SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] 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:
<PAGE>
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
DESTINY I:
CLASS O
CLASS N
DESTINY II:
CLASS O
CLASS N
FUNDS OF FIDELITY DESTINY PORTFOLIOS:
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-840-6333
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 9:00 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 Class O shares of 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
<PAGE>
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
2
<PAGE>
PROXY STATEMENT
FIDELITY DESTINY PORTFOLIOS
SPECIAL MEETING OF SHAREHOLDERS OF
DESTINY I:
CLASS O
CLASS N
DESTINY II:
CLASS O
CLASS N
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 9:00 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
3
<PAGE>
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 may be acquired initially only by means of an
investment in Fidelity Systematic Investment Plans, a plan consisting of two
series, Destiny Plans I and Destiny Plans II (collectively, Destiny Plans), 82
Devonshire Street, Boston, Massachusetts 02109, for the accumulation of shares
of the funds. Investments in Destiny Plans I purchase shares of Destiny I and
investments in Destiny II Plans purchase shares of Destiny II. On [February 28,
1999], there were ___________ Class O shares of Destiny I and _________ Class O
shares of Destiny II issued and outstanding. On [February 28, 1999], Destiny
Plans owned _________ Class O shares or ____% of the Class O shares of Destiny I
outstanding on that date and __________ Class O shares or ____% of the Class O
shares of Destiny II outstanding on that date. As of [February 28, 1999], Class
N shares were not in existence. 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 800-840-6333 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 10 AND 12 REQUIRES THE AFFIRMATIVE VOTE OF A
"MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF THE APPROPRIATE FUNDS.
APPROVAL OF PROPOSAL 11 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE
OUTSTANDING VOTING SECURITIES" OF CLASS O SHARES. 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.
<TABLE>
<CAPTION>
Proposal # Proposal Description Applicable Fund(s)
- ---------- -------------------- ------------------
<S> <C> <C>
1. To elect as Trustees the twelve nominees presented in proposal 1. All
2. To ratify the selection of Deloitte & Touche LLP as independent All
accountants of the funds.
3. To authorize the Trustees to adopt an amended and restated All
Declaration of Trust.
4. To amend the trust's Bylaws to require only Trustee approval of All
changes to the Bylaws.
5. To adopt a new fundamental investment policy for the fund that would All
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.
4
<PAGE>
Proposal # Proposal Description Applicable Fund(s)
- ---------- -------------------- ------------------
6. To approve an amended management contract for the fund that would: (i) Destiny 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.
7. To approve an amended management contract for the fund that would: Destiny II
(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 sub-advisory agreement with FMR U.K. to provide All
investment advice and research services or investment management
services.
9. To approve an amended sub-advisory agreement with FMR Far East to All
provide investment advice and research services or investment
management services.
10. To approve a Distribution and Service Plan for Class O shares of each All
fund which describes all material aspects of the proposed financing
for the distribution of Class O shares of the fund.
11. To eliminate a fundamental investment policy for the fund. All
12. To amend the diversification limitation to exclude "securities of All
other investment companies" from issuer diversification limitations.
</TABLE>
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 ____) 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.
5
<PAGE>
<TABLE>
<CAPTION>
Year of
Nominee Election or
(Age) Principal Occupation ** Appointment
----- ----------------------- -----------
<S> <C> <C>
Ralph F. Cox President of RABAR Enterprises (management 1991
(66) 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 Prior to her retirement in September 1991, Mrs. Davis was 1992
(67) 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 Consultant, author, and lecturer (1993). Mr. Gates was 1997
(55) 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.
6
<PAGE>
Year of
Nominee Election or
(Age) Principal Occupation ** Appointment
----- ----------------------- -----------
<S> <C> <C>
*Edward C. Johnson 3d President, is Chairman, Chief Executive Officer and a 1968
(68) 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 Prior to his retirement in 1984, Mr. Jones was Chairman 1990
(71) 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 Executive-in-Residence (1995) at Columbia University 1987
(66) 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).
7
<PAGE>
Year of
Nominee Election or
(Age) Principal Occupation ** Appointment
----- ----------------------- -----------
<S> <C> <C>
*Peter S. Lynch Vice Chairman and Director of FMR. Prior to May 31, 1997
(56) 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 Vice President of Finance for the University of North 1997
(65) 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 Chairman of G.M. Management Group (strategic advisory 1989
(70) 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 Chairman of the Board of Lexmark International, Inc. 1993
(66) (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 Senior Vice President, is also President and a Director N/A
(52) 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.
