will be subject to upward and downward
adjustment on the basis of the Portfolio's investment performance as
follows:]
(c) Performance Adjustment ((Rate)): ((This sub-paragraph (c) will be
in effect only through the last calendar day of the 18 month period
beginning on the date that this amended Contract takes effect and will
have no force and effect thereafter. The Performance Adjustment Rate
for the Portfolio will be determined by reference only to the
Portfolio's initial class investment performance. The Basic Fee
will be subject to downward adjustment on the basis of the Portfolio's
initial class investment performance as follows:)) An
adjustment to the monthly basic fee will be made by applying a
performance adjustment rate to the average net assets of the Portfolio
over the performance period. The resulting dollar figure will be
[added to or] subtracted from the basic fee [depending on whether]
((if the initial class of)) the Portfolio experienced [better
or] worse performance than the performance Index. [The amount of the
basic fee payable to the Adviser by the Portfolio will be increased by
an amount determined by (i) computing an annual rate of 0.02% for each
percentage point, rounded to the nearer point, that the Portfolio's
investment performance for the performance period ending on the last
day of such month exceeds the record of the Index, for such
performance period, and (ii) multiplying 1/12 of this rate by the
average net assets for the performance period, with the maximum such
increase in fee being at the annual rate of 0.24% of the average net
assets up to and including $100,000,000 and at the annual rate of 0.2%
of the average net assets in excess of $100,000,000.]
The amount of the basic fee payable to the Adviser by the Portfolio
will be reduced by an amount determined by (i) computing an annual
rate of 0.02% for each percentage point, rounded to the nearer point,
that the record of the Index for said performance period exceeds the
investment performance of(( the initial class of)) the
Portfolio, and (ii) multiplying 1/12 of this rate by the average net
assets for the performance period, with the maximum such reduction in
fee being at the annual rate of .24% of the average net assets up to
and including $100,000,000 and at the annual rate of 0.2% of the
average net assets in excess of $100,000,000.
The performance period [will be a 12-month rolling period through
July 31, 1985, consisting of the current month and the preceding 11
months. Commencing with the month of August, 1985, the 12-month period
will be extended by adding each new month to the period until the
period covers 36 months. Thereafter, as each new month is added, the
oldest month will be dropped producing a 36-month rolling performance
period .] ((consists of the current month plus the previous 35
month s.))
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share ((of the initial
class ))of the Portfolio on the first business day of the
performance period with (ii) the closing net asset value of one share
((of the initial class)) of the Portfolio as of the last
business day of such period. In computing the investment performance
((of the initial class)) of the Portfolio and the investment
record of the Index, distributions of realized capital gains, the
value of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains accumulated to the end
of such period and dividends paid out of investment income on the part
((of the initial class)) of the Portfolio, and all cash
distributions of the [companies whose stocks comprise] ((securities
included in)) the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
The basic fee and the [upward or] downward adjustment of the fee for
investment performance will be accrued throughout the month for the
purpose of determining the net asset value of the shares of the fund.
The adjustment of the Basic Fee will not be cumulative. A[n increased
fee will result even though the performance of the Portfolio over some
period of time shorter than the performance period has been behind
that of the Index, and, conversely, a] reduction in fee will be made
for that month even though the performance of the Portfolio over some
period of time shorter than the performance period has been ahead of
that of the Index.
(d) ((Performance Adjustment.)) One-twelfth of the annual
[p]((P))erformance [a]((A))djustment [r]((R))ate [shall] ((will)) be
applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust ((or other
organizational document))) determined as of the close of business on
each business day throughout the month and the performance period. The
resulting dollar amount is [added to or] deducted from the basic fee.
((No Performance Adjustment will be made after the last calendar day
of the 18 month period beginning on the date that this amended
Contract takes effect.))
(e) In case of termination of this Contract during any month, the fee
for that month [will] ((shall)) be reduced proportionately on the
basis of the number of business days during which it is in effect for
that month. The Basic Fee Rate will be computed [upon the average net
assets for the performance period] ((on the basis of and applied to
net assets averaged over that month)) ending on the last business day
on which this Contract is in effect. ((While the Performance
Adjustment is in effect,)) [T]((t))he amount of [this] ((the))
[p]((P))erformance [a]((A))djustment to the Basic Fee will be computed
on the basis of and applied to net assets averaged over the 36-month
period ending on the last business day on which this Contract is in
effect.
4. It is understood that the Portfolio will pay all its expenses
[other than those expressly stated to be payable by the Adviser
hereunder], which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
[relating] ((related)) to the registration and qualification of the
Fund and the Portfolio's shares for distribution under state and
federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the
Portfolio; (viii) all other expenses incidental to holding meetings of
the Portfolio's shareholders, including proxy solicitation((s))
therefor; (ix) a pro rata share, based on relative net assets of the
Portfolio and other registered investment companies having Advisory
and Service or Management Contracts with the Adviser, of 50% of
insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument.))
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, [1994]((2000)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent[, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. [The]
((This)) Contract shall terminate automatically in the event of its
assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts((, without giving
effect to the choice of laws provisions thereof)).
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 5
UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY DESTINY PORTFOLIOS:
DESTINY II
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made ((as of)) this [1st] __ day of
_____ [November 1993] 1999, by and between Fidelity Destiny
Portfolios, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Destiny II (hereinafter called the "Portfolio"),
and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser") ((as set forth in its
entirety below)).
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated [modified January 1, 1989] ((November 1,
1993)), to a modification of said Contract in the manner set forth
below. The [Modified] ((Amended)) Management Contract shall[,] when
executed by duly authorized officers of the Fund and the Adviser, take
effect on [the later of November 1, 1993 or the first day of the month
following approval] ((____________, 1999)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio[,]((;)) and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to[;]((:)) (i) providing the Portfolio with office space, equipment
and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations
with, and monitoring the performance of((,)) custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed
to be necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser [, at its own expense,] shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or
the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Basic Fee
and((, while in effect,)) a Performance Adjustment to the Basic Fee
based upon the investment performance ((of the initial class))
of the Portfolio in relation to the Standard & Poor's Daily Stock
Price Index of 500 Common Stocks (the "Index"). ((The Performance
Adjustment will be in effect only through the last calendar day of the
18 month period beginning on the date that this amended Contract takes
effect. After that date, the management fee will be composed of a
Basic Fee only.)) The Basic Fee and((, while in effect,)) [and] the
Performance Adjustment will be [compared] ((computed)) as follows:
(a) Basic Fee Rate: The [A]((a))nnual Basic Fee Rate shall be the
sum of the Group Fee Rate and the Individual Fund Fee Rate calculated
to the nearest millionth decimal place as follows:
(i) Group Fee Rate. The [g]((G))roup [f]((F))ee [r]((R))ate shall
be based upon the monthly average of the net assets of the registered
investment companies having Advisory and Service or Management
Contracts with the Adviser (computed in the manner set forth in the
[charter of each investment company] ((Fund's Declaration of Trust or
other organizational document))) determined as of the close of
business on each business day throughout the month. The [g]((G))roup
[f]((F))ee [r]((R))ate shall be determined on a cumulative basis
pursuant to the following schedule:
Average Net Assets Annualized Fee Rate
([F]((f))or each level)
0 - $ 3 billion .52((00))%
3 - 6 .49((00))
6 - 9 .46((00))
9 - 12 .43((00))
12 - 15 .40((00))
15 - 18 .385((0))
18 - 21 .37((00))
21 - 24 .36((00))
24 - 30 .35((00))
30 - 36 .345((0))
36 - 42 .34((00))
42 - 48 .335((0))
48 - 66 .325((0))
66 - 84 .32((00))
84 - 102 .315((0))
102 - 138 .310((0))
138 - 174 .305((0))
[Over ((174 - 174] 210)) [.300] ((.3000))
((210 - 246)) ((.2950))
((246 - 282)) ((.2900))
((282 - 318)) ((.2850))
((318 - 354)) ((.2800))
((354 - 390)) ((.2750))
((390 - 426)) ((.2700))
((426 - 462)) ((.2650))
((462 - 498)) ((.2600))
((498 - 534)) ((.2550))
((Over 534)) ((.2500))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall
be .30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust ((or other organizational
document))) determined as of the close of business on each business
day throughout the month. The resulting dollar amount comprises the
Basic Fee. [The Basic Fee will be subject to upward and downward
adjustment on the basis of the Portfolio's investment performance as
follows:]
(c) Performance Adjustment ((Rate)): ((This sub-paragraph (c) will
be in effect only through the last calendar day of the 18 month period
beginning on the date that this amended Contract takes effect and will
have no force and effect thereafter. The Performance Adjustment Rate
for the Portfolio will be determined by reference only to the
Portfolio's initial class investment performance. The Basic Fee
will be subject to downward adjustment on the basis of the Portfolio's
initial class investment performance as follows:)) An
adjustment to the monthly basic fee will be made by applying a
performance adjustment rate to the average net assets of the Portfolio
over the performance period. The resulting dollar figure will be
[added to or] subtracted from the basic fee [depending on whether]
((if the initial class of)) the Portfolio experienced [better
or] worse performance than the performance Index. [The amount of the
basic fee payable to the Adviser by the Portfolio will be increased by
an amount determined by (i) computing an annual rate of 0.02% for each
percentage point, rounded to the nearer point, that the Portfolio's
investment performance for the performance period ending on the last
day of such month exceeds the record of the Index, for such
performance period, and (ii) multiplying 1/12 of this rate by the
average net assets for the performance period, with the maximum such
increase in fee being at the annual rate of 0.24% of the average net
assets up to and including $100,000,000 and at the annual rate of 0.2%
of the average net assets in excess of $100,000,000.]
