SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-34099)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 68 [X]
and
REGISTRATION STATEMENT (No. 811-1796)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 68 [X]
Fidelity Destiny Portfolios
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(x) on (November 26, 1999) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
LIKE SECURITIES OF ALL MUTUAL FUNDS, THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, AND THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FIDELITY(REGISTERED TRADEMARK)
DESTINY PORTFOLIOS
DESTINY I - CLASS O
(Fund 006, CUSIP 316127109)
DESTINY II - CLASS O
(Fund 306, CUSIP 316127208)
S hares of Class O of each fund are only available to the
general public through Fidelity Systematic Investment Plans:
Destiny Plans I: O and Destiny Plans II: O (the " Destiny Plans"
or a " Destiny Plan"), a unit investment trust. Details of the
Destiny Plans, including the Creation and Sales Charges and the
Custodian Fees, are discussed in the prospectus for the Destiny
Plans. Prospective investors should read this prospectus in
conjunction with the Destiny Plans' prospectus.
PROSPECTUS
NOVEMBER 26, 1999
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY F-3 INVESTMENT SUMMARY
F-4 PERFORMANCE
F-6 FEE TABLE
FUND BASICS F-8 INVESTMENT DETAILS
F-9 VALUING SHARES
SHAREHOLDER INFORMATION F-11 BUYING AND SELLING SHARES
F-14 EXCHANGING SHARES
F-14 ACCOUNT FEATURES AND POLICIES
F-16 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
F-17 TAX CONSEQUENCES
FUND SERVICES F-18 FUND MANAGEMENT
F-19 FUND DISTRIBUTION
APPENDIX F-20 FINANCIAL HIGHLIGHTS
F-22 ADDITIONAL PERFORMANCE
INFORMATION
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
DESTINY I seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing primarily in common stocks.
(small solid bullet) Potentially investing in other types of
securities, including bonds which may be lower-quality debt
securities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently from the U.S. market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
DESTINY II seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Normally investing primarily in common stocks.
(small solid bullet) Potentially investing in other types of
securities, including bonds which may be lower-quality debt
securities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently from the U.S. market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in each fund's
performance from year to year and compares Class O's performance to
the performance of a market index and an average of the performance of
similar funds over various periods of time and also illustrates the
performance of the Destiny Plans. Returns for each fund do not include
the effect of the Destiny Plan Creation and Sales Charges and
Custodian Fees. Returns for each fund would be lower if the effect of
the Destiny Plan Creation and Sales Charges and Custodian Fees was
included. The returns for the Destiny Plans do include the effect of
the Destiny Plan Creation and Sales Charges and Custodian Fees.
Returns are based on past results and are not an indication of
future performance .
YEAR-BY-YEAR RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DESTINY I - CLASS O
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
25.54% -3.15% 38.92% 15.15% 26.42% 4.43% 36.95% 18.55% 30.92% 25.63%
</TABLE>
Percentage
(%)
Row: 1, Col: 1, Value: 25.54
Row: 2, Col: 1, Value: -3.15
Row: 3, Col: 1, Value: 38.92
Row: 4, Col: 1, Value: 15.15
Row: 5, Col: 1, Value: 26.42
Row: 6, Col: 1, Value: 4.430000000000001
Row: 7, Col: 1, Value: 36.95
Row: 8, Col: 1, Value: 18.55
Row: 9, Col: 1, Value: 30.92
Row: 10, Col: 1, Value: 25.63
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS O OF DESTINY I, THE
HIGHEST RETURN FOR A QUARTER WAS 21.23 % (QUARTER ENDING
MARCH 31 , 1991 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-18.64 % (QUARTER ENDING SEPTEMBER 30 , 1990 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS O OF
DESTINY I WAS -1.52 %.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DESTINY II - CLASS O
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
26.41% -2.52% 41.42% 15.48% 26.81% 4.48% 35.96% 17.86% 29.64% 28.11%
</TABLE>
Percentage
(%)
Row: 1, Col: 1, Value: 26.41
Row: 2, Col: 1, Value: -2.52
Row: 3, Col: 1, Value: 41.42
Row: 4, Col: 1, Value: 15.48
Row: 5, Col: 1, Value: 26.81
Row: 6, Col: 1, Value: 4.48
Row: 7, Col: 1, Value: 35.96
Row: 8, Col: 1, Value: 17.86
Row: 9, Col: 1, Value: 29.64
Row: 10, Col: 1, Value: 28.11
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS O OF DESTINY II, THE
HIGHEST RETURN FOR A QUARTER WAS 25.56 % (QUARTER ENDING
DECEMBER 31, 1998 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-20.41 % (QUARTER ENDING SEPTEMBER 30, 1990 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS O OF
DESTINY II WAS 3.58 %.
AVERAGE ANNUAL RETURNS - FUNDS
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
DESTINY I - CLASS O 25.63% 22.77% 21.23%
Standard & Poor's 500 Index 28.58% 24.06% 19.21%
Lipper Growth Funds Average 22.86% 18.63% 16.72%
DESTINY II - CLASS O 28.11% 22.69% 21.65%
Standard & Poor's 500 Index 28.58% 24.06% 19.21%
Lipper Growth Funds Average 22.86% 18.63% 16.72%
AVERAGE ANNUAL RETURNS - PLANS
The returns in the following table include the effect of the
Destiny Plan Creation and Sales Charges and Custodian Fees for a
$50/month, 15 year Destiny Plan. The returns assume an initial $600
lump sum investment at the beginning of each period shown, with no
subsequent Destiny Plan investments in that year. Because the returns
assume yearly lump sum investments, they do not reflect what investors
would have earned if they had made only regular monthly investments
over the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years Past 15 years/ Life of Plan
December 31, 1998
Destiny Plans I: O -39.95% 18.34% 19.64% 18.28%
Destiny Plans II: O -38.76% 18.27% 20.05% 22.10%A
</TABLE>
A FROM DECEMBER 30, 1985 (COMMENCEMENT OF OPERATIONS OF CLASS
O).
Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.
The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell Class O shares of a fund but does not
reflect the Destiny Plan Creation and Sales Charges and Custodian
Fees . The annual class operating expenses provided below for Class
O do not reflect the effect of any reduction of certain expenses
during the period.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Class O
Sales charge (load) on NONE
purchases and reinvested
distributions
Deferred sales charge (load) NONE
on redemptions
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Class O
Destiny I Management fee 0.29%
Distribution and Service NONE
(12b-1) fee
Other expenses 0.03%
TOTAL ANNUAL CLASS OPERATING 0.32%
EXPENSES
Destiny II Management fee 0.45%
Distribution and Service NONE
(12b-1) fee
Other expenses 0.03%
TOTAL ANNUAL CLASS OPERATING 0.48%
EXPENSES
A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, through arrangements with
each funds' custodian and transfer agent , credits realized
as a result of uninvested cash balances are used to reduce custodian
and transfer agent expenses. Including these reduction s , the
total Class O operating expenses would have been 0.31 % for
Destiny I and 0.47 % for Destiny II.
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that Class O's annual return is 5% and that
your shareholder fees and Class O's annual operating expenses are
exactly as described in the fee table. This example illustrates the
effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicated:
Class O
Destiny I 1 year $ 33
3 years $ 103
5 years $ 180
10 years $ 406
Destiny II 1 year $ 49
3 years $ 154
5 years $ 269
10 years $ 604
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
DESTINY I seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets primarily in common stocks. FMR
may also invest the fund's assets in other types of securities,
including bonds which may be lower-quality debt securities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates , and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
DESTINY II seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets primarily in common stocks. FMR
may also invest the fund's assets in other types of securities,
including bonds which may be lower-quality debt securities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates , and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible
securities , and warrants.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable, or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest but
are sold at a discount from their face values. Debt securities include
corporate bonds, government securities, and mortgage and other
asset-backed securities.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance. A fund's share price
changes daily based on changes in market conditions and interest rates
and in response to other economic, political , or financial
developments. A fund's reaction to these developments will be affected
by the types of securities in which the fund invests, the financial
condition, industry and economic sector, and geographic location of an
issuer, and the fund's level of investment in the securities of that
issuer. When you sell your shares of a fund, they could be worth more
or less than what you paid for them.
The following factors can significantly affect a fund's performance:
STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market , and economic
developments. In the short-term, equity prices can fluctuate
dramatically in response to these developments. Different parts of the
market and different types of equity securities can react differently
to these developments. For example, large cap stocks can react
differently from small cap stocks, and "growth" stocks can react
differently from "value" stocks. Issuer, political , or economic
developments can affect a single issuer, issuers within an industry or
economic sector or geographic region, or the market as a whole.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities and mortgage
securities can be more sensitive to interest rate changes.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic ,
or regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial , and other operational risks;
and the less stringent investor protection and disclosure standards of
some foreign markets. All of these factors can make foreign
investments, especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments. In addition, foreign
markets can perform differently from the U.S. market.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of
an issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. The value of securities of smaller,
less well-known issuers can be more volatile than that of larger
issuers. Lower-quality debt securities (those of less than
investment-grade quality) tend to be more sensitive to these changes
than higher-quality debt securities.
Lower-quality debt securities involve greater risk of default or price
changes due to changes in the credit quality of the issuer. The value
of lower-quality debt securities often fluctuates in response to
company, political , or economic developments and can decline
significantly over short periods of time or during periods of general
or regional economic difficulty.
In response to market, economic, political , or other
conditions, FMR may temporarily use a different investment strategy
for defensive purposes. If FMR does so, different factors could affect
a fund's performance and the fund may not achieve its investment
objective.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
DESTINY I seeks capital growth.
DESTINY II seeks capital growth.
VALUING SHARES
Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelit y normally calculates Class O's NAV as of the
close of business of the NYSE, normally 4:00 p.m. Eastern time.
However, NAV may be calculated earlier if trading on the NYSE is
restricted or as permitted by the Securities and Exchange Commission
(SEC). Each fund's assets are valued as of this time for the purpose
of computing Class O's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each fund's assets are valued primarily on the basis of market
quotations. Certain short-term securities are valued on the basis of
amortized cost. If market quotations are not readily available for a
security or if a security's value has been materially affected by
events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or
market), that security may be valued by another method that the Board
of Trustees believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining
value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
To contact Fidelity for account, product and service
information, please use the following phone numbers:
(small solid bullet) Nationally (toll-free), 1-800-433-0734 (8:30 a.m.
- - 7:00 p.m. Eastern time, Monday through Friday).
(small solid bullet) In Alaska or Overseas (call collect),
1-617- 330-3183 (8:00 a.m. - 6:00 p.m. Eastern time, Monday
through Friday).
Please use the following address es :
SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Class O shares of the funds through a retirement
account or sell Class O shares through an investment professional.
When you invest through a retirement account or an investment
professional, the procedures for buying, selling, and exchanging Class
O shares of a fund and the account features and policies may differ.
Additional fees may also apply to your investment in Class O shares of
a fund, including a transaction fee if you sell Class O shares of
a fund through a broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
BUYING SHARES
Each fund has an agreement with Fidelity Distributors Corporation
(FDC) under which the fund issues shares at NAV to State Street Bank
and Trust Company (State Street) as Custodian for the Destiny
Plans. Generally, State Street will hold all shares of each fund
unless a Planholder elects to hold fund shares directly after
completing or terminating a Destiny Plan. The terms of
the offering of the Destiny Plans are contained in the
Destiny Plans' prospectus. E ach fund will only offer its
shares to the general public through the Destiny
Plans. The fund also offers its shares to a particular retirement
plan.