8
<PAGE>
Year of
Nominee Election or
(Age) Principal Occupation ** Appointment
----- ----------------------- -----------
<S> <C> <C>
Thomas R. Williams President of The Wales Group, Inc. (management and 1989
(70) 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.
9
<PAGE>
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>
<CAPTION>
Compensation Table
Aggregate Aggregate Total
Compensation Compensation Compensation
Trustees and Members from from from the
of the Advisory Board Destiny IB, C, E Destiny IIB, D, E Fund Complex*A
--------------------- ---------------- ----------------- --------------
<S> <C> <C> <C>
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.
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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, $774, Marvin L. Mann, $663, and Thomas R. Williams, $663.
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, $1,053, 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, $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.
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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, financial
statement disclosures or audit scope, which if not resolved to the satisfaction
of PwC would have caused it to make reference to the disagreements in connection
with its report on the financial statement for such years.
Effective February 18, 1999, PwC resigned and 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.
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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 and July 16, 1998, 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.
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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 __ 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 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 is 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
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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 ____ and _____.
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.
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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 __ 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
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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 Fund
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 THAT A
MASTER 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 CONSEQUENCES 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.
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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.
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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 __ 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
19
<PAGE>
on page __. 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 - the Basic Fee rate will no
longer be increased or decreased based on the fund's performance relative to the
Index. It would 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 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 0.3071% of the Fund'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
20
<PAGE>
Securities and Exchange Commission (SEC) rules for calculating performance
adjustments are intended to ensure that positive or negative adjustments result
from the adviser's management skill and not random or irrelevant factors.
In April 1999, the fund began offering a second class of shares, Class
N. When the Present Contract was adopted in 1993, the fund had one class of
shares, 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 pay 12b-1 fees,
which lower performance, of 25 basis points.
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 FMR's view on the inconsistent
treatment of distribution fees in performance adjustment calculations, FMR
recommended and the Board approved, a proposal to eliminate the performance
adjustment component from the Fund's Management Contract rather than use the
performannce of any single class of the fund or adopt a different methodology to
account for the new multiple class structure for calculating performance
adjustments.
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 on the fund 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, 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 $210
billion as illustrated in the following table. (For an explanation of how the
Group Fee rate is used to calculate the management fee, see the section entitled
"Present Management Contracts" on page __.)
21
<PAGE>
<TABLE>
<CAPTION>
GROUP FEE RATE BREAKPOINTS
Average Group Average Group
Assets Present Assets Amended
($ billions) Contract ($ billions) Contract
------------ -------- ------------ --------
<S> <C> <C> <C>
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 Present Amended
($ billions) Contract 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>
Present Contract Amended Contract Difference
---------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ % $ % $ %
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
Management Fee
</TABLE>
22
<PAGE>
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 for the Class O shares
adjusted to reflect current fees of the Class O shares of the fund and are
calculated as a percentage of average net assets.
Class O:
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% for Class O under the Present Contract and 0.48%
for Class O under the Amended Contract.
The fund began issuing Class N shares on April 2, 1999. The following
figures are based on estimated expenses of Class N shares of the fund and are
calculated as a percentage of average net assets of Class N shares for the fund.
Class N:
Present Contract Amended Contract
---------------- ----------------
Management Fee 0.33% .46%
12b-1 Fee 0.25% .25%
Other Expenses .66% .66%
----- ----
Total Fund Operating Expenses 1.24% 1.37%
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:
Class O:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Present Contract $4 $11 $20 $44
Amended Contract $5 $15 $27 $60
23
<PAGE>
Class N:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Present Contract $13 $39 $68 $150
Amended Contract $14 $43 $75 $165
</TABLE>
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 Securities and Exchange Commission. 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
24
<PAGE>
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 index, 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
25
<PAGE>
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
26
<PAGE>
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 __ 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 __. 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)
27
<PAGE>
during which the Performance Adjustment will be eliminated, the fund's aggregate
management fee rate will equal the Basic Fee rate - the 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 are intended to ensure that positive or negative adjustments result
from the adviser's management skill and not random or irrelevant factors.