The amount of the basic fee payable to the Adviser by the Portfolio
will be reduced by an amount determined by (i) computing an annual
rate of 0.02% for each percentage point, rounded to the nearer point,
that the record of the Index for said performance period exceeds the
investment performance of ((the initial class of)) the
Portfolio, and (ii) multiplying 1/12 of this rate by the average net
assets for the performance period, with the maximum such reduction in
fee being at the annual rate of .24% of the average net assets up to
and including $100,000,000 and at the annual rate of 0.2% of the
average net assets in excess of $100,000,000.
The performance period [will be a 12-month rolling period through
July 31, 1985, consisting of the current month and the preceding 11
months. Commencing with the month of August, 1985, the 12-month period
will be extended by adding each new month to the period until the
period covers 36 months. Thereafter, as each new month is added, the
oldest month will be dropped producing a 36-month rolling performance
period.] ((consists of the current month plus the previous 35
months.))
The Portfolio's investment performance will be measured by comparing
(i) the opening net asset value of one share ((of the initial
class)) of the Portfolio on the first business day of the
performance period with (ii) the closing net asset value of one share
((of the initial class)) of the Portfolio as of the last
business day of such period. In computing the investment performance
((of the initial class)) of the Portfolio and the investment
record of the Index, distributions of realized capital gains, the
value of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains accumulated to the end
of such period and dividends paid out of investment income on the part
((of the initial class)) of the Portfolio, and all cash
distributions of the [companies whose stocks comprise] ((securities
included in)) the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
The basic fee and the [upward or] downward adjustment of the fee for
investment performance will be accrued throughout the month for the
purpose of determining the net asset value of the shares of the fund.
The adjustment of the Basic Fee will not be cumulative. A[n increased
fee will result even though the performance of the Portfolio over some
period of time shorter than the performance period has been behind
that of the Index, and, conversely, a] reduction in fee will be made
for that month even though the performance of the Portfolio over some
period of time shorter than the performance period has been ahead of
that of the Index.
(d) ((Performance Adjustment.)) One-twelfth of the annual
[p]((P))erformance [a]((A))djustment [r]((R))ate [shall] ((will)) be
applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Fund's Declaration of Trust ((or other
organizational document))) determined as of the close of business on
each business day throughout the month and the performance period. The
resulting dollar amount is [added to or] deducted from the basic fee.
((No Performance Adjustment will be made after the last calendar day
of the 18 month period beginning on the date that this amended
Contract takes effect.))
(e) In case of termination of this Contract during any month, the
fee for that month [will] ((shall)) be reduced proportionately on the
basis of the number of business days during which it is in effect for
that month. The Basic Fee Rate will be computed [upon the average net
assets for the performance period] ((on the basis of and applied to
net assets averaged over that month)) ending on the last business day
on which this Contract is in effect. ((While the Performance
Adjustment is in effect,)) [T]((t))he amount of [this] ((the))
[p]((P))erformance [a]((A))djustment to the Basic Fee will be computed
on the basis of and applied to net assets averaged over the 36-month
period ending on the last business day on which this Contract is in
effect.
4. It is understood that the Portfolio will pay all its expenses
[other than those expressly stated to be payable by the Adviser
hereunder], which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
[relating] ((related)) to the registration and qualification of the
Fund and the Portfolio's shares for distribution under state and
federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the
Portfolio; (viii) all other expenses incidental to holding meetings of
the Portfolio's shareholders, including proxy solicitation((s))
therefor; (ix) a pro rata share, based on relative net assets of the
Portfolio and other registered investment companies having Advisory
and Service or Management Contracts with the Adviser, of 50% of
insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security ((or other investment
instrument.))
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, [1994]((2000)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent[, such consent
on the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. [The]
((This)) Contract shall terminate automatically in the event of its
assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts((, without giving
effect to the choice of laws provisions thereof)).
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the [Securities and Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 6
((Underlined)) language will be added, [bracketed] language will be
deleted.
The proper name of each Fund, Destiny I and Destiny II, will be
inserted in each respective fund's contract where indicated by (Name
of Portfolio).
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF
(NAME OF PORTFOLIO)
((AMENDMENT)) [AGREEMENT] made this [1st]___ day of [November, 1993]
______, ((1999)), by and between [Fidelity Management & Research
(U.K.) Inc., a Massachusetts Corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Sub-Adviser" and Fidelity Management & Research Company, a
Massachusetts corporation with principal offices at 82 Devonshire
Street, Boston, Massachusetts (hereinafter called the
"Adviser")]((Fidelity Management & Research Company, a Massachusetts
corporation with principal offices at 82 Devonshire Street, Boston,
Massachusetts (hereinafter called the "Advisor"); Fidelity Management
& Research (U.K.) Inc. (hereinafter called the "Sub-Advisor"); and
Fidelity Destiny Portfolios, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of (Name of Portfolio) (hereinafter
called the "Portfolio"))).
((Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, the
Adviser and the Sub-Advisor hereby consent, pursuant to Paragraph 6 of
the existing Sub-Advisory Agreement dated November 1, 1993, to a
modification of said Agreement in the manner set below. The Amended
Sub-Advisory Agreement shall, when executed by duly authorized
officers of the Fund, the Adviser and the Sub-Advisor, take effect on
__________,1999.))
WHEREAS ((the Trust and)) the [Adviser]((Advisor)) [has]((have))
entered into a Management Contract [with Fidelity Destiny Portfolios,
a Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund")] on
behalf of [(Name of Portfolio) (hereinafter called the "Portfolio")]
((the Portfolio)), pursuant to which the [Adviser] ((Advisor)) is to
act as investment manager of the Portfolio; and
WHEREAS the Sub-[Adviser]((Advisor)) [has personnel in Western Europe
and was formed for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries and issuers located outside of North America,
principally in Western Europe] ((and its subsidiaries and other
affiliated persons have personnel in various locations throughout the
world and have been formed in part for the purpose of researching and
compiling information and recommendations with respect to the
economies of various countries, and securities of issuers located in
such countries, and providing investment advisory services in
connection therewith;))
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the ((Trust, the))
[Adviser]((Advisor)) and the Sub-[Adviser]((Advisor)) agree as
follows:
1. ((Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.))