The price to buy one share of Class O is the class's NAV. Class O
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your order
is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
KEY INFORMATION
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
Fidelity at the appropriate
number found in "General
Information" to set up your
account and to arrange a
wire transaction.
TO ADD TO AN ACCOUNT
(small solid bullet) Call
Fidelity at the appropriate
number found in "General
Information" for instructions.
SELLING SHARES
The following discussion relates only to those investors who hold
shares of a fund directly.
The price to sell one share of Class O is the class's NAV.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 30 days;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
If you have certificates for your shares, you must submit them to
Fidelity when you sell your shares. Call Fidelity for specific
instructions. The funds currently do not issue share certificates.
KEY INFORMATION
AUTOMATICALLY (small solid bullet) Use
Fidelity Systematic Exchange
Program to exchange to Class
A or Class T of a Fidelity
Advisor fund.
(small solid bullet) Use
Fidelity Systematic
Withdrawal Program to set up
periodic redemptions from
your Class O account.
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Exchange
to other Fidelity funds or
to Class A or Class T of a
Fidelity Advisor fund. Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information."
MAIL Fidelity Investments INDIVIDUAL, JOINT TENANTS,
P.O. Box 770002 Cincinnati, SOLE PROPRIETORSHIP, UGMA/UTMA
OH 45277-0081 (small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
RETIREMENT ACCOUNT
(small solid bullet) The
account owner should
complete a retirement
distribution form. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information" to
request one.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANTS,
SOLE PROPRIETORSHIP, UGMA/UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
RETIREMENT ACCOUNT
(small solid bullet) The
account owner should
complete a retirement
distribution form. Visit
your investment professional
to request one.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a Class O shareholder, you have the privilege of exchanging
shares of a fund for shares of other Fidelity funds , including
Class A or Class T of the Fidelity Advisor funds. The exchange
privilege is available only to those investors who hold
shares of a fund directly.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year. Accounts under
common ownership or control will be counted together for purposes of
the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
held by certain institutional retirement plans to conform to plan
exchange limits and Department of Labor regulations. See your plan
materials for further information.
(small solid bullet) Each fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
The funds may terminate or modify the exchange privileges in the
future.
Other funds may have different exchange restrictions, and may impose
trading fees of up to 3.00% of the amount exchanged. Check each fund's
prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following shareholder services are applicable only to those
investors who hold shares of a fund directly.
AUTOMATIC WITHDRAWAL PROGRAMS. Fidelity offers convenient services
that let you automatically transfer money between accounts or out of
your account. Automatic withdrawal or exchange programs can be a
convenient way to provide a consistent income flow or to move money
between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY SYSTEMATIC EXCHANGE
PROGRAM TO MOVE MONEY FROM
CLASS O TO CLASS A OR CLASS
T OF A FIDELITY ADVISOR FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" after both
accounts are opened.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 2 business days
prior to your next scheduled
exchange date.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
FIDELITY SYSTEMATIC WITHDRAWAL PROGRAM
TO SET UP PERIODIC REDEMPTIONS FROM
YOUR CLASS O ACCOUNT TO YOU
OR TO YOUR BANK CHECKING
ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Monthly, quarterly, or (small solid bullet) Accounts
semi-annually with a value of $10,000 or
more in Class O shares are
eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
withdrawal date.
OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information"
before your first use to verify that this feature is set up on your
account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund and certain transactions through automatic withdrawal
programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each fund earns dividends, interest, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
Each fund normally pays dividends and capital gain distributions in
December.
DISTRIBUTION OPTIONS
The following distribution options are applicable only to those
investors who hold shares of a fund directly.
When you open an account, specify how you want to receive your
distributions. The following options may be available for Class O's
distributions:
1. REINVESTMENT OPTION. Your dividends and capital gain distributions
will be automatically reinvested in additional Class O shares of the
fund. If you do not indicate a choice, you will be assigned this
option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional Class O shares of the fund.
Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
Not all distribution options are available for every account. If you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you. If you are not investing through a
tax-advantaged retirement account, you should consider these tax
consequences.
TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income ,
while each fund's distributions of long-term capital gains are
taxable to you generally as capital gains.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in a fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.
FMR is each fund's manager.
As of March 25, 1999 , FMR had approximately $ 521.7
billion in discretionary assets under management.
As the manager, FMR is responsible for choosing each fund's
investments and handling its business affairs.
Affiliates assist FMR with foreign investments:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for each fund. FMR
U.K. was organized in 1986 to provide investment research and advice
to FMR. Currently, FMR U.K. provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services for each fund.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for each fund. FMR
Far East was organized in 1986 to provide investment research and
advice to FMR. Currently, FMR Far East provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for each fund.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
George Vanderheiden is vice president and manager of Destiny I which
he has managed since 1980. He also manages other Fidelity funds. Mr.
Vanderheiden is a member of the Board of Directors for FMR Corp. He
joined Fidelity in 1971.
Beth Terrana is vice president and manager of Destiny II, which she
has managed since June 1998. She also manages other Fidelity funds.
Since joining Fidelity in 1983, Ms. Terrana has worked as an analyst,
portfolio assistant and manager.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security,
industry , or market sector. The views expressed by any such
person are the views of only that individual as of the time expressed
and do not necessarily represent the views of Fidelity or any other
person in the Fidelity organization. Any such views are subject to
change at any time based upon market or other conditions and Fidelity
disclaims any responsibility to update such views. These views may not
be relied on as investment advice and, because investment decisions
for a Fidelity fund are based on numerous factors, may not be relied
on as an indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is determined by
calculating a basic fee and then applying a performance adjustment.
The performance adjustment decreases the management fee if a fund has
performed worse than the S&P 500. After December 31, 2000, no
performance adjustment will be applied to the basic fee.
The basic fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by a fund's average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For September 1999, the group fee rate was 0.2801 % for Destiny
I and the group fee rate was 0.2801 % for Destiny II. The
individual fund fee rate is 0.17% for Destiny I and 0.30% for Destiny
II.
The basic fee for Destiny I and Destiny II for the fiscal year ended
September 30, 1999 was 0.45 % and 0.58 %, respectively, of
the fund's average net assets.
The performance adjustment rate is calculated monthly by comparing
over the performance period Destiny I's and Destiny II's performance
to that of the S&P 500.
For Destiny I and Destiny II, the performance period is the most
recent 36-month period.
The performance adjustment rate is divided by twelve and multiplied by
the fund's average net assets throughout the month, and the resulting
dollar amount is then subtracted from the basic fee if Class O's
performance is worse than that of the S&P 500. The maximum annualized
performance adjustment rate is -0.24% of the fund's average net
assets up to and including $100,000,000 and -0.20% of the fund's
average net assets in excess of $100,000,000 over the performance
period.
The total management fee for the fiscal year ended September 30, 1999,
was 0.29 % of the fund's average net assets for Destiny I and
0.45 % of the fund's average net assets for Destiny II.
FMR pays FMR U.K. and FMR Far East for providing assistance with
investment advisory services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a
class's expenses and boost its performance.
FUND DISTRIBUTION
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
FDC distributes Class O's shares.
Class O of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 that
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with providing services intended
to result in the sale of Class O shares and/or shareholder support
services. FMR, directly or through FDC, may pay intermediaries, such
as banks, broker-dealers and other service-providers, that provide
those services. Currently, the Board of Trustees of each fund has
authorized such payments for Class O.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Destiny Portfolios, provided that
the fund receives brokerage services and commission rates comparable
to those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related
statement of additional information (SAI), in connection with the
offer contained in this prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell shares of the
funds to or to buy shares of the funds from any person to whom it is
unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you
understand Class O's financial history for the past 5 years.
Certain information reflects financial results for a single class
share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in the
class (assuming reinvestment of all dividends and
distributions). This information has been audited by
Deloitte & Touche LLP (1999 annual information only) ,
independent accountants, whose reports, along with each fund's
financial highlights and financial statements, are included in each
fund's annual report. Annual information prior to 1999 was
audited by PricewaterhouseCoopers LLP. A free copy of each
annual report is available upon request.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DESTINY I - CLASS O
Years ended September 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 24.58 $ 25.08 $ 20.41 $ 18.78 $ 17.70
period
Income from Investment
Operations
Net investment income .42 C .44 C .49 C .45 .41
Net realized and unrealized 4.13 1.56 6.36 2.42 3.54
gain (loss)
Total from investment 4.55 2.00 6.85 2.87 3.95
operations
Less Distributions
From net investment income (.42) (.47) (.45) (.43) (.34)
From net realized gain (2.17) (2.03) (1.73) (.81) (2.53)
Total distributions (2.59) (2.50) (2.18) (1.24) (2.87)
Net asset value, end of period $ 26.54 $ 24.58 $ 25.08 $ 20.41 $ 18.78
TOTAL RETURN A,B 18.99% 8.72% 36.29% 16.04% 27.49%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 6,977,155 $ 6,206,058 $ 5,960,742 $ 4,565,482 $ 4,053,389
(000 omitted)
Ratio of expenses to average .32% .33% .39% .65% .68%
net assets
Ratio of expenses to average .31% D .33% .38% D .65% .68%
net assets after expense
reductions
Ratio of net investment 1.55% 1.71% 2.20% 2.40% 2.35%
income to average net assets
Portfolio turnover 36% 27% 32% 42% 55%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGE AND OTHER FEES ASSESSED THROUGH FIDELITY SYSTEMATIC INVESTMENT
PLANS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DESTINY II - CLASS O
Years ended September 30, 1999 1998 1997 1996 E 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 14.07 $ 14.40 $ 11.61 $ 10.57 $ 9.52
period
Income from Investment
Operations
Net investment income .12 C .18 C .27 C .24 .22
Net realized and unrealized 3.73 .71 3.52 1.34 1.99
gain (loss)
Total from investment 3.85 .89 3.79 1.58 2.21
operations
Less Distributions
From net investment income (.12) (.25) (.25) (.22) (.17)
From net realized gain (3.04) (.97) (.75) (.32) (.99)
Total distributions (3.16) (1.22) (1.00) (.54) (1.16)
Net asset value, end of period $ 14.76 $ 14.07 $ 14.40 $ 11.61 $ 10.57
TOTAL RETURN A,B 30.06% 6.64% 34.72% 15.43% 26.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,226,303 $ 3,969,409 $ 3,609,144 $ 2,538,407 $ 2,031,762
(000 omitted)
Ratio of expenses to average .48% .48% .54% .78% .80%
net assets
Ratio of expenses to average .47% D .48% .53% D .78% .80%
net assets after expense
reductions
Ratio of net investment .79% 1.23% 2.11% 2.38% 2.33%
income to average net assets
Portfolio turnover 77% 106% 35% 37% 52%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGE AND OTHER FEES ASSESSED THROUGH FIDELITY SYSTEMATIC INVESTMENT
PLANS.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
E PER-SHARE DATA HAVE BEEN ADJUSTED FOR A 3 FOR 1 SHARE SPLIT PAID
JUNE 21, 1996.
ADDITIONAL PERFORMANCE INFORMATION
Lipper has created new comparison categories that group funds
according to portfolio characteristics and capitalization, as well as
by capitalization only. The Lipper Large-Cap Value Funds Average and
the Lipper Large-Cap Core Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar portfolio
characteristics and capitalization. The Lipper Large-Cap Supergroup
Average reflects the performance (excluding sales charges) of mutual
funds with similar capitalization. The following information compares
each fund's Class O performance to two new Lipper comparison
categories.