In April 1999, the fund began offering a second class of shares, Class
N. When the Present Contract was adopted in 1993, the fund had one class of
shares, 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 pay 12b-1 fees,
which lower performance, of 25 basis points.
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 FMR's view on the inconsistent
treatment of distribution fees in performance adjustment calculations, FMR
recommended and the Board approved, a proposal to eliminate the performance
adjustment component from the Fund's Management Contract rather than use the
performannce of any single class of the fund or adopt a different methodology to
account for the new multiple class structure for calculating performance
adjustments.
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 on the fund 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
28
<PAGE>
period, the Performance Adjustment can decrease, but not increase, the
management fee owed by the fund. During the phase-out period, 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 $210
billion as illustrated in the following table. (For an explanation of how the
Group Fee rate is used to calculate the management fee, see the section entitled
"Present Management Contracts" on page __.)
<TABLE>
<CAPTION>
GROUP FEE RATE BREAKPOINTS
Average Group Average Group
Assets Present Assets Amended
($ billions) Contract ($ billions) Contract
------------ -------- ------------- --------
<S> <C> <C> <C>
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 Present Amended
($ billions) Contract 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%
29
<PAGE>
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>
Present Contract Amended Contract Difference
---------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ % $ % $ %
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
Management Fee
</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 for the Class O shares
adjusted to reflect current fees of the Class O shares of the fund and are
calculated as a percentage of average net assets.
Class O:
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% for Class O under the Present Contract and 0.62%
for Class O under the Amended Contract.
30
<PAGE>
The fund began issuing Class N shares on April 2, 1999. The following
figures are based on estimated expenses of Class N shares of the fund and are
calculated as a percentage of average net assets of Class N shares for the fund.
Class N:
Present Contract Amended Contract
---------------- ----------------
Management Fee .47% .59%
12b-1 Fee .25% .25
Other Expenses .66% .66%
----- ----
Total Fund Operating Expenses 1.38% 1.50%
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:
Class O:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Present Contract $5 $16 $28 $63
Amended Contract $6 $20 $35 $77
Class N:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Present Contract $14 $44 $76 $166
Amended Contract $15 $47 $82 $179
</TABLE>
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 Securities and Exchange Commission. 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
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<PAGE>
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 index, 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
32
<PAGE>
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.
33
<PAGE>
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.
34
<PAGE>
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
35
<PAGE>
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, 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
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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
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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 CLASS
O SHARES OF EACH FUND.
The Board of Trustees has approved, and recommends that Class O
shareholders of Destiny I and Destiny II approve, a Distribution and Service
Plan (the Plan) for Class O shares of each fund. A copy of the form of Plan 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.
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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 Class O 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
Class O 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 Class O 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 Class O 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 Class O 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
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<PAGE>
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 Class O
shareholders. The Trustees recommend that Class O 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 strategy 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 policies, will allow each fund to more clearly communicate its
investment strategy 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.
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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]Government or any of its agencies or
instrumentalities, or securities of other investment companies) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10%
of the outstanding voting securities of that issuer."
The 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.
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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, net
assets, and total expenses 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 __.
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, Mr. Silver, and _______________________, 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, [the
following transactions/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.
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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 __.
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.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC by Destiny I and Destiny II fiscal 1998 amounted to
$824,006 and $812,105, 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.
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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>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
----------------------- --------------------------
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
------ ---- ------ --------
<S> <C> <C> <C> <C>
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>
Individual Fund Management/Basic
Group Fee Rate Fee Rate Fee Rate
-------------- --------------- ----------------
<S> <C> <C> <C> <C>
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 per se, 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.
44
<PAGE>
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:
<TABLE>
<CAPTION>
FMR U.K. FMR Far East
-------- ------------
<S> <C> <C> <C>
Destiny I $325,286 $311,961
Destiny II $173,011 $165,398
</TABLE>
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>
Brokerage % of Aggregate Brokerage Commissions % of Aggregate
Commissions Commissions Paid to Paid to Commissions Paid to
Paid to NFSC NFSC FBS FBS
------------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
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, in care of [________], 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.
45
<PAGE>
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;
<PAGE>
[(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
2
<PAGE>
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.))
3
<PAGE>
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.
4
<PAGE>
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.