[1.](((a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor,)) [T]((t))he Sub-[Adviser]((Advisor)) shall [act as
investment consultant] ((provide investment advice to the Portfolio
and)) [to]the [Adviser]((Advisor with respect to all or a portion of
the investments of the Portfolio, and in connection with such advice))
[and] shall furnish ((the Portfolio and)) the [Adviser]((Advisor
such)) factual information, research reports and investment
recommendations [relating to non-U.S. issuers of securities located
in, and the economies of, various countries outside the U.S., all] as
the [Adviser] ((Advisor)) may reasonably require. Such information may
include written and oral reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.))
(((c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any
or all of the services contemplated by this Agreement directly or
through such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.))
((2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.))
((3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.))
[2.]((4. Compensation)): The [Sub-Adviser will be compensated by the
Adviser] ((Advisor shall compensate the Sub-))[Adviser]((Advisor)) on
the following basis for the services to be furnished hereunder[: the
Adviser agrees to pay the Sub-Adviser a monthly fee equal to 110% of
the Sub-Adviser's costs incurred in connection with the agreement,
said costs to be determined in relation to the assets of the Portfolio
that benefits from the services of the sub-adviser].
(((a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 110% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.))
(((b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers or reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.))
(((c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1)
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.))
((5. Expenses: It is understood that the Portfolio will pay all of
its expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.))
[3.]((6. Interested Persons)): It is understood that Trustees,
officers((,)) and shareholders of the [Fund] ((Trust)) are or may be
or become interested in the [Adviser] Advisor [and]((or)) the
Sub-[Adviser]((Advisor)) as directors, officers or otherwise and that
directors, officers and stockholders of the [Adviser] ((Advisor)) or
the Sub-[Adviser]((Advisor)) are or may be or become similarly
interested in the [Fund](( Trust)), and that the [Adviser]((Advisor))
or the Sub-[Adviser]((Advisor)) may be or become interested in the
[Fund]((Trust)) as a shareholder or otherwise.
[4. The Sub-Adviser shall for all purposes be an independent
contractor and not an agent or employee of the Adviser or the Fund.
The Sub-Adviser shall have no authority to act for, represent, bind or
obligate the Adviser or the Fund, and shall in no event have
discretion to invest or reinvest assets held by the Portfolio.]
[5.]((7. Services to Other Companies or Accounts)): The
[S]((s))ervices of the Sub-[Adviser]((Advisor)) to the
[Adviser]((Advisor)) are not to be deemed to be exclusive, the
Sub-[Adviser]((Advisor)) being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Agreement,
interfere, in a material manner, with the Sub-[Adviser]((Advisor's))
ability to meet all of its obligations [with respect to rendering
investment advice] hereunder. ((The Sub-Advisor shall for all purposes
be an independent contractor and not an agent or employee of the
Advisor or the Trust.))
((8. Standard of Care)): In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-[Adviser]((Advisor)), the
Sub-[Adviser]((Advisor)) shall not be subject to liability to the
[Adviser]((Advisor)), the [Fund]((Trust)) or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security.
((9. Duration and Termination of Agreement; Amendments)):
[6.](a) Subject to prior termination as provided in sub[-]paragraph
(d) of this paragraph [6]((9)), this Agreement shall continue in force
until July 31, [1994](( 2000)) and indefinitely thereafter, but
only so long as the continuance after such period shall be
specifically approved at least annually by vote of the
[Fund]((Trust))'s Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser]((Advisor)), the Sub-[Adviser]((Advisor)) and the Portfolio[,
such consent on the part of the Portfolio to be authorized by vote of
a majority of the outstanding voting securities of the Portfolio]
((subject to the provisions of Section 15 of the 1940 Act, as modified
by or interpreted by any applicable order or orders of the Securities
and Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph [6]((9)), the terms of any continuance or modification
of [the]((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund]((Trust)) who are not parties
to [such]((this)) Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either the [Adviser]((Advisor)), the Sub-[Adviser]((Advisor)) or
the Portfolio may, at any time on sixty (60) days((')) prior written
notice to the other parties, terminate this Agreement, without payment
of any penalty, by action of its Board of Trustees or Directors, or
((with respect to the Portfolio)) by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
[7.]((10. Limitation of Liability)): The Sub-[Adviser]((Advisor)) is
hereby expressly put on notice of the limitation of shareholder
liability as set forth in the Declaration of Trust [of the Fund]((or
other organizational document of the Trust)) and agrees that any
obligations of the [Fund]((Trust)) or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-[Adviser]((Advisor)) shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-[Adviser]((Advisor))
seek satisfaction of any such obligation from the [shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Adviser seek
satisfaction of any such obligation from the] Trustees or any
individual Trustee.
11. ((Governing Law)): This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the [Investment Company Act of] 1940 ((Act)) as now in
effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 7
((Underlined)) language will be added, [bracketed] language will be
deleted.
The proper name of each fund, Destiny I and Destiny II, will be
inserted in each respective fund's contract where indicated by (Name
of Portfolio).
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY DESTINY PORTFOLIOS ON BEHALF OF
(NAME OF PORTFOLIO)
((AMENDMENT)) [AGREEMENT] made this [1st]___ day of [November, 1993]
______, ((1999)), by and between [Fidelity Management & Research (Far
East) Inc., a Massachusetts Corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Sub-Adviser" and Fidelity Management & Research Company, a
Massachusetts corporation with principal offices at 82 Devonshire
Street, Boston, Massachusetts (hereinafter called the
"Adviser")]((Fidelity Management & Research Company, a Massachusetts
corporation with principal offices at 82 Devonshire Street, Boston,
Massachusetts (hereinafter called the "Advisor"); Fidelity Management
& Research (Far East) Inc. (hereinafter called the "Sub-Advisor"); and
Fidelity Destiny Portfolios, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of (Name of Portfolio) (hereinafter
called the "Portfolio"))).
((Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, the
Adviser and the Sub-Advisor hereby consent, pursuant to Paragraph 6 of
the existing Sub-Advisory Agreement dated November 1, 1993, to a
modification of said Agreement in the manner set below. The Amended
Sub-Advisory Agreement shall, when executed by duly authorized
officers of the Fund, the Adviser and the Sub-Advisor, take effect on
_________,1999.))
WHEREAS ((the Trust and)) the [Adviser]((Advisor)) [has]((have))
entered into a Management Contract [with Fidelity Destiny Portfolios,
a Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund")] on
behalf of [(Name of Portfolio) (hereinafter called the "Portfolio")]
((the Portfolio)), pursuant to which the [Adviser] ((Advisor)) is to
act as investment manager of the Portfolio; and
WHEREAS the Sub-[Adviser]((Advisor)) [has personnel in Asia and the
Pacific Basin and was formed for the purpose of researching and
compiling information and recommendations with respect to the
economies of various countries and issuers located outside of North
America, principally in Asia and the Pacific Basin] ((and its
subsidiaries and other affiliated persons have personnel in various
locations throughout the world and have been formed in part for the
purpose of researching and compiling information and recommendations
with respect to the economies of various countries, and securities of
issuers located in such countries, and providing investment advisory
services in connection therewith;))
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the ((Trust, the))
[Adviser]((Advisor)) and the Sub-[Adviser]((Advisor)) agree as
follows:
1. ((Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.))