AVERAGE ANNUAL RETURNS
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
DESTINY I - CLASS O 25.63% 22.77% 21.23%
Lipper Large-Cap Value Funds 18.75% 19.93% 16.50%
Average
Lipper Large-Cap Supergroup 27.83% 20.98% 17.68%
Average
DESTINY II - CLASS O 28.11% 22.69% 21.65%
Lipper Large-Cap Core Funds 25.61% 20.69% 17.42%
Average
Lipper Large-Cap Supergroup 27.83% 20.98% 17.68%
Average
[This Page Intentionally Left Blank]
You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual and semi-annual
reports include a discussion of the fund's holdings and recent market
conditions and the fund's investment strategies that affected
performance.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-888-622-3175 .
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-1796
Fidelity, Fidelity Investments & (Pyramid) Design and Fidelity
Investments are registered trademarks of FMR Corp .
The third party marks appearing above are the marks of their
respective owners.
DES-pro-1199
LIKE SECURITIES OF ALL MUTUAL FUNDS, THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, AND THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FIDELITY(REGISTERED TRADEMARK)
DESTINY PORTFOLIOS
DESTINY I - CLASS N
( F und 395, CUSIP 316127307)
DESTINY II - CLASS N
( F und 396, CUSIP 316127406)
Shares of Class N of each fund are only available to the general
publi c through Fidelity Systematic Investment Plans: Destiny Plans
I: N and Destiny Plans II: N (the " Destiny Plans" or a
" Destiny Plan"), a unit investment trust. Details of the
Destiny Plans, including the Creation and Sales Charges, are
discussed in the prospectus for the Destiny Plans. Prospective
investors should read this prospectus in conjunction with the
Destiny Plans' prospectus .
PROSPECTUS
NOVEMBER 26, 1999
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY F-3 INVESTMENT SUMMARY
F-4 PERFORMANCE
F-6 FEE TABLE
FUND BASICS F-8 INVESTMENT DETAILS
F-9 VALUING SHARES
SHAREHOLDER INFORMATION F-11 BUYING AND SELLING SHARES
F-14 EXCHANGING SHARES
F-14 ACCOUNT FEATURES AND POLICIES
F-16 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
F-17 TAX CONSEQUENCES
FUND SERVICES F-18 FUND MANAGEMENT
F-19 FUND DISTRIBUTION
APPENDIX F-21 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
DESTINY I seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing primarily in common stocks.
(small solid bullet) Potentially investing in other types of
securities, including bonds which may be lower-quality debt
securities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently from the U.S. market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
DESTINY II seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Normally investing primarily in common stocks.
(small solid bullet) Potentially investing in other types of
securities, including bonds which may be lower-quality debt
securities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently from the U.S. market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in each fund's
performance from year to year and compares Class O's performance to
the performance of a market index and an average of the performance of
similar funds over various periods of time and also illustrates the
performance of the Destiny Plan s. Returns for each fund do not
include the effect of the Destiny Plan (Class O) Creation and Sales
Charges and Custodian Fees. Returns for each fund would be lower if
the effect of the Destiny Plan (Class O) Creation and Sales Charges
and Custodian Fees was included. The returns for the Destiny Plans do
include the effect of the Destiny Plan (Class O) Creation and Sales
Charges and Custodian Fees. Returns are based on past results and
are not an indication of future performance.
Performance history will be available for Class N after Class N has
been in operation for one calendar year.
YEAR-BY-YEAR RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DESTINY I - CLASS O
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
25.54% -3.15% 38.92% 15.15% 26.42% 4.43% 36.95% 18.55% 30.92% 25.63%
</TABLE>
Percentage
(%)
Row: 1, Col: 1, Value: 25.54
Row: 2, Col: 1, Value: -3.15
Row: 3, Col: 1, Value: 38.92
Row: 4, Col: 1, Value: 15.15
Row: 5, Col: 1, Value: 26.42
Row: 6, Col: 1, Value: 4.430000000000001
Row: 7, Col: 1, Value: 36.95
Row: 8, Col: 1, Value: 18.55
Row: 9, Col: 1, Value: 30.92
Row: 10, Col: 1, Value: 25.63
THE RETURNS SHOWN ABOVE ARE FOR CLASS O OF DESTINY I, WHICH IS NOT
AVAILABLE THROUGH THIS PROSPECTUS. CLASS N WOULD HAVE SUBSTANTIALLY
SIMILAR ANNUAL RETURNS TO CLASS O BECAUSE THE CLASSES ARE INVESTED IN
THE SAME PORTFOLIO OF SECURITIES. CLASS N'S RETURNS WILL BE LOWER THAN
CLASS O'S RETURNS TO THE EXTENT THAT CLASS N HAS HIGHER EXPENSES.
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS O OF DESTINY I, THE
HIGHEST RETURN FOR A QUARTER WAS 21.23 % (QUARTER ENDING
MARCH 31 , 1991 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-18.64 % (QUARTER ENDING SEPTEMBER 30 , 1990 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS O OF
DESTINY I WAS -1.52 %.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DESTINY II - CLASS O
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
26.41% -2.52% 41.42% 15.48% 26.81% 4.48% 35.96% 17.86% 29.64% 28.11%
</TABLE>
Percentage
(%)
Row: 1, Col: 1, Value: 26.41
Row: 2, Col: 1, Value: -2.52
Row: 3, Col: 1, Value: 41.42
Row: 4, Col: 1, Value: 15.48
Row: 5, Col: 1, Value: 26.81
Row: 6, Col: 1, Value: 4.48
Row: 7, Col: 1, Value: 35.96
Row: 8, Col: 1, Value: 17.86
Row: 9, Col: 1, Value: 29.64
Row: 10, Col: 1, Value: 28.11
THE RETURNS SHOWN ABOVE ARE FOR CLASS O OF DESTINY II, WHICH IS NOT
AVAILABLE THROUGH THIS PROSPECTUS. CLASS N WOULD HAVE SUBSTANTIALLY
SIMILAR ANNUAL RETURNS TO CLASS O BECAUSE THE CLASSES ARE INVESTED IN
THE SAME PORTFOLIO OF SECURITIES. CLASS N'S RETURNS WILL BE LOWER THAN
CLASS O'S RETURNS TO THE EXTENT THAT CLASS N HAS HIGHER EXPENSES.
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS O OF DESTINY II, THE
HIGHEST RETURN FOR A QUARTER WAS 25.56 % (QUARTER ENDING
DECEMBER 31, 1998 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-20.41 % (QUARTER ENDING SEPTEMBER 30, 1990 ).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS O OF
DESTINY II WAS 3.58 %.
AVERAGE ANNUAL RETURNS - FUNDS
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
DESTINY I - CLASS O 25.63% 22.77% 21.23%
Standard & Poor's 500 Index 28.58% 24.06% 19.21%
Lipper Growth Funds Average 22.86% 18.63% 16.72%
DESTINY II - CLASS O 28.11% 22.69% 21.65%
Standard & Poor's 500 Index 28.58% 24.06% 19.21%
Lipper Growth Funds Average 22.86% 18.63% 16.72%
THE RETURNS SHOWN ABOVE ARE FOR CLASS O OF DESTINY I AND DESTINY
II, WHICH ARE NOT AVAILABLE THROUGH THIS PROSPECTUS. CLASS N WOULD
HAVE SUBSTANTIALLY SIMILAR ANNUAL RETURNS TO CLASS O BECAUSE THE
CLASSES ARE INVESTED IN THE SAME PORTFOLIO OF SECURITIES. CLASS N'S
RETURNS WILL BE LOWER THAN CLASS O'S RETURNS TO THE EXTENT THAT CLASS
N HAS HIGHER EXPENSES.
AVERAGE ANNUAL RETURNS - PLANS
The returns in the following table include the effect of the
Destiny Plan (Class O) Creation and Sales Charges and Custodian Fees
for a $50/month, 15 year Destiny Plan. The returns assume an initial
$600 lump sum investment at the beginning of each period shown, with
no subsequent Destiny Plan investments in that year. Because the
returns assume yearly lump sum investments, they do not reflect what
investors would have earned if they had made only regular monthly
investments over the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years Past 15 years/ Life of Plan
December 31, 1998
Destiny Plans I: O -39.95% 18.34% 19.64% 18.28%
Destiny Plans II: O -38.76% 18.27% 20.05% 22.10%A
</TABLE>
A FROM DECEMBER 30, 1985 (COMMENCEMENT OF OPERATIONS OF CLASS
O).
Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.
The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell Class N shares of a fund but does not
reflect the Destiny Plan Creation and Sales Charges . The annual
class operating expenses provided below for Class N are based on
estimated expenses.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Class N
Sales charge (load) on NONE
purchases and reinvested
distributions
Deferred sales charge (load) NONE
on redemptions
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Class N
Destiny I Management fee 0.29%
Distribution and Service 0.25%
(12b-1) fee (including 0.25%
Service fee)
Other expenses 0.65%
TOTAL ANNUAL CLASS OPERATING 1.19%
EXPENSES
Destiny II Management fee 0.45%
Distribution and Service 0.25%
(12b-1) fee (including 0.25%
Service fee)
Other expenses 0.66%
TOTAL ANNUAL CLASS OPERATING 1.36%
EXPENSES
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that Class N's annual return is 5% and that
your shareholder fees and Class N's annual operating expenses are
exactly as described in the fee table. This example illustrates the
effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicated:
Class N
Destiny I 1 year $ 121
3 years $ 378
5 years $ 654
10 years $ 1,443
Destiny II 1 year $ 138
3 years $ 431
5 years $ 745
10 years $ 1,635
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
DESTINY I seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets primarily in common stocks. FMR
may also invest the fund's assets in other types of securities,
including bonds which may be lower-quality debt securities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates , and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
DESTINY II seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets primarily in common stocks. FMR
may also invest the fund's assets in other types of securities,
including bonds which may be lower-quality debt securities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates , and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible
securities , and warrants.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable, or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest but
are sold at a discount from their face values. Debt securities include
corporate bonds, government securities, and mortgage and other
asset-backed securities.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance. A fund's share price
changes daily based on changes in market conditions and interest rates
and in response to other economic, political , or financial
developments. A fund's reaction to these developments will be affected
by the types of securities in which the fund invests, the financial
condition, industry and economic sector, and geographic location of an
issuer, and the fund's level of investment in the securities of that
issuer. When you sell your shares of a fund, they could be worth more
or less than what you paid for them.
The following factors can significantly affect a fund's performance:
STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market , and economic
developments. In the short-term, equity prices can fluctuate
dramatically in response to these developments. Different parts of the
market and different types of equity securities can react differently
to these developments. For example, large cap stocks can react
differently from small cap stocks, and "growth" stocks can react
differently from "value" stocks. Issuer, political , or economic
developments can affect a single issuer, issuers within an industry or
economic sector or geographic region, or the market as a whole.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities and mortgage
securities can be more sensitive to interest rate changes.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic ,
or regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial , and other operational risks;
and the less stringent investor protection and disclosure standards of
some foreign markets. All of these factors can make foreign
investments, especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments. In addition, foreign
markets can perform differently from the U.S. market.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. The value of securities of smaller,
less well-known issuers can be more volatile than that of larger
issuers. Lower-quality debt securities (those of less than
investment-grade quality) tend to be more sensitive to these changes
than higher-quality debt securities.
Lower-quality debt securities involve greater risk of default or price
changes due to changes in the credit quality of the issuer. The value
of lower-quality debt securities often fluctuates in response to
company, political , or economic developments and can decline
significantly over short periods of time or during periods of general
or regional economic difficulty.
In response to market, economic, political , or other
conditions, FMR may temporarily use a different investment strategy
for defensive purposes. If FMR does so, different factors could affect
a fund's performance and the fund may not achieve its investment
objective.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
DESTINY I seeks capital growth.