5
<PAGE>
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].
6
<PAGE>
(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.
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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.
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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
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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
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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.]
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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"].
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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.
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[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.
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(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.
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[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 dividend((s)), 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
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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.]
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(((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
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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.
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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]
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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.
<PAGE>
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.
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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
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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.
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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.
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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.
6
<PAGE>
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.
7
<PAGE>
EXHIBIT 3
COMPARISON OF STAND ALONE FUND STRUCTURE
TO
MASTER FEEDER FUND STRUCTURE
STAND ALONE FUND STRUCTURE
Retail Institutional Retirement
Investors Investors Investors
Individual Individual Individual
Fund A-1 Fund A-2 Fund A-3
(Managed (Managed (Managed by
by FMR) by FMR) FMR)
MASTER FEEDER FUND STRUCTURE
Retail
Investors
Feeder
Fund
A-1
Master Fund
(Managed by
FMR)
Feeder Feeder
Fund A-3 Fund A-2
Retirement Institutional
Investors Investors
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 Class O))
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]for each level)
- ------------------ ---------------------------------------
0 - $ 3 billion .52((00))%
3 - 6 .49((00))
6 - 9 .46((00))
<PAGE>
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((0))
((174)) ((-))((210))
((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 calendar 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 Class O investment
performance. The Basic Fee will be subject to downward adjustment on the basis
of the Portfolio's Class O 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 Class O 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 ((Class O of))
<PAGE>
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.] ((commence with the first day of the first full
month following the Portfolio's commencement of operations. During the first
eleven months of the performance period for the Portfolio, there will be no
performance adjustment. Starting with the twelfth month of the performance
period, the performance adjustment will take effect. Following the twelfth month
a new month will be added to the performance period until the performance period
equals 36 months. Thereafter the performance period will consist 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 Class O ))of the Portfolio on the
first business day of the performance period with (ii) the closing net asset
value of one share ((of Class O)) of the Portfolio as of the last business day
of such period. In computing the investment performance ((of Class O)) 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 Class O)) 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
[December 31, 2000/ the last calendar day of the 18 calendar 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
<PAGE>
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)).
<PAGE>
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]
<PAGE>
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.
<PAGE>
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 Class O))
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]for each level)
- ------------------ ---------------------------------------
0 - $ 3 billion .52((00))%
3 - 6 .49((00))
6 - 9 .46((00))
<PAGE>
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((0))
((174)) ((-))((210))
((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 calendar 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 Class O investment
performance. The Basic Fee will be subject to downward adjustment on the basis
of the Portfolio's Class O 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 Class O 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 ((Class O of))
<PAGE>
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.] ((commence with the first day of the first full
month following the Portfolio's commencement of operations. During the first
eleven months of the performance period for the Portfolio, there will be no
performance adjustment. Starting with the twelfth month of the performance
period, the performance adjustment will take effect. Following the twelfth month
a new month will be added to the performance period until the performance period
equals 36 months. Thereafter the performance period will consist 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 Class O ))of the Portfolio on the
first business day of the performance period with (ii) the closing net asset
value of one share ((of Class O)) of the Portfolio as of the last business day
of such period. In computing the investment performance ((of Class O)) 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 Class O)) 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
[December 31, 2000/ the last calendar day of the 18 calendar 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
<PAGE>
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)).
<PAGE>
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]
<PAGE>
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.))
<PAGE>
[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
2
<PAGE>
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
3
<PAGE>
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]((1999)) 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.
4
<PAGE>
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]
5
<PAGE>
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.))
<PAGE>
[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
2
<PAGE>
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
3
<PAGE>
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]((1999)) 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.
4
<PAGE>
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]
5
<PAGE>
EXHIBIT 8
FORM OF
DISTRIBUTION AND SERVICE PLAN
FIDELITY DESTINY PORTFOLIOS: [FUND NAME]
Class O Shares
The proper name of each fund, Destiny I and Destiny II, will be inserted in each
fund's plan where indicated by [Fund Name].
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, 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 the Fund, 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.
<PAGE>
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.