[1.](((a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor,)) [T]((t))he Sub-[Adviser]((Advisor)) shall [act as
investment consultant] ((provide investment advice to the Portfolio
and)) [to]the [Adviser]((Advisor with respect to all or a portion of
the investments of the Portfolio, and in connection with such advice))
[and] shall furnish ((the Portfolio and)) the [Adviser]((Advisor
such)) factual information, research reports and investment
recommendations [relating to non-U.S. issuers of securities located
in, and the economies of, various countries outside the U.S., all] as
the [Adviser] ((Advisor)) may reasonably require. Such information may
include written and oral reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.))
(((c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any
or all of the services contemplated by this Agreement directly or
through such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.))
((2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.))
((3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.))
[2.]((4. Compensation)): The [Sub-Adviser will be compensated by the
Adviser] ((Advisor shall compensate the Sub-))[Adviser]((Advisor)) on
the following basis for the services to be furnished hereunder[: the
Adviser agrees to pay the Sub-Adviser a monthly fee equal to 105% of
the Sub-Adviser's costs incurred in connection with the agreement,
said costs to be determined in relation to the assets of the Portfolio
that benefits from the services of the sub-adviser].
(((a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 105% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.))
(((b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers or reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.))
(((c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1)
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.))
((5. Expenses: It is understood that the Portfolio will pay all of
its expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.))
[3.]((6. Interested Persons)): It is understood that Trustees,
officers((,)) and shareholders of the [Fund] ((Trust)) are or may be
or become interested in the [Adviser] ((Advisor)) [and]((or)) the
Sub-[Adviser]((Advisor)) as directors, officers or otherwise and that
directors, officers and stockholders of the [Adviser] ((Advisor)) or
the Sub-[Adviser]((Advisor)) are or may be or become similarly
interested in the [Fund](( Trust)), and that the [Adviser]((Advisor))
or the Sub-[Adviser]((Advisor)) may be or become interested in the
[Fund]((Trust)) as a shareholder or otherwise.
[4. The Sub-Adviser shall for all purposes be an independent
contractor and not an agent or employee of the Adviser or the Fund.
The Sub-Adviser shall have no authority to act for, represent, bind or
obligate the Adviser or the Fund, and shall in no event have
discretion to invest or reinvest assets held by the Portfolio.]
[5.]((7. Services to Other Companies or Accounts)): The
[S]((s))ervices of the Sub-[Adviser]((Advisor)) to the
[Adviser]((Advisor)) are not to be deemed to be exclusive, the
Sub-[Adviser]((Advisor)) being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Agreement,
interfere, in a material manner, with the Sub-[Adviser]((Advisor))'s
ability to meet all of its obligations [with respect to rendering
investment advice] hereunder. ((The Sub-Advisor shall for all purposes
be an independent contractor and not an agent or employee of the
Advisor or the Trust.))
((8. Standard of Care)): In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-[Adviser]((Advisor,)) the
Sub-[Adviser]((Advisor)) shall not be subject to liability to the
[Adviser]((Advisor,)) the [Fund]((Trust)) or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security.
((9. Duration and Termination of Agreement; Amendments)):
[6.](a) Subject to prior termination as provided in sub[-]paragraph
(d) of this paragraph [6]((9)), this Agreement shall continue in force
until July 31, [1994](( 2000)) and indefinitely thereafter, but
only so long as the continuance after such period shall be
specifically approved at least annually by vote of the
[Fund]((Trust))'s Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser]((Advisor,)) the Sub-[Adviser]((Advisor)) and the Portfolio[,
such consent on the part of the Portfolio to be authorized by vote of
a majority of the outstanding voting securities of the Portfolio]
((subject to the provisions of Section 15 of the 1940 Act, as modified
by or interpreted by any applicable order or orders of the Securities
and Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph [6]((9)), the terms of any continuance or modification
of [the]((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund]((Trust)) who are not parties
to [such]((this)) Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either the [Adviser]((Advisor,)) the Sub-[Adviser]((Advisor)) or
the Portfolio may, at any time on sixty (60) days((')) prior written
notice to the other parties, terminate this Agreement, without payment
of any penalty, by action of its Board of Trustees or Directors, or
((with respect to the Portfolio)) by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
[7.]((10. Limitation of Liability)): The Sub-[Adviser]((Advisor)) is
hereby expressly put on notice of the limitation of shareholder
liability as set forth in the Declaration of Trust [of the Fund]((or
other organizational document of the Trust)) and agrees that any
obligations of the [Fund]((Trust)) or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-[Adviser]((Advisor)) shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-[Adviser]((Advisor))
seek satisfaction of any such obligation from the [shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Adviser seek
satisfaction of any such obligation from the] Trustees or any
individual Trustee.
11. ((Governing Law)): This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the [Investment Company Act of] 1940 ((Act)) as now in
effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
[SIGNATURE LINES OMITTED]
EXHIBIT 8
The proper name of each fund, Destiny I and Destiny II, will be
inserted in each fund's plan where indicated by [Fund Name]. This
plan will apply only to existing shares of each fund, which are
expected to be designated Class O shares.
FORM OF
DISTRIBUTION AND SERVICE PLAN
FIDELITY DESTINY PORTFOLIOS: [FUND NAME]
CLASS O SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act") for Class O shares ("Class O") of [Fund Name], a class of
shares of [Fund Name] (the "Fund"), a series of Fidelity Destiny
Portfolios (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor"), a wholly-owned subsidiary of Fidelity Management &
Research Company (the "Adviser"), under which the Distributor uses all
reasonable efforts, consistent with its other business, to secure
purchasers for the Fund's shares of beneficial interest ("Shares").
Under the agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by
the Distributor, advertising, and other promotional activities in
connection with the offering of Shares for sale to the public. It is
recognized that the Adviser may use its management fee revenues as
well as past profits or its resources from any other source, to make
payment to the Distributor with respect to any expenses incurred in
connection with the distribution of Class O shares, including the
activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of Class O shares or who
render shareholder support services, including but not limited to
providing office space, equipment and telephone facilities, answering
routine inquiries regarding the Fund, processing shareholder
transactions and providing such other shareholder services as the
Trust may reasonably request.
4. Class O will not make separate payments as a result of this Plan
to the Adviser, Distributor or any other party, it being recognized
that the Fund presently pays, and will continue to pay, a management
fee to the Adviser. To the extent that any payments made by the Fund
to the Adviser, including payment of management fees, should be deemed
to be indirect financing of any activity primarily intended to result
in the sale of Class O shares within the context of Rule 12b-1 under
the Act, then such payments shall be deemed to be authorized by this
Plan.