DESTINY II seeks capital growth.
VALUING SHARES
Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity normally calculates Class N's NAV as of the close of
business of the NYSE, normally 4:00 p.m. Eastern time. However, NAV
may be calculated earlier if trading on the NYSE is restricted or as
permitted by the Securities and Exchange Commission (SEC). Each fund's
assets are valued as of this time for the purpose of computing Class
N's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each fund's assets are valued primarily on the basis of market
quotations. Certain short-term securities are valued on the basis of
amortized cost. If market quotations are not readily available for a
security or if a security's value has been materially affected by
events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or
market), that security may be valued by another method that the Board
of Trustees believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining
value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
To contact Fidelity for account, product and service
information, please use the following phone numbers:
(small solid bullet) Nationally (toll-free), 1-800-433-0734 (8:30 a.m.
- - 7:00 p.m. Eastern time, Monday through Friday).
(small solid bullet) In Alaska or Overseas (call collect),
1-617- 330-3183 (8:00 a.m. - 6:00 p.m. Eastern time, Monday
through Friday).
Please use the following addresses:
SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may sell Class N shares of the funds through an investment
professional. When you invest through an investment professional, the
procedures for selling and exchanging Class N shares of a fund
and the account features and policies may differ. Additional fees may
also apply to your investment in Class N shares of a fund, including a
transaction fee if you sell Class N shares of the fund through a
broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
BUYING SHARES
Each fund has an agreement with Fidelity Distributors Corporation
(FDC) under which the fund issues shares at NAV to State Street Bank
and Trust Company (State Street) as Custodian for the Destiny
Plans. Generally, State Street will hold all shares of each fund
unless a Planholder elects to hold fund shares directly
after completing o r terminating a Destiny Plan. The
terms of the offering of the Destiny Plans are contained in the
Destiny Plans' prospectus. E ach fund will only offer its
shares to the g eneral public through the Destiny Plans.
The price to buy one share of Class N is the class's NAV. Class N
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your order
is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
KEY INFORMATION
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
Fidelity at the appropriate
number found in "General
Information" to set up your
account and to arrange a
wire transaction.
TO ADD TO AN ACCOUNT
(small solid bullet) Call
Fidelity at the appropriate
number found in "General
Information" for instructions.
SELLING SHARES
The following discussion relates only to those investors who hold
shares of a fund directly.
The price to sell one share of Class N is the class's NAV.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 30 days;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
If you have certificates for your shares, you must submit them to
Fidelity when you sell your shares. Call Fidelity for specific
instructions. The funds currently do not issue share certificates.
KEY INFORMATION
AUTOMATICALLY (small solid bullet) Use
Fidelity Systematic Exchange
Program to exchange to Class
A or Class T of a Fidelity
Advisor fund.
(small solid bullet) Use
Fidelity Systematic
Withdrawal Program to set up
periodic redemptions from
your Class N account.
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Exchange
to Class A or Class T of a
Fidelity Advisor fund. Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information."
MAIL Fidelity Investments INDIVIDUAL, JOINT TENANTS,
P.O. Box 770002 Cincinnati, SOLE PROPRIETORSHIP, UGMA/UTMA
OH 45277-0081 (small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number fund in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANTS,
SOLE PROPRIETORSHIP, UGMA/UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a Class N shareholder, you have the privilege of exchanging
shares of a fund for Class A or Class T shares of the Fidelity Advisor
funds. The exchange privilege is available only to those investors
who hold shares of a fund directly.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year. Accounts under
common ownership or control will be counted together for purposes of
the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
held by certain institutional retirement plans to conform to plan
exchange limits and Department of Labor regulations. See your plan
materials for further information.
(small solid bullet) Each fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
The funds may terminate or modify the exchange privilege in the
future.
Other funds may have different exchange restrictions, and may impose
trading fees of up to 1.00% of the amount exchanged. Check each
fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following shareholder services are applicable only to those
investors who hold shares of a fund directly.
AUTOMATIC WITHDRAWAL PROGRAMS. Fidelity offers convenient services
that let you automatically transfer money between accounts or out of
your account. Automatic withdrawal or exchange programs can be a
convenient way to provide a consistent income flow or to move money
between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY SYSTEMATIC EXCHANGE
PROGRAM TO MOVE MONEY FROM
CLASS N TO CLASS A OR CLASS
T OF A FIDELITY ADVISOR FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" after both
accounts are opened.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 2 business days
prior to your next scheduled
exchange date.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
FIDELITY SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR CLASS N ACCOUNT TO YOU
OR TO YOUR BANK CHECKING
ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Monthly, quarterly or (small solid bullet) Accounts
semi-annually with a value of $10,000 or
more in Class N shares are
eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
withdrawal date.
OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE
SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information"
before your first use to verify that this feature is set up on your
account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund and certain transactions through automatic withdrawal
programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each fund earns dividends, interest, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
Each fund normally pays dividends and capital gain distributions in
December.
DISTRIBUTION OPTIONS
The following distribution options are applicable only to those
investors who hold shares of the funds directly.
When you open an account, specify how you want to receive your
distributions. The following options may be available for Class N's
distributions:
1. REINVESTMENT OPTION. Your dividends and capital gain distributions
will be automatically reinvested in additional Class N shares of the
fund. If you do not indicate a choice, you will be assigned this
option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional Class N shares of the fund.
Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
Not all distribution options are available for every account. If you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you. If you are not investing through a
tax-advantaged retirement account, you should consider these tax
consequences.
TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income ,
while each fund's distributions of long-term capital gains are
taxable to you generally as capital gains.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in a fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.
FMR is each fund's manager.
As of March 25, 1999 , FMR had approximately $521.7
billion in discretionary assets under management.
As the manager, FMR is responsible for choosing each fund's
investments and handling its business affairs.
Affiliates assist FMR with foreign investments:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for each fund. FMR
U.K. was organized in 1986 to provide investment research and advice
to FMR. Currently, FMR U.K. provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services for each fund.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for each fund. FMR
Far East was organized in 1986 to provide investment research and
advice to FMR. Currently, FMR Far East provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for each fund.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
George Vanderheiden is vice president and manager of Destiny I which
he has managed since 1980. He also manages other Fidelity funds. Mr.
Vanderheiden is a member of the Board of Directors for FMR Corp. He
joined Fidelity in 1971.
Beth Terrana is vice president and manager of Destiny II, which she
has managed since June 1998. She also manages other Fidelity funds.
Since joining Fidelity in 1983, Ms. Terrana has worked as an analyst,
portfolio assistant and manager.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security,
industry , or market sector. The views expressed by any such
person are the views of only that individual as of the time expressed
and do not necessarily represent the views of Fidelity or any other
person in the Fidelity organization. Any such views are subject to
change at any time based upon market or other conditions and Fidelity
disclaims any responsibility to update such views. These views may not
be relied on as investment advice and, because investment decisions
for a Fidelity fund are based on numerous factors, may not be relied
on as an indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is determined by
calculating a basic fee and then applying a performance adjustment.
The performance adjustment decreases the management fee if a fund has
performed worse than the S&P 500. After December 31, 2000, no
performance adjustment will be applied to the basic fee.
The basic fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by a fund's average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For September 1999, the group fee rate was 0.2801 % for Destiny
I and the group fee rate was 0.2801 % for Destiny II. The
individual fund fee rate is 0.17% for Destiny I and 0.30% for Destiny
II.
The basic fee for Destiny I and Destiny II for the fiscal year
ended September 30, 1999 was 0.45% and 0.58%, respectively, of the
fund's average net assets.
The performance adjustment rate is calculated monthly by comparing
over the performance period Destiny I's and Destiny II's performance
to that of the S&P 500.
For Destiny I and Destiny II, the performance period is the most
recent 36-month period.
The performance adjustment rate is divided by twelve and multiplied by
the fund's average net assets throughout the month, and the resulting
dollar amount is then subtracted from the basic fee if Class O's
performance is worse than that of the S&P 500. The maximum annualized
performance adjustment rate is -0.24% of the fund's average net assets
up to and including $100,000,000 and -0.20% of the fund's average net
assets in excess of $100,000,000 over the performance period.
The total management fee for the fiscal year ended September 30, 1999,
was 0.29 % of the fund's average net assets for Destiny I and
0.45 % of the fund's average net assets for Destiny II.
FMR pays FMR U.K. and FMR Far East for providing assistance with
investment advisory services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a
class's expenses and boost its performance.
FUND DISTRIBUTION
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
FD C distributes Class N's shares.
Class N of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class N of each fund is authorized to pay FDC a monthly
12b-1 (distribution) fee as compensation for providing services
intended to result in the sale of Class N shares. Class N of each fund
may pay FDC a 12b-1 (distribution) fee at an annual rate of 0.50% of
its average net assets, or such lesser amount as the Trustees may
determine from time to time. Currently, the Board of Trustees has not
approved such payments. The Board of Trustees may approve 12b-1
(distribution) fee payments at an annual rate of up to 0.50% of Class
N's average net assets when the Trustees believe that it is in the
best interests of Class N shareholders to do so.
In addition, pursuant to each Class N plan, Class N of each fund pays
FDC a monthly 12b-1 (service) fee at an annual rate of 0.25% of Class
N's average net assets throughout the month for providing shareholder
support services.
FDC may reallow to intermediaries (such as banks, broker-dealers and
other service-providers) , including its affiliates, up to the
full amount of the Class N 12b-1 (service) fee for providing
shareholder support services.
Because 12b-1 fees are paid out of Class N's assets on an ongoing
basis, they will increase the cost of your investment and may cost you
more than paying other types of sales charges.
In addition, each Class N plan specifically recognizes that FMR may
make payments from its management fee revenue, past profits, or other
resources to FDC for expenses incurred in connection with providing
services intended to result in the sale of Class N shares and/or
shareholder support services, including payments made to
intermediaries that provide those services. Currently, the Board of
Trustees of each fund has authorized such payments for Class N.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Destiny Portfolios, provided that a
fund receives brokerage services and commission rates comparable to
those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related
statement of additional information (SAI), in connection with the
offer contained in this prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell shares of the
funds to or to buy shares of the funds from any person to whom it is
unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand
Class N's financial history for the period of the class's operations.
Certain information reflects financial results for a single class
share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in the class
(assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP ,
independent accountants, whose report s , along with each
fund' s financial highlights and financial statements, are
included in each fund' s annual report. A free
copy of the annual report is available upon request.
DESTINY I - CLASS N
Year ended September 30, 1999 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.76
period
Income from Investment
Operations
Net investment income D .08
Net realized and unrealized (1.39)G
gain (loss)
Total from investment (1.31)
operations
Net asset value, end of period $ 26.45
TOTAL RETURN B, C (4.72)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 256
(000 omitted)
Ratio of expenses to average 1.18% A
net assets
Ratio of expenses to average 1.17% A, F
net assets after expense
reductions
Ratio of net investment .68% A
income to average net assets
Portfolio turnover 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGE AND OTHER FEES ASSESSED THROUGH FIDELITY SYSTEMATIC INVESTMENT
PLANS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD APRIL 30, 1999 (COMMENCEMENT OF SALE OF CLASS N
SHARES) TO SEPTEMBER 30, 1999.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
DESTINY II - CLASS N
Year ended September 30, 1999 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 15.35
period
Income from Investment
Operations
Net investment income (loss)D .00
Net realized and unrealized (.63)G
gain (loss)
Total from investment (.63)
operations
Net asset value, end of period $ 14.72
TOTAL RETURN B, C (4.10)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,524
(000 omitted)
Ratio of expenses to average 1.35% A
net assets
Ratio of expenses to average 1.33% A, F
net assets after expense
reductions
Ratio of net investment (.07)% A
income (loss) to average net
assets
Portfolio turnover 77%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGE AND OTHER FEES ASSESSED THROUGH FIDELITY SYSTEMATIC INVESTMENT
PLANS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD APRIL 30, 1999 (COMMENCEMENT OF SALE OF CLASS N
SHARES) TO SEPTEMBER 30, 1999.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
[This Page Intentionally Left Blank]
You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual report includes a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-888-622-3175 .