<PAGE>
EXHIBIT 9
"TO BE UPDATED"
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (A)
<TABLE>
<CAPTION>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- ----------
<S> <C> <C> <C>
GROWTH
Contrafund (POUND) 12/31/97 $27,817.1 0.48%
Trend (POUND) 12/31/97 1,442.4 0.42
Variable Insurance Products:
Growth
Initial Class 12/31/97 6,937.2 0.60
Service Class 12/31/97 0.6 0.60
Overseas (SIGMA)
Initial Class 12/31/97 1,917.4 0.75
Service Class 12/31/97 0.3 0.75
Variable Insurance Products II:
Asset Manager: Growth (POUND)
Initial Class 12/31/97 389.5 .60
Service Class (#) 12/31/97 0.0 .60
Contrafund (POUND)
Initial Class 12/31/97 3,294.9 0.60
Service Class 12/31/97 1.4 0.60
Variable Insurance Products III:
Growth Opportunities (POUND)
Initial Class 12/31/97 703.1 0.60
Service Class 12/31/97 0.7 0.60
Select Portfolios:
Air Transportation (POUND) 2/28/98 62.7 0.60
American Gold 2/28/98 279.5 0.60
Automotive (POUND) 2/28/98 62.2 0.59
Biotechnology (POUND) 2/28/98 577.4 0.60
Brokerage and Investment
Management (POUND) 2/28/98 416.4 0.60
Business Services and
Outsourcing (POUND)** 2/28/98 53.8 0.60(BETA)
Chemicals (POUND) 2/28/98 83.4 0.60
Computers (POUND) 2/28/98 658.0 0.60
Construction and
Housing (POUND) 2/28/98 26.0 0.60
Consumer Industries (POUND) 2/28/98 26.5 0.61
Cyclical Industries (POUND) 2/28/98 3.6 0.00*
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- ----------
Defense and Aerospace (POUND) 2/28/98 63.9 0.60
Select Portfolios (continued)
Developing
Communications (POUND) 2/28/98 $ 238.7 0.60%
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 (POUND) 2/28/98 27.8 0.60
Financial Services (POUND) 2/28/98 468.5 0.60
Food and Agriculture (POUND) 2/28/98 247.0 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
Systems (POUND)** 2/28/98 11.9 0.60(BETA)
Multimedia (POUND) 2/28/98 59.1 0.60
Natural Gas (POUND) 2/28/98 82.3 0.59
Natural Resources (POUND) 2/28/98 6.4 0.00*
Paper and Forest
Products (POUND) 2/28/98 24.2 0.60
Precious Metals and
Minerals (POUND) 2/28/98 194.7 0.60
Regional Banks (POUND) 2/28/98 1,035.6 0.60
Retailing (POUND) 2/28/98 152.9 0.60
Software and Computer
Services (POUND) 2/28/98 434.9 0.60
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*(BETA)
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- ----------
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
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
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- ----------
Advisor Focus Funds
(continued)
Utilities Growth: (POUND)
Class A 7/31/98 $ 1.7 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 (POUND) 8/31/98 468.9 0.59
Destiny I (POUND) 9/30/98 6,399.7 0.31
Destiny II(POUND) 9/30/98 4,058.8 0.45
Advisor International Capital
Appreciation: (RX)**
Class A 10/31/98 0.6 0.73(+)
Class T 10/31/98 6.9 0.73(+)
Class B 10/31/98 2.3 0.73(+)
Class C 10/31/98 1.3 0.73(+)
Institutional Class 10/31/98 5.0 0.73(+)
Advisor Overseas (SIGMA)
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 (SIGMA) 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
(SIGMA)
Emerging Markets (SIGMA) 10/31/98 390.9 0.74
Europe (SIGMA) 10/31/98 1,399.6 0.73%
Europe Capital Appreciation 10/31/98 594.4 0.72
(SIGMA)
France (SIGMA) 10/31/98 12.5 0.73
Germany (SIGMA) 10/31/98 23.7 0.73
Hong Kong and China (RX) 10/31/98 154.3 0.74
International Value (RX) 10/31/98 454.5 0.82
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- ----------
Japan (RX) 10/31/98 238.4 1.01
Japan Small Companies (RX) 10/31/98 95.1 0.74
Latin America (SIGMA) 10/31/98 594.2 0.75
Nordic (SIGMA) 10/31/98 104.3 0.74
Overseas (SIGMA) 10/31/98 3,862.7 0.90
Pacific Basin (RX) 10/31/98 206.8 1.11
Southeast Asia (RX) 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 (SIGMA) 10/31/98 7.5 0.74
Value 10/31/98 7,451.9 0.41
Worldwide (SIGMA) 10/31/98 1,169.1 0.74
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 Small Cap: (POUND)**
Class A 11/30/98 $ 4.2 0.74(BETA)
Class T 11/30/98 30.2 0.74(BETA)
Class B 11/30/98 9.5 0.74(BETA)
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- ----------
Class C 11/30/98 9.4 0.74(BETA)
Institutional Class 11/30/98 8.2 0.74(BETA)
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 .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
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or as of
November 30, 1998, 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 at the close of business on each business day throughout its
fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due form
FMR pursuant to voluntary or state expenses limitations. Funds so
affected are indicated by an (*). The ratio for certain multi-class
funds is presented gross of expense reductions.