5. This Plan shall become effective upon the approval by a vote of at
least a "majority of the outstanding voting securities" (as defined in
the Act) of the Class O, the Plan having been approved by a
vote of a majority of the Trustees of the Trust, including a majority
of Trustees who are not "interested persons" of the Trust (as defined
in the Act) and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements related to this Plan
(the "Independent Trustees"), cast in person at a meeting called for
the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect from the date specified above until April 30, 2000 and from
year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Trustees
of the Fund, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to authorize direct payments by the
Class O to finance any activity primarily intended to result in the
sale of Class O shares, to increase materially the amount spent by the
Class O for distribution, or any amendment of the Management Contract
to increase the amount to be paid by the Fund thereunder shall be
effective only upon approval by a vote of a majority of the
outstanding voting securities of the Class O, in the case of this
Plan, or upon approval by a vote of a majority of the outstanding
voting securities of the Fund, in the case of the Management
Contract, and (b) any material amendments of this Plan shall be
effective only upon approval in the manner provided in the first
sentence in this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of the Class
O.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or Distributor to provide the Trust, for review by the
Board of Trustees, and the Trustees shall review, at least quarterly,
a written report of the amounts expended in connection with financing
any activity primarily intended to result in the sale of Class O
shares (making estimates of such costs where necessary or desirable)
and the purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class O Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust or other organizational
document, any obligations assumed by Class O pursuant to this Plan and
any agreements related to this Plan shall be limited in all cases to
Class O and its assets, and shall not constitute an obligation of any
shareholder of the Trust or of any other class of the Fund, series of
the Trust or class of such series.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
EXHIBIT 9
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT OBJECTIVE AND FUND FISCAL YEAR END (A) AVERAGE NET ASSETS RATIO OF NET ADVISORY FEES
(MILLIONS)(B) TO AVERAGE NET ASSETS PAID
TO FMR (C)
GROWTH
Select Portfolios:
Air Transportation ((pound)) 2/28/98 $ 62.7 0.60%
Automotive ((pound)) 2/28/98 62.2 0.59
Biotechnology ((pound)) 2/28/98 577.4 0.60
Brokerage and Investment 2/28/98 416.4 0.60
Management ((pound))
Business Services and 2/28/99 60.7 0.60(bold italic B)
Outsourcing ((pound)) **
Chemicals ((pound)) 2/28/98 83.4 0.60
Computers ((pound)) 2/28/98 658.0 0.60
Construction and Housing 2/28/98 26.0 0.60
((pound))
Consumer Industries ((pound)) 2/28/98 26.5 0.61
Cyclical Industries ((pound)) 2/28/98 3.6 0.00*
Defense and Aerospace 2/28/98 63.9 0.60
((pound))
Developing Communications 2/28/98 238.7 0.60
((pound))
Electronics ((pound)) 2/28/98 2,374.6 0.60
Energy ((pound)) 2/28/98 191.3 0.59
Energy Service ((pound)) 2/28/98 964.1 0.59
Environmental Services 2/28/98 27.8 0.60
((pound))
Financial Services ((pound)) 2/28/98 468.5 0.60
Food and Agriculture ((pound)) 2/28/98 247.0 0.60
Gold ((pound)) 2/28/98 279.5 0.60
Health Care ((pound)) 2/28/98 1,590.8 0.60
Home Finance ((pound)) 2/28/98 1,334.7 0.60
Industrial Equipment ((pound)) 2/28/98 60.1 0.60
Industrial Materials ((pound)) 2/28/98 29.9 0.60
Insurance ((pound)) 2/28/98 110.4 0.60
Leisure ((pound)) 2/28/98 142.1 0.60
Medical Delivery ((pound)) 2/28/98 159.1 0.60
Medical Equipment and 2/28/99 22.2 0.60(bold italic B)
Systems ((pound)) **
Multimedia ((pound)) 2/28/98 59.1 0.60
Select Portfolios: - continued
Natural Gas ((pound)) 2/28/98 $ 82.3 0.59%
Natural Resources ((pound)) 2/28/98 6.4 0.00*
Paper and Forest Products 2/28/98 24.2 0.60
((pound))
Precious Metals and 2/28/98 194.7 0.60
Minerals ((pound))
Regional Banks ((pound)) 2/28/98 1,035.6 0.60
Retailing ((pound)) 2/28/98 152.9 0.60
Software and Computer 2/28/98 434.9 0.60
Services ((pound))
Technology ((pound)) 2/28/98 552.2 0.60
Telecommunications ((pound)) 2/28/98 413.4 0.60
Transportation ((pound)) 2/28/98 57.4 0.59
Utilities Growth ((pound)) 2/28/98 273.5 0.60
Magellan ((pound)) 3/31/98 61,521.2 0.43
Large Cap Stock ((pound)) 4/30/98 133.9 0.45
Mid Cap Stock ((pound)) 4/30/98 1,579.2 0.60
Small Cap Selector ((pound)) 4/30/98 727.3 0.67
Small Cap Stock ((pound))** 4/30/98 383.2 0.69*(bold italic B)
Contrafund II ((pound)) 6/30/98 226.3 0.59
Fidelity Fifty ((pound)) 6/30/98 180.5 0.43
Advisor Focus Funds:
Consumer Industries: ((pound))
Class A 7/31/98 1.3 0.59
Class T 7/31/98 10.7 0.59
Class B 7/31/98 2.2 0.59
Class C 7/31/98 0.5 0.59
Institutional Class 7/31/98 2.7 0.59
Cyclical Industries: ((pound))
Class A 7/31/98 0.4 0.59
Class T 7/31/98 2.7 0.59
Class B 7/31/98 0.5 0.59
Class C 7/31/98 0.1 0.59
Institutional Class 7/31/98 1.5 0.59
Advisor Focus Funds: -
continued
Financial Services: ((pound))
Class A 7/31/98 $ 12.6 0.59%
Class T 7/31/98 82.7 0.59
Class B 7/31/98 30.1 0.59
Class C 7/31/98 8.3 0.59
Institutional Class 7/31/98 3.9 0.59
Health Care: ((pound))
Class A 7/31/98 10.5 0.59
Class T 7/31/98 79.2 0.59
Class B 7/31/98 22.1 0.59
Class C 7/31/98 6.5 0.59
Institutional Class 7/31/98 7.1 0.59
Natural Resources: ((pound))
Class A 7/31/98 6.9 0.59
Class T 7/31/98 499.5 0.59
Class B 7/31/98 54.7 0.59
Class C 7/31/98 1.6 0.59
Institutional Class 7/31/98 6.2 0.59
Technology: ((pound))
Class A 7/31/98 11.7 0.59
Class T 7/31/98 76.3 0.59
Class B 7/31/98 17.6 0.59
Class C 7/31/98 3.0 0.59
Institutional Class 7/31/98 5.2 0.59
Utilities Growth: ((pound))
Class A 7/31/98 1.4 0.59
Class T 7/31/98 13.9 0.59
Class B 7/31/98 5.9 0.59
Class C 7/31/98 1.6 0.59
Institutional Class 7/31/98 3.7 0.59
Blue Chip Growth ((pound)) 7/31/98 14,487.5 0.47
Dividend Growth ((pound)) 7/31/98 5,316.4 0.65