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-1796
Fidelity, Fidelity Investments & (Pyramid) Design and Fidelity
Investments are registered trademarks of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
DESN-pro-1199
DESTINY I AND DESTINY II
FUNDS OF FIDELITY DESTINY PORTFOLIOS
CLASS O AND CLASS N
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 26, 1999
This statement of additional information (SAI) is not a prospectus.
Portions of each fund's annual report are incorporated herein.
The annual reports are supplied with this SAI.
To obtain a free additional copy of a prospectus, dated November 26,
1999, or an annual report, please call Fidelity(registered trademark)
at 1-888-622-3175 .
TABLE OF CONTENTS PAGE
Investment Policies and 17
Limitations
Portfolio Transactions 22
Valuation 25
Performance 25
Additional Purchase, Exchange 36
and Redemption Information
Distributions and Taxes 36
Trustees and Officers 36
Control of Investment Advisers 40
Management Contracts 40
Distribution Services 44
Transfer and Service Agent 45
Agreements
Description of the Trust 45
Financial Statements 46
Appendix 46
For more information on any Fidelity fund, including charges and
expenses, call Fidelity at the number indicated above for a free
prospectus. Read it carefully before you invest or send money.
DESN-ptb-1199
1.537916.102
(fidelity_logo_graphic)(registered trademark)
82 Devonshire Street, Boston, MA 02109
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the
1940 Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF DESTINY I AND DESTINY II
THE FOLLOWING ARE EACH FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. EACH FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) 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, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) Each fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) Each fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) Each fund does not currently intend to purchase securities on
margin, except that each fund may obtain such short-term credits as
are necessary for the clearance of transactions, and provided that
margin payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities on
margin.
(iii) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) Each fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) Each fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) Each 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, each fund were in a position where
more than 10% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
For the funds' limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 31.
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help a fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may involve repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR or its affiliates, or through reverse repurchase agreements. If
a fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If a fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it in
cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.
COMMON STOCK represents an equity or ownership interest in an issuer.
In the event an issuer is liquidated or declares bankruptcy, the
claims of owners of bonds and preferred stock take precedence over the
claims of those who own common stock.
CONVERTIBLE SECURITIES are bonds, debentures, notes, preferred stocks
or other securities that may be converted or exchanged (by the holder
or by the issuer) into shares of the underlying common stock (or cash
or securities of equivalent value) at a stated exchange ratio. A
convertible security may also be called for redemption or conversion
by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible
security held by a fund is called for redemption or conversion, the
fund could be required to tender it for redemption, convert it into
the underlying common stock, or sell it to a third party.
Convertible securities generally have less potential for gain or loss
than common stocks. Convertible securities generally provide yields
higher than the underlying common stocks, but generally lower than
comparable non-convertible securities. Because of this higher yield,
convertible securities generally sell at prices above their
"conversion value," which is the current market value of the stock to
be received upon conversion. The difference between this conversion
value and the price of convertible securities will vary over time
depending on changes in the value of the underlying common stocks and
interest rates. When the underlying common stocks decline in value,
convertible securities will tend not to decline to the same extent
because of the interest or dividend payments and the repayment of
principal at maturity for certain types of convertible securities.
However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. When the
underlying common stocks rise in value, the value of convertible
securities may also be expected to increase. At the same time,
however, the difference between the market value of convertible
securities and their conversion value will narrow, which means that
the value of convertible securities will generally not increase to the
same extent as the value of the underlying common stocks. Because
convertible securities may also be interest-rate sensitive, their
value may increase as interest rates fall and decrease as interest
rates rise. Convertible securities are also subject to credit risk,
and are often lower-quality securities.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay interest but are
sold at a deep discount from their face values. Debt securities
include corporate bonds, government securities, and mortgage and other
asset-backed securities.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks
inherent in U.S. investments.
Foreign investments involve risks relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include expropriation or nationalization
of assets, confiscatory taxation, restrictions on U.S. investment or
on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. Additionally, governmental
issuers of foreign debt securities may be unwilling to pay interest
and repay principal when due and may require that the conditions for
payment be renegotiated. There is no assurance that FMR will be able
to anticipate these potential events or counter their effects. In
addition, the value of securities denominated in foreign currencies
and of dividends and interest paid with respect to such securities
will fluctuate based on the relative strength of the U.S. dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and investors may have
difficulty enforcing their legal rights in foreign countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms of
ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risks of
nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be based on only a
few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may trade a small
number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
holdings difficult or impossible at times.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however,
may exercise its rights as a shareholder and may communicate its views
on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters
could have a significant effect on the value of the fund's investment
in the company. The activities in which a fund may engage, either
individually or in conjunction with others, may include, among others,
supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's
directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a
portion of its assets; or supporting or opposing third-party takeover
efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities
with a view to mitigating, to the extent possible, the risk of
litigation against a fund and the risk of actual liability if a fund
is involved in litigation. No guarantee can be made, however, that
litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options: Combined Positions, Correlation of Price Changes, Futures
Contracts, Futures Margin Payments, Limitations on Futures and Options
Transactions, Liquidity of Options and Futures Contracts, Options and
Futures Relating to Foreign Currencies, OTC Options, Purchasing Put
and Call Options, and Writing Put and Call Options.
COMBINED POSITIONS involve purchasing and writing options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, purchasing a put option and writing a
call option on the same underlying instrument would construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call
option at a lower price, to reduce the risk of the written call option
in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction
costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that the
options or futures position will not track the performance of the
fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury
bonds or notes, and some are based on indices of securities prices,
such as the Standard & Poor's 500 Index (S&P 500 (registered
trademark) ). Futures can be held until their delivery dates, or
can be closed out before then if a liquid secondary market is
available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The funds intend to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets under normal conditions; or (c)
purchase call options if, as a result, the current value of option
premiums for call options purchased by the fund would exceed 5% of the
fund's total assets. These limitations do not apply to options
attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts
and options, and the funds' policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. A fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. Currency options may also be purchased
or written in conjunction with each other or with currency futures or
forward contracts. Currency futures and options values can be expected
to correlate with exchange rates, but may not reflect other factors
that affect the value of a fund's investments. A currency hedge, for
example, should protect a Yen-denominated security from a decline in
the Yen, but will not protect a fund against a price decline resulting
from deterioration in the issuer's creditworthiness. Because the value
of a fund's foreign-denominated investments changes in response to
many factors other than exchange rates, it may not be possible to
match the amount of currency options and futures to the value of the
fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the purchaser or writer greater flexibility
to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may terminate
its position in a put option by allowing it to expire or by exercising
the option. If the option is allowed to expire, the purchaser will
lose the entire premium. If the option is exercised, the purchaser
completes the sale of the underlying instrument at the strike price. A
purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. The writer of a put or call option takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the writer assumes the obligation
to pay the strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. The writer may seek
to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes. When writing an option on
a futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the writer to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options
are similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the
effects of a price decline. At the same time, because a call writer
must be prepared to deliver the underlying instrument in return for
the strike price, even if its current value is greater, a call writer
gives up some ability to participate in security price increases.
ILLIQUID SECURITIES cannot be sold or disposed of in the ordinary
course of business at approximately the prices at which they are
valued. Difficulty in selling securities may result in a loss or may
be costly to a fund. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market , and (4) the nature of the security and the market in
which it trades (including any demand, put or tender features, the
mechanics and other requirements for transfer, any letters of credit
or other credit enhancement features, any ratings, the number of
holders, the method of soliciting offers, the time required to dispose
of the security, and the ability to assign or offset the rights and
obligations of the security).
INDEXED SECURITIES are instruments whose prices are indexed to the
prices of other securities, securities indices, currencies, or other
financial indicators. Indexed securities typically, but not always,
are debt securities or deposits whose value at maturity or coupon rate
is determined by reference to a specific instrument or statistic.
Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest
rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities. Currency-indexed securities may be
positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a
security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a
put on the underlying currency. Currency-indexed securities may also
have prices that depend on the values of a number of different foreign
currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. Indexed securities may be more
volatile than the underlying instruments. Indexed securities are also
subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow money
from, other funds advised by FMR or its affiliates. A fund will lend
through the program only when the returns are higher than those
available from an investment in repurchase agreements, and will borrow
through the program only when the costs are equal to or lower than the
cost of bank loans. Interfund loans and borrowings normally extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. A fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities are
medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff & Phelps Credit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments
involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the
event of fraud or misrepresentation, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
interest and repayment of principal. If scheduled interest or
principal payments are not made, the value of the instrument may be
adversely affected. Loans that are fully secured provide more
protections than an unsecured loan in the event of failure to make
scheduled interest or principal payments. However, there is no
assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off
their indebtedness, or may pay only a small fraction of the amount
owed. Direct indebtedness of developing countries also involves a risk
that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal
when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks. For example, if a loan is foreclosed, the purchaser could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, a purchaser could be held liable as a co-lender.
Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, the purchaser has direct recourse
against the borrower, the purchaser may have to rely on the agent to
apply appropriate credit remedies against a borrower. If assets held
by the agent for the benefit of a purchaser were determined to be
subject to the claims of the agent's general creditors, the purchaser
might incur certain costs and delays in realizing payment on the loan
or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness may include letters of credit, revolving credit
facilities, or other standby financing commitments that obligate
purchasers to make additional cash payments on demand. These
commitments may have the effect of requiring a purchaser to increase
its investment in a borrower at a time when it would not otherwise
have done so, even if the borrower's condition makes it unlikely that
the amount will ever be repaid.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see each fund's
investment limitations). For purposes of these limitations, a fund
generally will treat the borrower as the "issuer" of indebtedness held
by the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC
interpretations require a fund, in appropriate circumstances, to treat
both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an
issuer of indebtedness may restrict a fund's ability to invest in
indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities have poor
protection with respect to the payment of interest and repayment of
principal, or may be in default. These securities are often considered
to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay. The market prices of
lower-quality debt securities may fluctuate more than those of
higher-quality debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
Because the risk of default is higher for lower-quality debt
securities, FMR's research and credit analysis are an especially
important part of managing securities of this type. FMR will attempt
to identify those issuers of high-yielding securities whose financial
condition is adequate to meet future obligations, has improved, or is
expected to improve in the future. FMR's analysis focuses on relative
values based on such factors as interest or dividend coverage, asset
coverage, earnings prospects, and the experience and managerial
strength of the issuer.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
PREFERRED STOCK represents an equity or ownership interest in an
issuer that pays dividends at a specified rate and that has precedence
over common stock in the payment of dividends. In the event an issuer
is liquidated or declares bankruptcy, the claims of owners of bonds
take precedence over the claims of those who own preferred and common
stock.