(+) Annualized.
# Average net assets for the period shown were less than $100,000.
** Less than a complete fiscal year.
(BETA) Based on estimated expenses for the first year.
(RX) Fidelity Management & Research Company 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. (RJ), Fidelity
International Investment Advisors (FIIA), and Fidelity International
Investment Advisors (U.K.) Limited (FIIA (U.K.)L), with respect to the
fund.
<PAGE>
(SIGMA) Fidelity Management & Research Company 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) Fidelity Management & Research Company has entered into sub-advisory
agreements with FMR U.K. and FMR Far East, with respect to the fund.
<PAGE>
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 9:00 a.m. 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
<PAGE>
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:
- ---------------------------------------------------------------
1. To elect the twelve nominees []FOR all nominees [] WITHHOLD 1.
specified below as Trustees: listed (except as authority
Ralph F. Cox, Phyllis Burke marked to the to vote
Davis, Robert M. Gates, Edward contrary below). for all
C. Johnson 3d, E. Bradley nominees.
Jones, Donald J. Kirk, Peter S.
Lynch, William O. McCoy, Gerald
C. McDonough, Marvin L. Mann,
Robert C. Pozen, and 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.)
________________________________________________________________________________
2. To ratify the selection of FOR[ ] AGAINST[ ] ABSTAIN[ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an FOR[ ] AGAINST[ ] ABSTAIN[ ] 3.
amended and restated Declaration of
Trust.
4. To amend the trust's Bylaws. FOR[ ] AGAINST[ ] ABSTAIN[ ] 4.
5. To adopt a new fundamental policy 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 management FOR[ ] AGAINST[ ] ABSTAIN[ ] 6.
contract for the fund.
8. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 8.
agreement with FMR U.K. for the fund.
9. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 9.
agreement with FMR Far East for the
fund.
10. To approve a Distribution and Service FOR[ ] AGAINST[ ] ABSTAIN [ ] 10.
Plan for Class O shares of the fund.
11. To eliminate a fundamental investment FOR[ ] AGAINST[ ] ABSTAIN [ ] 11.
policy for the fund.
12. To amend the fund's diversification FOR[ ] AGAINST[ ] ABSTAIN [ ] 12.
limitation to exclude "securities of
other investment companies" from
issuer diversification limitations.
DEST-pxc-0499 cusip # 316127109/fund #006
<PAGE>
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 9:00 a.m. 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
<PAGE>
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:
- ---------------------------------------------------------------
1. To elect the twelve nominees []FOR all nominees [] WITHHOLD 1.
specified below as Trustees: listed (except as authority
Ralph F. Cox, Phyllis Burke marked to the to vote
Davis, Robert M. Gates, Edward contrary below). for all
C. Johnson 3d, E. Bradley nominees.
Jones, Donald J. Kirk, Peter S.
Lynch, William O. McCoy, Gerald
C. McDonough, Marvin L. Mann,
Robert C. Pozen, and 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.)
________________________________________________________________________________
2. To ratify the selection of FOR[ ] AGAINST[ ] ABSTAIN[ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an FOR[ ] AGAINST[ ] ABSTAIN[ ] 3.
amended and restated Declaration of
Trust.
4. To amend the trust's Bylaws. FOR[ ] AGAINST[ ] ABSTAIN[ ] 4.
5. To adopt a new fundamental policy 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 management FOR[ ] AGAINST[ ] ABSTAIN[ ] 6.
contract for the fund.
8. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 8.
agreement with FMR U.K. for the fund.
9. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 9.
agreement with FMR Far East for the
fund.
10. To approve a Distribution and Service FOR[ ] AGAINST[ ] ABSTAIN [ ] 10.
Plan for Class O shares of the fund.
11. To eliminate a fundamental investment FOR[ ] AGAINST[ ] ABSTAIN [ ] 11.
policy for the fund.
12. To amend the fund's diversification FOR[ ] AGAINST[ ] ABSTAIN [ ] 12.
limitation to exclude "securities of
other investment companies" from
issuer diversification limitations.
DEST-pxc-0499 cusip # 316127208/fund# 306
<PAGE>
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 9:00 a.m. 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
(006, 306 HH)
<PAGE>
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:
- ---------------------------------------------------------------
1. To elect the twelve nominees []FOR all nominees [] WITHHOLD 1.
specified below as Trustees: listed (except as authority
Ralph F. Cox, Phyllis Burke marked to the to vote
Davis, Robert M. Gates, Edward contrary below). for all
C. Johnson 3d, E. Bradley nominees.
Jones, Donald J. Kirk, Peter S.
Lynch, William O. McCoy, Gerald
C. McDonough, Marvin L. Mann,
Robert C. Pozen, and 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.)
________________________________________________________________________________
2. To ratify the selection of FOR[ ] AGAINST[ ] ABSTAIN[ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an FOR[ ] AGAINST[ ] ABSTAIN[ ] 3.
amended and restated Declaration of
Trust.
4. To amend the trust's Bylaws. FOR[ ] AGAINST[ ] ABSTAIN[ ] 4.
5. To adopt a new fundamental policy 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 management FOR[ ] AGAINST[ ] ABSTAIN[ ] 6.
contract for the fund.
8. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 8.
agreement with FMR U.K. for the fund.
9. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 9.
agreement with FMR Far East for the
fund.
10. To approve a Distribution and Service FOR[ ] AGAINST[ ] ABSTAIN [ ] 10.
Plan for Class O shares of the fund.
11. To eliminate a fundamental investment FOR[ ] AGAINST[ ] ABSTAIN [ ] 11.
policy for the fund.
12. To amend the fund's diversification FOR[ ] AGAINST[ ] ABSTAIN [ ] 12.
limitation to exclude "securities of
other investment companies" from
issuer diversification limitations.
DEST-pxc-0499 cusip # 316127109/fund# 006 HH
<PAGE>
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 9:00 a.m. 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
(006, 306 HH)
<PAGE>
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:
- ---------------------------------------------------------------
1. To elect the twelve nominees []FOR all nominees [] WITHHOLD 1.
specified below as Trustees: listed (except as authority
Ralph F. Cox, Phyllis Burke marked to the to vote
Davis, Robert M. Gates, Edward contrary below). for all
C. Johnson 3d, E. Bradley nominees.
Jones, Donald J. Kirk, Peter S.
Lynch, William O. McCoy, Gerald
C. McDonough, Marvin L. Mann,
Robert C. Pozen, and 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.)
________________________________________________________________________________
2. To ratify the selection of FOR[ ] AGAINST[ ] ABSTAIN[ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an FOR[ ] AGAINST[ ] ABSTAIN[ ] 3.
amended and restated Declaration of
Trust.
4. To amend the trust's Bylaws. FOR[ ] AGAINST[ ] ABSTAIN[ ] 4.
5. To adopt a new fundamental policy 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 management FOR[ ] AGAINST[ ] ABSTAIN[ ] 6.
contract for the fund.
8. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 8.
agreement with FMR U.K. for the fund.
9. To approve an amended sub-advisory FOR[ ] AGAINST[ ] ABSTAIN[ ] 9.
agreement with FMR Far East for the
fund.
10. To approve a Distribution and Service FOR[ ] AGAINST[ ] ABSTAIN [ ] 10.
Plan for Class O shares of the fund.
11. To eliminate a fundamental investment FOR[ ] AGAINST[ ] ABSTAIN [ ] 11.
policy for the fund.
12. To amend the fund's diversification FOR[ ] AGAINST[ ] ABSTAIN [ ] 12.
limitation to exclude "securities of
other investment companies" from
issuer diversification limitations.
DEST-pxc-0499 cusip #316127208/fund# 306 HH