Low-Priced Stock ((pound)) 7/31/98 10,834.5 0.74
OTC Portfolio ((pound)) 7/31/98 4,213.9 0.50
Export and Multinational Fund 8/31/98 $ 468.9 0.59%
((pound))
Destiny I ((pound)) 9/30/98 6,399.7 0.31
Destiny II ((pound)) 9/30/98 4,058.8 0.45
Advisor Diversified
International (rex-all) **
Class A 10/31/99 1.1 0.74(bold italic B)
Class T 10/31/99 1.5 0.74(bold italic B)
Class B 10/31/99 1.1 0.74(bold italic B)
Class C 10/31/99 1.1 0.74(bold italic B)
Institutional Class 10/31/99 1.0 0.74(bold italic B)
Advisor Europe Capital
Appreciation (rex-all) **
Class A 10/31/99 0.5 0.74(bold italic B)
Class T 10/31/99 2.1 0.74(bold italic B)
Class B 10/31/99 0.7 0.74(bold italic B)
Class C 10/31/99 0.8 0.74(bold italic B)
Institutional Class 10/31/99 0.4 0.74(bold italic B)
Advisor Global Equity
(rex-all) **
Class A 10/31/99 1.1 0.74(bold italic B)
Class T 10/31/99 1.2 0.74(bold italic B)
Class B 10/31/99 1.1 0.74(bold italic B)
Class C 10/31/99 1.1 0.74(bold italic B)
Institutional Class 10/31/99 1.1 0.74(bold italic B)
Advisor International Capital
Appreciation: (rex-all) **
Class A 10/31/98 0.6 0.73(dagger)
Class T 10/31/98 6.9 0.73(dagger)
Class B 10/31/98 2.3 0.73(dagger)
Class C 10/31/98 1.3 0.73(dagger)
Institutional Class 10/31/98 5.0 0.73(dagger)
Advisor Japan (rex-all) **
Class A 10/31/99 0.4 0.74(bold italic B)
Class T 10/31/99 0.4 0.74(bold italic B)
Class B 10/31/99 0.4 0.74(bold italic B)
Class C 10/31/99 0.4 0.74(bold italic B)
Institutional Class 10/31/99 0.4 0.74(bold italic B)
Advisor Latin America
(rex-all) **
Class A 10/31/99 $ 0.4 0.74(bold italic B)%
Class T 10/31/99 0.4 0.74(bold italic B)
Class B 10/31/99 0.4 0.74(bold italic B)
Class C 10/31/99 0.4 0.74(bold italic B)
Institutional Class 10/31/99 0.4 0.74(bold italic B)
Advisor Overseas: ((epslon))
Class A 10/31/98 8.5 0.89
Class T 10/31/98 1,159.5 0.89
Class B 10/31/98 51.9 0.89
Class C 10/31/98 6.1 0.89
Institutional Class 10/31/98 47.3 0.89
Canada ((epslon)) 10/31/98 71.9 0.30
Capital Appreciation ((pound)) 10/31/98 2,379.7 0.44
Disciplined Equity ((pound)) 10/31/98 2,857.4 0.43
Diversified International 10/31/98 1,849.8 0.83
((epslon))
Emerging Markets ((epslon)) 10/31/98 390.9 0.74
Europe ((epslon)) 10/31/98 1,399.6 0.73
Europe Capital Appreciation 10/31/98 594.4 0.72
((epslon))
France ((epslon)) 10/31/98 12.5 0.73
Germany ((epslon)) 10/31/98 23.7 0.73
Hong Kong and China (rex-all) 10/31/98 154.3 0.74
International Value (rex-all) 10/31/98 454.5 0.82
Japan (rex-all) 10/31/98 238.4 1.01
Japan Small Companies (rex-all) 10/31/98 95.1 0.74
Latin America ((epslon)) 10/31/98 594.2 0.75
Nordic ((epslon)) 10/31/98 104.3 0.74
Overseas ((epslon)) 10/31/98 3,862.7 0.90
Pacific Basin (rex-all) 10/31/98 206.8 1.11
Southeast Asia (rex-all) 10/31/98 235.6 1.16
Stock Selector ((pound)) 10/31/98 1,885.4 0.43
TechnoQuant Growth 10/31/98 67.4 0.39
United Kingdom ((epslon)) 10/31/98 7.5 0.74
Value ((pound)) 10/31/98 7,451.9 0.41
Worldwide ((epslon)) 10/31/98 1,169.1 0.74
Advisor Dividend Growth
((pound))**
Class A 11/30/99 $ 0.5 0.59(bold italic B)%
Class T 11/30/99 5.1 0.59(bold italic B)
Class B 11/30/99 3.4 0.59(bold italic B)
Class C 11/30/99 1.2 0.59(bold italic B)
Institutional Class 11/30/99 0.9 0.59(bold italic B)
Advisor Equity Growth:
((pound))
Class A 11/30/98 56.8 0.59
Class T 11/30/98 4,568.3 0.59
Class B 11/30/98 166.9 0.59
Class C 11/30/98 26.0 0.59
Institutional Class 11/30/98 1,004.7 0.59
Advisor Growth
Opportunities:((pound))
Class A 11/30/98 255.0 0.46
Class T 11/30/98 22,748.7 0.46
Class B 11/30/98 925.6 0.46
Class C 11/30/98 146.1 0.46
Institutional Class 11/30/98 493.0 0.46
Advisor Large Cap: ((pound))
Class A 11/30/98 3.1 0.59
Class T 11/30/98 59.5 0.59
Class B 11/30/98 27.5 0.59
Class C 11/30/98 1.5 0.59
Institutional Class 11/30/98 7.7 0.59
Advisor Mid Cap: ((pound))
Class A 11/30/98 8.2 0.59
Class T 11/30/98 357.3 0.59
Class B 11/30/98 73.2 0.59
Class C 11/30/98 6.5 0.59
Institutional Class 11/30/98 35.4 0.59
Advisor Retirement Growth
((pound))**
Class A 11/30/99 0.2 0.59(bold italic B)
Class T 11/30/99 0.5 0.59(bold italic B)
Class B 11/30/99 0.2 0.59(bold italic B)
Class C 11/30/99 0.2 0.59(bold italic B)
Institutional Class 11/30/99 0.2 0.59(bold italic B)
Advisor Small Cap: ((pound))**
Class A 11/30/98 $ 4.2 0.74(bold italic B)%
Class T 11/30/98 30.2 0.74(bold italic B)
Class B 11/30/98 9.5 0.74(bold italic B)
Class C 11/30/98 9.4 0.74(bold italic B)
Institutional Class 11/30/98 8.2 0.74(bold italic B)
Advisor Strategic
Opportunities: ((pound))
Class A 11/30/98 3.5 0.38%
Class T 11/30/98 491.8 0.38
Class B 11/30/98 109.5 0.38
Initial Class 11/30/98 20.2 0.38
Institutional Class 11/30/98 4.7 0.38
Advisor TechnoQuant Growth:
((pound))
Class A 11/30/98 3.8 0.59
Class T 11/30/98 18.3 0.59
Class B 11/30/98 11.6 0.59
Class C 11/30/98 0.3 0.59
Institutional Class 11/30/98 1.3 0.59
Emerging Growth ((pound)) 11/30/98 2,172.0 0.79
Growth Company ((pound)) 11/30/98 10,377.6 0.42
New Millennium ((pound)) 11/30/98 1,525.9 0.62
Retirement Growth ((pound)) 11/30/98 4,376.5 0.40
Contrafund ((pound)) 12/31/98 33,442.4 0.45
Trend ((pound)) 12/31/98 1,354.1 0.39
Variable Insurance Products:
Growth
Initial Class 12/31/98 9,027.5 0.59
Service Class 12/31/98 50.6 0.59
Overseas ((epslon))
Initial Class 12/31/98 2,073.3 0.74
Service Class 12/31/98 15.9 0.74
Variable Insurance Products II:
Asset Manager: Growth
((pound))
Initial Class 12/31/98 $ 495.2 0.59%
Service Class 12/31/98 1.1 0.59
Contrafund ((pound))
Initial Class 12/31/98 4,974.2 0.59
Service Class 12/31/98 61.3 0.59
Variable Insurance Products
III:
Growth Opportunities ((pound))
Initial Class 12/31/98 1,296.4 0.59
Service Class 12/31/98 66.4 0.59
Mid Cap ((pound))**
Initial Class 12/31/98 0.5 .59(bold italic B)
Service Class 12/31/98 0.5 .59(bold italic B)
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or
as of January 31, 1999, if fiscal year end figures are not yet
available.
(b) Average net assets are computed on the basis of average net assets
of each fund or class at the close of business on each business day
throughout its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*). The ratio for certain multi-class
funds is presented gross of expense reductions for presentation
purposes.