REAL ESTATE INVESTMENT TRUSTS. Equity real estate investment trusts
own real estate properties, while mortgage real estate investment
trusts make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property
taxes, interest rates, and tax and regulatory requirements, such as
those relating to the environment. Both types of trusts are dependent
upon management skill, are not diversified, and are subject to heavy
cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to qualify for tax-free status of income under
the Internal Revenue Code and failing to maintain exemption from the
1940 Act.
REPURCHASE AGREEMENTS involve an agreement to purchase a security and
to sell that security back to the original seller at an agreed-upon
price. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate
or maturity of the purchased security. As protection against the risk
that the original seller will not fulfill its obligation, the
securities are held in a separate account at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus
the accrued incremental amount. The value of the security purchased
may be more or less than the price at which the counterparty has
agreed to purchase the security. In addition, delays or losses could
result if the other party to the agreement defaults or becomes
insolvent. The funds will engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their sale.
Difficulty in selling securities may result in a loss or be costly to
a fund. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering.
Where registration is required, the holder of a registered security
may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under
an effective registration statement. If, during such a period, adverse
market conditions were to develop, the holder might obtain a less
favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds will enter into
reverse repurchase agreements with parties whose creditworthiness has
been reviewed and found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of fund assets and may be
viewed as a form of leverage.
SECURITIES OF OTHER INVESTMENT COMPANIES . including shares of
closed-end investment companies, unit investment trusts, and open-end
investment companies, represent interests in professionally managed
portfolios that may invest in any type of instrument. Investing in
other investment companies involves substantially the same risks as
investing directly in the underlying instruments, but may involve
additional expenses at the investment company-level, such as portfolio
management fees and operating expenses. Certain types of investment
companies, such as closed-end investment companies, issue a fixed
number of shares that trade on a stock exchange or over-the-counter at
a premium or a discount to their net asset value. Others are
continuously offered at net asset value, but may also be traded in the
secondary market.
The extent to which a fund can invest in securities of other
investment companies is limited by federal securities laws.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or other institutions, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, earn additional income. The borrower
provides the fund with collateral in an amount at least equal to the
value of the securities loaned. The fund maintains the ability to
obtain the right to vote or consent on proxy proposals involving
material events affecting securities loaned. If the borrower defaults
on its obligation to return the securities loaned because of
insolvency or other reasons, a fund could experience delays and costs
in recovering the securities loaned or in gaining access to the
collateral. These delays and costs could be greater for foreign
securities. If a fund is not able to recover the securities loaned, a
fund may sell the collateral and purchase a replacement investment in
the market. The value of the collateral could decrease below the value
of the replacement investment by the time the replacement investment
is purchased. Loans will be made only to parties deemed by FMR to be
in good standing and when, in FMR's judgment, the income earned would
justify the risks.
Cash received as collateral through loan transactions may be invested
in other eligible securities. Investing this cash subjects that
investment, as well as the securities loaned, to market appreciation
or depreciation.
SHORT SALES "AGAINST THE BOX" are short sales of securities that a
fund owns or has the right to obtain (equivalent in kind or amount to
the securities sold short). If a fund enters into a short sale against
the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities
convertible or exchangeable into such securities) and will be required
to hold such securities while the short sale is outstanding. The fund
will incur transaction costs, including interest expenses, in
connection with opening, maintaining, and closing short sales against
the box.
SWAP AGREEMENTS can be individually negotiated and structured to
include exposure to a variety of different types of investments or
market factors. Depending on their structure, swap agreements may
increase or decrease a fund's exposure to long- or short-term interest
rates (in the United States or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such
as security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease the fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
A fund may be able to eliminate its exposure under a swap agreement
either by assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or a similarly
creditworthy party.
TEMPORARY DEFENSIVE POLICIES. Each fund reserves the right to invest
without limitation in preferred stocks and investment-grade debt
instruments for temporary, defensive purposes.
WARRANTS. Warrants are instruments which entitle the holder to buy an
equity security at a specific price for a specific period of time.
Changes in the value of a warrant do not necessarily correspond to
changes in the value of its underlying security. The price of a
warrant may be more volatile than the price of its underlying
security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying security and do not represent any rights in
the assets of the issuing company. A warrant ceases to have value if
it is not exercised prior to its expiration date. These factors can
make warrants more speculative than other types of investments.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
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
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser. In
selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
above.
Generally, commissions for investments traded on foreign exchanges
will be higher than for investments traded on U.S. exchanges and may
not be subject to negotiation.
Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
investment accounts over which FMR or its affiliates exercise
investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing, or
selling securities; and the availability of securities or the
purchasers or sellers of securities. In addition, such broker-dealers
may furnish analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and
performance of investment accounts; and effect securities transactions
and perform functions incidental thereto (such as clearance and
settlement).
The selection of such broker-dealers for transactions in equity
securities is generally made by FMR (to the extent possible consistent
with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff based
upon the quality of research and execution services provided.
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to a fund. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to that fund or its
other clients. In reaching this determination, FMR will not attempt to
place a specific dollar value on the brokerage and research services
provided, or to determine what portion of the compensation should be
related to those services.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and 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.
FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's expenses. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment accounts which they or their affiliates manage, unless
certain requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees of each fund periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended September 30, 1999 and 1998, the
portfolio turnover rates were 36 % and 27 %, respectively,
for Destiny I and 77 % and 106 %, respectively, for
Destiny II. Variations in turnover rate may be due to a fluctuating
volume of shareholder purchase and redemption orders, market
conditions, or changes in FMR's investment outlook.
The following table shows the total amount of brokerage commissions
paid by each fund.
Fiscal Year Ended Total Amount Paid
Destiny I September 30
1999 $ 4,365,696
1998 $ 2,570,840
1997 $ 2,584,748
Destiny II September 30
1999 $ 5,105,348
1998 $ 4,980,133
1997 $ 1,650,699
Of the following tables, the first shows the total amount of brokerage
commissions paid by each fund to NFSC and FBS, as applicable, for the
past three fiscal years. The second table shows the approximate
percentage of aggregate brokerage commissions paid by a fund to NFSC
for transactions involving the approximate percentage of the aggregate
dollar amount of transactions for which the fund paid brokerage
commissions for the fiscal year ended 1999. NFSC is paid on a
commission basis.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Amount Paid
Fiscal Year Ended To NFSC To FBS
Destiny I September 30
1999 $ 475,612 $ 0
1998 $ 379,953 $ 6,480
1997 $ 325,801 $ 66,245
Destiny II September 30
1999 $ 336,677 $ 0
1998 $ 737,785 $ 3,960
1997 $ 206,961 $ 38,055
Fiscal Year Ended1999 % of Aggregate Commissions % of Aggregate Dollar Amount
Paid to NFSC of Transactions Effected
through NFSC
Destiny I(dagger) September 30 10.89% 19.08%
Destiny II(dagger) September 30 6.59% 11.41%
</TABLE>
(dagger) The difference between the percentage of aggregate brokerage
commissions paid to, and the percentage of the aggregate dollar amount
of transactions effected through, NFSC is a result of the low
commission rates charged by NFSC.
The following table shows the dollar amount of brokerage commissions
paid to firms that provided research services and the approximate
dollar amount of the transactions involved for the fiscal year ended
1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended 1999 $ Amount of Commissions Paid $ Amount of Brokerage
to Firms that Provided Transactions Involved*
Research Services*
Destiny I September 30 $ 4,143,532 $ 3,852,259,691
Destiny II September 30 4,687,702 5,181,922,057
</TABLE>
* The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
The Trustees of each fund have approved procedures in conformity with
Rule 10f-3 under the 1940 Act whereby a fund may purchase securities
that are offered in underwritings in which an affiliate of FMR
participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment accounts managed by FMR
affiliates. It sometimes happens that the same security is held in the
portfolio of more than one of these funds or investment accounts.
Simultaneous transactions are inevitable when several funds and
investment accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or investment account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
Each class's net asset value per share (NAV) is the value of a single
share. The NAV of each class is computed by adding the class's pro
rata share of the value of the applicable fund's investments, cash,
and other assets, subtracting the class's pro rata share of the
applicable fund's liabilities, subtracting the liabilities allocated
to the class, and dividing the result by the number of shares of that
class that are outstanding.
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Most equity securities
for which the primary market is the United States are valued at last
sale price or, if no sale has occurred, at the closing bid price. Most
equity securities for which the primary market is outside the United
States are valued using the official closing price or the last sale
price in the principal market in which they are traded. If the last
sale price (on the local exchange) is unavailable, the last evaluated
quote or closing bid price normally is used. Securities of other
open-end investment companies are valued at their respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Independent brokers or quotation services provide prices of foreign
securities in their local currency. FSC gathers all exchange rates
daily at the close of the NYSE using the last quoted price on the
local currency and then translates the value of foreign securities
from their local currencies into U.S. dollars. Any changes in the
value of forward contracts due to exchange rate fluctuations and days
to maturity are included in the calculation of NAV. If an event that
is expected to materially affect the value of a portfolio security
occurs after the close of an exchange or market on which that security
is traded, then that security will be valued in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and ADRs, market and trading trends, the bid/ask
quotes of brokers and off-exchange institutional trading.
PERFORMANCE
A class may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. Each class's share price and
return fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than
their original cost.
RETURN CALCULATIONS. Returns quoted in advertising reflect all aspects
of a class's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in a class's NAV over a
stated period. A class's return may be calculated by using the
performance data of a previously existing class prior to the date that
the new class commenced operations, adjusted to reflect differences in
sales charges but not 12b-1 fees. A cumulative return reflects actual
performance over a stated period of time. Average annual returns are
calculated by determining the growth or decline in value of a
hypothetical historical investment in a class over a stated period,
and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return
of 7.18%, which is the steady annual rate of return that would equal
100% growth on a compounded basis in ten years. Average annual returns
covering periods of less than one year are calculated by determining a
class's return for the period, extending that return for a full year
(assuming that return remains constant over the year), and quoting the
result as an annual return. While average annual returns are a
convenient means of comparing investment alternatives, investors
should realize that a class's performance is not constant over time,
but changes from year to year, and that average annual returns
represent averaged figures as opposed to the actual year-to-year
performance of a class.
In addition to average annual returns, a class may quote unaveraged or
cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative returns
may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a
series of redemptions, over any time period. Returns may be broken
down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the
relationship of these factors and their contributions to return.
Returns may be quoted on a before-tax or after-tax basis. Returns and
other performance information may be quoted numerically or in a table,
graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a class's NAVs, adjusted
NAVs, and benchmark indexes may be used to exhibit performance. An
adjusted NAV includes any distributions paid by a fund and reflects
all elements of a class's return. Unless otherwise indicated, a
class's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. A fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving
average is the average of each day's adjusted closing NAV for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving
averages for a specified period to produce indicators showing when an
NAV has crossed, stayed above, or stayed below its moving average. The
13-week and 39-week long-term moving averages for each class of each
fund are shown in the table below.
Fund 13-Week Long-Term Moving 39-Week Long-Term Moving
Average Average
Destiny I - Class O* $ 28.09 $ 27.53
Destiny I - Class N* $ 28.02 N/A
Destiny II - Class O* $ 15.46 $ 15.10
Destiny II - Class N* $ 15.42 N/A
* On September 24, 1999.
HISTORICAL DESTINY PLAN RESULTS. The following tables show
each Destiny Plan ' s returns for the fiscal
periods ended September 30, 1999 . The returns in the following
table include the effect of the Destiny Plan Creation and Sales
Charges and Custodian Fees (Class O) for a $50/month, 15 year Destiny
Plan. The returns assume an initial $600 lump sum investment at the
beginning of each period shown, with no subsequent Destiny Plan
investments. Because the returns assume a lump sum investment, they do
not reflect what investors would have earned if they had made only
regular monthly investments over the period. Consult the Destiny
Plans' Prospectuses for more complete information on applicable
charges and fees.