(dagger) Annualized
** Less than a complete fiscal year
(bold italic B) Based on estimated expenses for the first year
(rex-all) Fidelity Management & Research Company (FMR) has entered
into sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (FIJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited (FIIA (U.K.)
L), with respect to the fund.
((epslon)) FMR has entered into sub-advisory agreements with the
following affiliates: FMR U.K., FMR Far East, FIIA, and FIIA (U.K.) L,
with respect to the fund.
((pound)) FMR has entered into sub-advisory agreements with FMR U.K.
and FMR Far East, with respect to the fund.
DES-pxs-0499 CUSIP#316127109/FUND#006
1.717512.100 CUSIP#316127208/FUND#306
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY DESTINY PORTFOLIOS: DESTINY I
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Thomas R. Williams and Eric D. Roiter, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY DESTINY PORTFOLIOS: DESTINY I which the undersigned
is entitled to vote at the Special Meeting of Shareholders of the fund
to be held at the office of the trust at 82 Devonshire St., Boston, MA
02109, on June 16, 1999 at 10:45 a.m. Eastern time and at any
adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date , 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316127109/fund #006
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Please detach at perforation before mailing.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the twelve nominees [ ] FOR all nominees listed [ ] WITHHOLD authority to 1.
specified below as Trustees: (except as marked to the vote for all nominees.
(01) Ralph F. Cox, (02) contrary below).
Phyllis Burke Davis, (03)
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E.
Bradley Jones, (06) Donald
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) Thomas R. Williams
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE
BELOW.)
</TABLE>
______________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Deloitte & Touche LLP as
independent accountants of
the fund.
3. To authorize the Trustees to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
adopt an amended and
restated Declaration of Trust.
4. To amend the trust's Bylaws. FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
5. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
policy for the fund that
would permit it to invest
all of its assets in another
open-end investment company
managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
6. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
management contract for the
fund.
8. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
sub-advisory agreement with
FMR U.K. for the fund.
9. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
sub-advisory agreement with
FMR Far East for the fund.
10. To approve a Distribution and FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
Service Plan for the fund.
11. To eliminate a fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
investment policy for the
fund.
12. To amend the fund's FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
diversification limitation
to exclude "securities of
other investment companies"
from issuer diversification
limitations.
</TABLE>
DESI -pxc-0499 cusip # 316127109/fund # 006
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY DESTINY PORTFOLIOS: DESTINY II
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Thomas R. Williams and Eric D. Roiter, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY DESTINY PORTFOLIOS: DESTINY II which the
undersigned is entitled to vote at the Special Meeting of Shareholders
of the fund to be held at the office of the trust at 82 Devonshire
St., Boston, MA 02109, on June 16, 1999 at 10:45 a.m. Eastern
time and at any adjournments thereof. All powers may be exercised
by a majority of said proxy holders or substitutes voting or acting
or, if only one votes and acts, then by that one. This Proxy shall be
voted on the proposals described in the Proxy Statement as specified
on the reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so indicate. Corporate and
partnership proxies should be signed by an authorized person
indicating the person's title.
Date , 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316127208/fund #306
Please refer to the Proxy Statement discussion of each of these
matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Please detach at perforation before mailing.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the twelve nominees [ ] FOR all nominees listed [ ] WITHHOLD authority to 1.
specified below as Trustees: (except as marked to the vote for all nominees.
(01) Ralph F. Cox, (02) contrary below).
Phyllis Burke Davis, (03)
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E.
Bradley Jones, (06) Donald
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) Thomas R. Williams
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE
NOMINEE(S) ON THE LINE
BELOW.)
</TABLE>
______________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Deloitte & Touche LLP as
independent accountants of
the fund.
3. To authorize the Trustees to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
adopt an amended and
restated Declaration of Trust.
4. To amend the trust's Bylaws. FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
5. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
policy for the fund that
would permit it to invest
all of its assets in another
open-end investment company
managed by FMR or an
affiliate with substantially
the same investment
objective and policies.
7. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
management contract for the
fund.
8. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
sub-advisory agreement with
FMR U.K. for the fund.
9. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
sub-advisory agreement with
FMR Far East for the fund.
10. To approve a Distribution and FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
Service Plan for the fund.
11. To eliminate a fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
investment policy for the
fund.
12. To amend the fund's FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
diversification limitation
to exclude "securities of
other investment companies"
from issuer diversification
limitations.
</TABLE>
DESII -pxc-0499 cusip # 316127208/fund #306
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
Dear Fidelity Destiny Portfolio Shareholder:
On June 16, 1999, there will be a special meeting of shareholders of
Destiny I and Destiny II Funds.
The matters to be discussed are important, and directly affect your
investment. As a shareholder, the number of votes you are entitled to
is based upon the dollar value of your investment. YOU MAY THINK YOUR
VOTE IS INSIGNIFICANT, BUT EVERY VOTE IS EXTREMELY IMPORTANT. We must
continue sending requests to vote until a majority of the shares are
voted prior to the meeting. Additional mailings are expensive, and
these costs are charged directly to the fund.
The enclosed Proxy Statement details the proposals under
consideration. A list of the proposals can be found on the cover of
the Proxy Statement. In addition, we have attached a Q&A to assist
you in understanding the proposals that require your vote. After you
have read the material, please cast your vote promptly by signing and
returning the enclosed proxy card. It is important that you sign the
proxy card exactly as your name appears in the account registration.
A postage-paid envelope has been provided. Your time will be well
spent, and you will help save the cost of the additional mailings.
These proposals have been carefully considered by the fund's Board of
Trustees, which is responsible for protecting your interests as a
shareholder. THE BOARD OF TRUSTEES BELIEVES THESE PROPOSALS ARE FAIR
AND REASONABLE, AND RECOMMENDS THAT YOU APPROVE THEM. If you have any
questions about any of the proposals, please do not hesitate to call
1-800-225-5270.
Remember, this is your opportunity to voice your opinion on matters
affecting your fund. YOUR PARTICIPATION IS EXTREMELY IMPORTANT NO
MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
Thank you. We appreciate your prompt attention.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Q&A
IMPORTANT INFORMATION TO
HELP YOU UNDERSTAND THE
PROPOSALS THAT YOU
ARE BEING ASKED TO VOTE ON.
PLEASE READ THE FULL TEXT OF THE PROXY STATEMENT. BELOW IS A BRIEF
OVERVIEW OF THE MATTERS TO BE VOTED UPON. YOUR VOTE IS IMPORTANT. IF
YOU HAVE ANY QUESTIONS REGARDING THE PROPOSALS PLEASE CALL
800-225-5270. WE APPRECIATE YOU PLACING YOUR TRUST IN THE FIDELITY
DESTINY PORTFOLIOS AND LOOK FORWARD TO HELPING YOU ACHIEVE YOUR
FINANCIAL GOALS.
Q. WHAT ROLE DOES THE BOARD OF TRUSTEES PLAY? (PROPOSAL 1)
A. The Board of Trustees oversees the investment policies of Destiny
I and Destiny II. Members of the Board are fiduciaries and have an
obligation to serve the best interests of shareholders, including
approving policy changes such as those proposed in the proxy
statement. In addition, the Trustees review fund performance, oversee
fund activities, and review contractual arrangements with companies
that provide services to the funds.
Q. WHAT IS THE ROLE OF DELOITTE & TOUCHE LLP AS INDEPENDENT
ACCOUNTANTS OF DESTINY I AND DESTINY II? (PROPOSAL 2)
A. As independent accountants, Deloitte & Touche LLP will examine
annual financial statements for the funds and provide other audit and
tax-related services. They will also sign or certify any financial
statements of the funds that are required by law to be independently
certified and filed with the Securities and Exchange Commission (SEC).
Q. WHY ARE THE TRUSTEES PROPOSING TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST? (PROPOSAL 3)
A. The new Declaration of Trust is a more modern form of trust
instrument for a Massachusetts business trust. It gives the Trustees
more flexibility, and, subject to the applicable requirements of
federal and state law, broader authority to act. This increased
flexibility may allow the Trustees to react more quickly to changes in
competitive and regulatory conditions. Adoption of the new
Declaration of Trust will not alter the Trustees' existing fiduciary
obligations to act in the best interest of the funds' shareholders.
Before utilizing any new flexibility that the new Declaration of Trust
may afford, the Trustees must first consider the shareholders'
interests and act in accordance with such interests.
Q. WHY ARE THE TRUSTEES PROPOSING TO AMEND THE TRUST'S BYLAWS?
(PROPOSAL 4)
A. The Board of Trustees recommends that shareholders approve a
proposal to amend the Bylaws in order to allow the Trustees added
flexibility in approving any changes to the Bylaws without seeking
special shareholder approval. Any adopted Bylaws will be standard for
most Fidelity funds. The Trustees believe that the amended Bylaws
will enable Destiny I and Destiny II to respond to changing conditions
more rapidly and without the expense of a special shareholder meeting.
Q. WHY ARE DESTINY I AND DESTINY II ADOPTING AN INVESTMENT POLICY TO
PERMIT THE FUNDS TO INVEST ALL OF THEIR ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY WITH SIMILAR INVESTMENT OBJECTIVES AND POLICIES?
(PROPOSAL 5)
A. This proposal will allow each fund to implement a "master-feeder"
fund structure that allows "feeder" funds to invest all of their
assets in a single "master" fund. The purpose of this structure is to
achieve operational efficiencies by consolidating portfolio management
while maintaining different distribution and servicing structures.
While neither FMR nor the Board of Trustees has determined that each
fund should invest in a "master fund," the Board of Trustees believes
it could be in the best interest of each fund to adopt such a
structure at a future date.
Q. WHAT IS BEING AMENDED IN THE DESTINY I AND DESTINY II MANAGEMENT
CONTRACTS? (PROPOSALS 6 AND 7)
A. The primary purpose of this proposal is to eliminate the
performance adjustment component of the management fee that FMR
receives under each fund's management contract. The proposed
management contract also modifies the management fee to provide lower
fees when FMR's assets under management exceed certain levels, and
allows FMR and the trust , on behalf of each fund, to modify the
management contract subject to the requirements of federal law.
Under each fund's current management contract, the management fee is
increased or decreased based upon the fund's performance relative to
the Standard & Poor's 500 Index (Index). If the proposal is approved
by shareholders, the performance component of the management fee would
be eliminated after an 18-month "phase-out" period. The future impact
of eliminating the performance adjustment will depend on many factors
and may represent an increase or decrease from each fund's present
management fee, depending on each fund's performance relative to the
Index.
Q. WHAT IS THE BENEFIT OF APPROVING NEW SUB-ADVISORY AGREEMENTS WITH
FMR U.K. AND FMR FAR EAST? (PROPOSALS 8 AND 9)
A. FMR U.K., with its principal office in London, England and FMR Far
East, with its principal office in Tokyo, Japan, are wholly owned
subsidiaries of FMR. Both FMR U.K. and FMR Far East provide FMR with
investment advice and research on foreign securities specific to their
regions. This research complements other research produced by FMR's
U.S. based research analysts and portfolio managers.
The proposed agreements would allow FMR U.K. and FMR Far East to
continue to provide FMR with investment advice and research services.
They would also permit FMR to grant FMR U.K. and FMR Far East
investment management authority if FMR believes it would be beneficial
to the funds and their shareholders.
The sub-advisory agreements on behalf of the funds would provide FMR
with increased flexibility to access more specialized investment
expertise in foreign markets. The proposed agreements would not
increase fees paid to FMR by the funds.
Q. WHAT IS A DISTRIBUTION AND SERVICE PLAN, AND WHY ARE DESTINY I AND
DESTINY II PROPOSING TO ADOPT ONE? (PROPOSAL 10)
A. The Distribution and Service Plan (the Plan) for each fund will be
adopted pursuant to Rule 12b-1 (the Rule) of the Investment Company
Act of 1940 (1940 Act). The Rule provides that a mutual fund acting
as a distributor of its shares must do so according to a written Plan
describing all material aspects of the proposed financing of
distribution that has been approved by the Board of Trustees and
shareholders. The Plan is designed to avoid legal uncertainties which
may arise from ambiguities within the Rule.
Each Plan will be a "no-fee" Plan under which FMR may use its own
resources to pay expenses in connection with the distribution of fund
shares. The Plan does not authorize payments by each fund other than
those that are to be made to FMR under its management contract.
Q. WHY IS A FUNDAMENTAL INVESTMENT POLICY BEING ELIMINATED BY DESTINY
I AND DESTINY II? (PROPOSAL 11)
A. Each fund's investment objective is to seek capital growth.
However, each fund also has a fundamental policy that states "although
many of the securities in each fund's portfolio at any given time may
be income-producing, income generally will not be a consideration in
the selection of securities." The quoted policy cannot be eliminated
without a shareholder vote.
It is proposed that the quoted policy be eliminated to allow each fund
to more clearly communicate its investment strategies in conformity
with the requirements of newly revised Form N-1A (the form used by
open-end investment companies like the funds to register under the
1940 Act and the Securities Act of 1933). The elimination of this
investment policy is not expected to affect the way each fund is
managed.
Q. WHAT IS THE BENEFIT OF AMENDING THE DIVERSIFICATION LIMITATION OF
DESTINY I AND DESTINY II TO
EXCLUDE SECURITIES OF OTHER INVESTMENT COMPANIES FROM ISSUER
DIVERSIFICATION LIMITS? (PROPOSAL 12)
A. This proposal would permit the funds to invest without limit
in the securities of other investment
companies. As a result of an exemption granted by the SEC, each fund
may invest up to 25% of its total assets in non-publicly offered money
market and short term bond funds (Central Funds) managed by FMR or an
affiliate of FMR. FMR anticipates that the Central Funds will benefit
each fund by enhancing the efficiency of cash management and by
providing increased short term investment opportunities.
Q. HAS THE FUNDS' BOARD OF TRUSTEES APPROVED THE PROPOSALS?
A. Yes. The Board of Trustees of Destiny I and Destiny II has
unanimously approved all of the
proposals and recommends that you vote to approve each one.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed
proxy card(s), and mailing them in the enclosed postage paid envelope.
If you need any assistance, or have any questions regarding the
proposals or how to vote your shares, please call 800-225-5270.
[DESTINY]
Fidelity Destiny
Portfolios
Important proxy materials are on the way to your clients right now.
April 19, 1999
Dear Investment Professional:
On Wednesday, June 16, 1999, there will be a Special Meeting of
Shareholders of Fidelity Destiny Portfolios.
The enclosed Proxy Statement details the proposals pertaining to the
funds. We also have enclosed a copy of the letter that is being
mailed to your clients who hold shares in the funds.
In addition, we have enclosed a Q&A to assist you in understanding the
proposals that require voting. If you have any questions about this
proxy after reading this letter, Proxy Statement and Q&A, please call
800-225-5270.
We appreciate your support and look forward to serving you in any way
we can.
Sincerely,
/s/ Daniel T. Geraci
Daniel T. Geraci
Executive Vice President
This letter is intended for broker dealer use only, any may not be
reproduced or shown to the public in oral or written form as sales
material.
[Fidelity logo]
Fidelity Investments Institutional Services Company, Inc., 82
Devonshire Street, Boston, MA 02109