Class N has a 12b-1 fee of 0.25% which is included in the average
annual returns.
Average Annual Returns *
One Year Five Years Ten Years Fifteen Years
Destiny Plans I: O -43.12% 16.76% 16.36% 18.08%
Destiny Plans I: N -40.96% 17.61% 16.30% 17.70%
* Initial offering of Class N for each fund took place on April
30, 1999. Class N returns prior to April 30, 1999 are those of Class
O, restated to reflect the higher 12b-1 and transfer agent fees
applicable to Class N.
Average Annual Returns *
One Year Five Years Ten Years Life of Plan
Destiny Plans II: O -37.83% 17.91% 17.51% 21.11%
Destiny Plans II: N -35.42% 18.78% 17.45% 20.78%
* Initial offering of Class N for each fund took place on April
30, 1999. Class N returns prior to April 30, 1999 are those of Class
O, restated to reflect the higher 12b-1 and transfer agent fees
applicable to Class N.
HISTORICAL FUND RESULTS. The following table shows each class's
returns for the fiscal periods ended September 30 , 1999 .
Returns for each fund do not include the effect of the Destiny Plan
Creation and Sales Charges and Custodian Fees (Class O). Returns for
each fund would be lower if the effect of the Destiny Plan Creation
and Sales Charges and Custodian Fees (Class O) was included.
Class N has a 12b-1 fee of 0.25% which is included in the average
annual and cumulative returns.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Returns* Cumulative Returns*
One Year Five Years Ten Years One Year Five Years Ten Years
Destiny I-Class O 18.99% 21.13% 17.91% 18.99% 160.81% 419.28%
Destiny II-Class O 30.06% 22.32% 19.07% 30.06% 173.88% 472.62%
Destiny I-Class N* 17.99% 20.09% 16.89% 17.99% 149.81% 376.18%
Destiny II-Class N* 29.07% 21.29% 18.05% 29.07% 162.52% 425.50%
</TABLE>
* Initial offering of Class N for each fund took place on April
30, 1999. Class N returns prior to April 30, 1999 are those of Class
O, restated to reflect the higher 12b-1 and transfer agent fees
applicable to Class N.
The following tables show the income and capital elements of each
class's cumulative return. The tables compare each class's return to
the record of the Standard & Poor's 500 Index (S&P 500), the Dow Jones
Industrial Average (DJIA), and the cost of living, as measured by the
Consumer Price Index (CPI), over the same period. The S&P 500 and DJIA
comparisons are provided to show how each class's return compared to
the record of a market capitalization-weighted index of common stocks
and a narrower set of stocks of major industrial companies,
respectively, over the same period. Each fund has the ability to
invest in securities not included in either index, and its investment
portfolio may or may not be similar in composition to the indexes. The
S&P 500 and DJIA returns are based on the prices of unmanaged groups
of stocks and, unlike each class's returns, do not include the effect
of brokerage commissions or other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each class of each fund during the 15-year
period ended September 30, 1999 or life of fund, as applicable,
assuming all distributions were reinvested. Returns are based on past
results and are not an indication of future performance. Tax
consequences of different investments have not been factored into the
figures below.
During the 15-year period ended September 30, 1999, a hypothetical
$10,000 investment in Class O of Destiny I would have grown to
$ 135,745 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DESTINY I - CLASS O INDEXES
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 24,083 $ 20,023 $ 91,639 $ 135,745 $ 119,449
1998 $ 22,305 $ 16,657 $ 75,121 $ 114,083 $ 93,462
1997 $ 22,759 $ 14,839 $ 67,335 $ 104,933 $ 85,709
1996 $ 18,521 $ 10,342 $ 48,130 $ 76,993 $ 61,025
1995 $ 17,042 $ 7,958 $ 41,353 $ 66,353 $ 50,714
1994 $ 16,062 $ 6,258 $ 29,727 $ 52,047 $ 39,086
1993 $ 15,299 $ 5,653 $ 25,395 $ 46,347 $ 37,697
1992 $ 13,648 $ 4,370 $ 18,512 $ 36,530 $ 33,357
1991 $ 14,283 $ 3,852 $ 14,067 $ 32,202 $ 30,036
1990 $ 10,045 $ 2,251 $ 9,298 $ 21,594 $ 22,897
1989 $ 13,476 $ 2,353 $ 10,312 $ 26,141 $ 25,230
1988 $ 10,817 $ 1,450 $ 7,503 $ 19,770 $ 18,970
1987 $ 13,476 $ 1,290 $ 7,432 $ 22,198 $ 21,645
1986 $ 10,789 $ 765 $ 3,645 $ 15,199 $ 15,090
1985 $ 9,800 $ 402 $ 997 $ 11,199 $ 11,453
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DESTINY I - CLASS O INDEXES
Fiscal Year Ended DJIA Cost of Living
1999 $ 133,736 $ 15,990
1998 $ 99,889 $ 15,610
1997 $ 99,495 $ 15,352
1996 $ 72,290 $ 15,029
1995 $ 57,593 $ 14,590
1994 $ 45,060 $ 14,229
1993 $ 40,567 $ 13,819
1992 $ 36,253 $ 13,457
1991 $ 32,461 $ 13,067
1990 $ 25,475 $ 12,638
1989 $ 26,916 $ 11,905
1988 $ 20,354 $ 11,410
1987 $ 24,128 $ 10,952
1986 $ 15,938 $ 10,495
1985 $ 11,548 $ 10,314
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class O of
Destiny I on October 1, 198 4 , the net amount invested in Class
O shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 82,215 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 4,592 for
dividends and $ 21,134 for capital gain distributions.
During the period from December 30, 1985 (commencement of operations)
to September 30, 1999, a hypothetical $10,000 investment in Class O of
Destiny II would have grown to $ 156,923 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DESTINY II - CLASS O INDEXES
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 44,280 $ 15,551 $ 97,092 $ 156,923 $ 89,246
1998 $ 42,210 $ 13,726 $ 64,723 $ 120,659 $ 69,830
1997 $ 43,200 $ 11,927 $ 58,014 $ 113,141 $ 64,037
1996 $ 34,830 $ 7,806 $ 41,344 $ 83,980 $ 45,595
1995 $ 31,720 $ 5,558 $ 35,475 $ 72,753 $ 37,891
1994 $ 28,550 $ 3,820 $ 24,927 $ 57,297 $ 29,203
1993 $ 26,680 $ 3,340 $ 20,831 $ 50,851 $ 28,166
1992 $ 22,750 $ 2,326 $ 14,747 $ 39,823 $ 24,923
1991 $ 23,600 $ 1,818 $ 10,214 $ 35,632 $ 22,441
1990 $ 16,490 $ 919 $ 5,277 $ 22,686 $ 17,107
1989 $ 21,480 $ 517 $ 5,408 $ 27,405 $ 18,850
1988 $ 18,220 $ 127 $ 2,953 $ 21,300 $ 14,173
1987 $ 20,860 $ 0 $ 2,267 $ 23,127 $ 16,172
1986* $ 14,780 $ 0 $ 285 $ 15,065 $ 11,274
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DESTINY II - CLASS O INDEXES
Fiscal Year Ended DJIA Cost of Living**
1999 $ 98,266 $ 15,361
1998 $ 73,396 $ 14,995
1997 $ 73,107 $ 14,748
1996 $ 53,117 $ 14,437
1995 $ 42,318 $ 14,016
1994 $ 33,109 $ 13,669
1993 $ 29,807 $ 13,275
1992 $ 26,638 $ 12,928
1991 $ 23,852 $ 12,553
1990 $ 18,718 $ 12,141
1989 $ 19,777 $ 11,436
1988 $ 14,956 $ 10,961
1987 $ 17,728 $ 10,522
1986* $ 11,711 $ 10,082
</TABLE>
* From December 30, 1985 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class O of
Destiny II on December 30, 1985 , the net amount invested in
Class O shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 86,632 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 4,970 for
dividends and $ 31,665 for capital gain distributions.
During the 15-year period ended September 30, 1999, a hypothetical
$10,000 investment in Class N of Destiny I would have grown to
$ 119,194 .
DESTINY I - CLASS N INDEXES
Fiscal Year Ended Total Value S&P 500 DJIA Cost of Living
1999 $ 119,194 $ 119,449 $ 133,736 $ 15,990
1998 $ 101,019 $ 93,462 $ 99,889 $ 15,610
1997 $ 93,734 $ 85,709 $ 99,495 $ 15,352
1996 $ 69,369 $ 61,025 $ 72,290 $ 15,029
1995 $ 60,305 $ 50,714 $ 57,593 $ 14,590
1994 $ 47,713 $ 39,086 $ 45,060 $ 14,229
1993 $ 42,860 $ 37,697 $ 40,567 $ 13,819
1992 $ 34,074 $ 33,357 $ 36,253 $ 13,457
1991 $ 30,300 $ 30,036 $ 32,461 $ 13,067
1990 $ 20,493 $ 22,897 $ 25,475 $ 12,638
1989 $ 25,031 $ 25,230 $ 26,916 $ 11,905
1988 $ 19,094 $ 18,970 $ 20,354 $ 11,410
1987 $ 21,631 $ 21,645 $ 24,128 $ 10,952
1986 $ 14,938 $ 15,090 $ 15,938 $ 10,495
1985 $ 11,102 $ 11,453 $ 11,548 $ 10,314
Explanatory Notes: With an initial investment of $10,000 in Class N
of Destiny I on April 30, 1999, the net amount invested in Class N
shares was $10,000. Initial offering of Class N for each fund took
place on April 30, 1999. Class N returns prior to April 30, 1999 are
those of Class O, restated to reflect the higher 12b-1 and transfer
agent fees applicable to Class N.
During the period from December 30, 1985 (commencement of operations
of Class O) to September 30, 1999, a hypothetical $10,000 investment
in Class N of Destiny II would have grown to $ 139,328 .
DESTINY II - CLASS N INDEXES
Fiscal Year Ended Total Value S&P 500 DJIA Cost of Living**
1999 $ 139,328 $ 89,246 $ 98,266 $ 15,361
1998 $ 107,951 $ 69,830 $ 73,396 $ 14,995
1997 $ 102,117 $ 64,037 $ 73,107 $ 14,748
1996 $ 76,452 $ 45,595 $ 53,117 $ 14,437
1995 $ 66,810 $ 37,891 $ 42,318 $ 14,016
1994 $ 53,072 $ 29,203 $ 33,109 $ 13,669
1993 $ 47,515 $ 28,166 $ 29,807 $ 13,275
1992 $ 37,533 $ 24,923 $ 26,638 $ 12,928
1991 $ 33,877 $ 22,441 $ 23,852 $ 12,553
1990 $ 21,752 $ 17,107 $ 18,718 $ 12,141
1989 $ 26,513 $ 18,850 $ 19,777 $ 11,436
1988 $ 20,786 $ 14,173 $ 14,956 $ 10,961
1987 $ 22,771 $ 16,172 $ 17,728 $ 10,522
1986* $ 14,960 $ 11,274 $ 11,711 $ 10,082
* From December 30, 1985 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class N
of Destiny II on April 30, 1999, the net amount invested in Class N
shares was $10,000. Initial offering of Class N for each fund took
place on April 30, 1999. Class N returns prior to April 1, 1999 are
those of Class O, restated to reflect the higher 12b-1 and transfer
agent fees applicable to Class N.
PERFORMANCE COMPARISONS. A class's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Generally, Lipper rankings are based on
return, assume reinvestment of distributions, do not take sales
charges or trading fees into consideration, and are prepared without
regard to tax consequences. In addition to the mutual fund rankings, a
class's performance may be compared to stock, bond, and money market
mutual fund performance indexes prepared by Lipper or other
organizations. When comparing these indexes, it is important to
remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a class's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, a class may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A class's performance may also be compared to that of the index
representing the universe of securities in which the fund may invest.
The return of the index reflects reinvestment of all dividends and
capital gains paid by securities included in the index. Unlike a
class's returns, however, the index's returns do not reflect brokerage
commissions, transaction fees, or other costs of investing directly in
the securities included in the index.
Each fund may compare its performance to that of the Standard & Poor's
500 Index, a market capitalization-weighted index of common stocks.
A class may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, a fund may offer greater liquidity or higher
potential returns than CDs, a fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indexes.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes that may be developed and made
available in the future.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals; and
charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A class may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote the fund's current portfolio
manager.
VOLATILITY. A class may quote various measures of volatility and
benchmark correlation in advertising. In addition, the class may
compare these measures to those of other funds. Measures of volatility
seek to compare a class's historical share price fluctuations or
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents a
class's percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of September 30, 1999, FMR advised over $ 3 3 billion in
municipal fund assets, $ 131 billion in taxable fixed-income
fund assets, $ 135 billion in money market fund assets,
$ 541 billion in equity fund assets, $ 16 billion in
international fund assets, and $ 43 billion in Spartan fund
assets. The funds may reference the growth and variety of money market
mutual funds and the adviser's innovation and participation in the
industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the
purpose of researching and managing investments abroad.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing each class's NAV. Shareholders receiving
securities or other property on redemption may realize a gain or loss
for tax purposes, and will incur any costs of sale, as well as the
associated inconveniences.
DISTRIBUTIONS AND TAXES
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to
the extent that the fund's income is derived from qualifying
dividends. Because each fund may earn other types of income, such as
interest, short-term capital gains, and non-qualifying dividends, the
percentage of dividends from the fund that qualifies for the deduction
generally will be less than 100%. A portion of each fund's dividends
derived from certain U.S. Government securities and securities of
certain other investment companies may be exempt from state and local
taxation.
CAPITAL GAIN DISTRIBUTIONS. Each fund's long-term capital gain
distributions are federally taxable to shareholders generally as
capital gains.
RETURNS OF CAPITAL. If a fund's distributions exceed its taxable
income and capital gains realized during a taxable year, all or a
portion of the distributions made in the same taxable year may be
recharacterized as a return of capital to shareholders. A return of
capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the fund and result in a higher
reported capital gain or lower reported capital loss when those shares
on which the distribution was received are sold.
FOREIGN TAX CREDIT OR DEDUCTION. Foreign governments may withhold
taxes on dividends and interest earned by a fund with respect to
foreign securities. Foreign governments may also impose taxes on other
payments or gains with respect to foreign securities. Because each
fund does not currently anticipate that securities of foreign issuers
will constitute more than 50% of its total assets at the end of its
fiscal year, shareholders should not expect to be eligible to claim a
foreign tax credit or deduction on their federal income tax returns
with respect to foreign taxes withheld.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as
a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, each fund intends to
distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. In addition to federal income
taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to
determine whether a fund is suitable to their particular tax
situation.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee each fund's activities, review contractual
arrangements with companies that provide services to each fund, and
review each fund's performance. Except as indicated, each individual
has held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR or its affiliates. The business address of each
Trustee, Member of the Advisory Board, and officer who is an
"interested person" (as defined in the 1940 Act) is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of FMR.
The business address of all the other Trustees is Fidelity
Investments(registered trademark), P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons"
by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (69), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; and a Director of FDC. Abigail Johnson, Vice
President of Destiny I and Destiny II, is Mr. Johnson's daughter.
ABIGAIL P. JOHNSON (37), is Vice President of certain Equity Funds
(1997), and is a Director of FMR Corp. (1994). Before assuming her
current responsibilities, Ms. Johnson managed a number of Fidelity
funds. Edward C. Johnson 3d, Trustee and President of the Funds, is
Ms. Johnson's father.
J. GARY BURKHEAD (58), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (67), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Waste
Management , Inc. (non-hazardous waste, 1993), CH2M Hill Companies
(engineering), Bonneville Pacific (independent power and petroleum
production). In addition, he is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (67), Trustee. Mrs. Davis is retired from Avon
Products, Inc. where she held various positions including Senior
Vice President of Corporate Affairs and Group Vice President
of U.S. sales, distributions, and manufacturing . She is
currently a Director of BellSouth Corporation (telecommunications),
Eaton Corporation (manufacturing), and the TJX Companies, Inc. (retail
stores), and previously served as a Director of Hallmark Cards,
Inc. , Nabisco Brands, Inc. , and Standard Brands, Inc. In
addition, she is a member of the Board of Directors of the
Southampton Hospital in Southampton, N.Y. (1998).
ROBERT M. GATES (56), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is a Director of Charles Stark Draper
Laboratory (non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (automotive, space, defense, and
information technology). Mr. Gates previously served as a Director of
LucasVarity PLC (automotive components and diesel engines). He is
currently serving as Dean of the George Bush School of Government and
Public Service at Texas A & M University (1999-2000). 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.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984,
Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (automotive, space, defense, and
information technology), CSX Corporation (freight transportation),
Birmingham Steel Corporation (producer of steel and steel products),
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, 1985-1997), and as a
Trustee of First Union Real Estate Investments (1986-1997). 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 of University School
(Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (66), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business. 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 as a Director
of 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), Vice Chairman 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).
NED C. LAUTENBACH (55), Member of the Advisory Board (1999), has
been a partner of Clayton, Dubilier & Rice, Inc. (private equity
investment firm) since September 1998. Mr. Lautenbach was Senior Vice
President of IBM Corporation from 1992 until his retirement in July
1998. From 1993 to 1995 he was Chairman of IBM World Trade
Corporation. He also was a member of IBM's Corporate Executive
Committee from 1994 to July 1998. He is a Director of PPG Industries
Inc. (glass, coating and chemical manufacturer), Dynatech Corporation
(global communications equipment), Eaton Corporation (global
manufacturer of highly engineered products) and ChoicePoint Inc. (data
identification, retrieval, storage, and analysis).
*PETER S. LYNCH (56), Trustee, is Vice Chairman and Director of FMR.
Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan(registered trademark) Fund and FMR
Growth Group Leader; and Managing Director of FMR Corp. Mr. Lynch was
also Vice President of Fidelity Investments Corporate Services
(1991-1992). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and
Society for the Preservation of New England Antiquities, and as an
Overseer of the Museum of Fine Arts of Boston.
WILLIAM O. McCOY (65), Trustee (1997), is the Interim Chancellor
for the University of North Carolina at Chapel Hill. Previously he had
served from 1995 through 1998 as Vice President of Finance for the
University of North Carolina (16-school system). 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), Duke-Weeks Realty Corporation
(real estate, 1994), Carolina Power and Light Company (electric
utility, 1996), the Kenan Transport Company (trucking, 1996), and
Dynatech Corporation (electronics, 1999). Previously, he was a
Director of First American Corporation (bank holding company,
1979-1996). In addition, Mr. McCoy served as a member of the Board of
Visitors for the University of North Carolina at Chapel Hill
(1994-1998) and currently serves on the Board of Visitors of the
Kenan-Flager Business School (University of North Carolina at Chapel
Hill, 1988).
GERALD C. McDONOUGH (71), Trustee and Chairman of the
non-interested Trustees, is Chairman of G.M. Management Group
(strategic advisory services). Mr. McDonough is a Director and
Chairman of the Board of York International Corp. (air conditioning
and refrigeration), Commercial Intertech Corp. (hydraulic systems,
building systems, and metal products, 1992), CUNO, Inc. (liquid and
gas filtration products, 1996), and Associated Estates Realty
Corporation (a real estate investment trust, 1993). Mr. McDonough
served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996 and
Brush-Wellman Inc. (metal refining) from 1983-1997.
MARVIN L. MANN (66), Trustee (1993), is Chairman Emeritus, of
Lexmark International, Inc. (office machines, 1991) where he still
remains a member of the Board. 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), Imation Corp. (imaging and information storage, 1997). He is a
Board member of Dynatech Corporation (electronics, 1999).
ROBERT C. POZEN (53), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS (71), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of National Life Insurance Company of Vermont and American Software,
Inc. Mr. Williams was previously a Director of ConAgra, Inc.
(agricultural products), Georgia Power Company (electric utility), and
Avado, Inc. (restaurants).
BETH TERRANA (42), is Vice President of Fidelity Destiny II (1998),
and other funds advised by FMR. Prior to her current responsibilities,
Ms. Terrana managed a variety of Fidelity funds.
GEORGE VANDERHEIDEN (53), is Vice President of Fidelity Destiny I, and
other funds advised by FMR. Prior to his current responsibilities, Mr.
Vanderheiden has managed a variety of Fidelity funds.
ERIC D. ROITER (50), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998) and Vice President and Clerk of FDC
(1998). Prior to joining Fidelity, Mr. Roiter was with the law firm of
Debevoise & Plimpton, as an associate (1981-1984) and as a partner
(1985-1997), and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981). Mr. Roiter was an
Adjunct Member, Faculty of Law, at Columbia University Law School
(1996-1997).
RICHARD A. SILVER (52), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
MATTHEW N. KARSTETTER (38), Deputy Treasurer (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
JOHN H. COSTELLO (53), Assistant Treasurer, is an employee of
FMR .
T he 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,
1999, or calendar year ended December 31, 1998, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Aggregate Compensation from Total Compensation from the
Advisory Board Destiny IB,C,E Destiny IIB,D,E Fund Complex*,A
Edward C. Johnson 3d** $ 0 $ 0 $ 0
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
E. Bradley Jones $ 2,265 $ 1,426 $ 222,000
Donald J. Kirk $ 2,296 $ 1,447 $ 226,500
Ned C. Lautenbach*** $ 0 $ 0 $ 0
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
Robert C. Pozen** $ 0 $ 0 $ 0
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.
*** Effective October 14, 1999, Mr. Lautenbach serves as a member
of the Advisory Board.
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; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
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: Ralph F. Cox, $1053; Phyllis Burke Davis,
$1053; Robert M. Gates, $1054; E. Bradley Jones, $1053; Donald J.
Kirk, $1053; William O. McCoy, $1053; Gerald C. McDonough, $1229;
Marvin L. Mann, $1053; and Thomas R. Williams, $1053.
D The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $663; Phyllis Burke Davis, $663;
Robert M. Gates, $663; E. Bradley Jones, $663; Donald J. Kirk, $663;
William O. McCoy, $663; Gerald C. McDonough, $774; Marvin L. Mann,
$663; and Thomas R. Williams, $663.
E 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. Williams, $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 subject to vesting and 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.
As of September 30, 1999, the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than 1%
of each fund's total outstanding shares.
As of September 30, 1999, the following owned of record or
beneficially 5% or more (up to and including 25%) of Class N's
outstanding shares:
Destiny I: Class N: Ruth E. McCoy, Columbia, MD (22.3%); Vincent
and Debbi Todaro, Long Branch, NJ (5.1%); Robert and Christine
Vitrikas, Alexandria, VA (5.1%).
Destiny II: Class N: Juanita A. Jones, Lynn Haven, FL (12.4%);
Howard F. Burdick Jr., Middletown, RI (6.2%).
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR,
FMR U.K. and FMR Far East. The voting common stock of FMR Corp. is
divided into two classes. Class B is held predominantly by members of
the Edward C. Johnson 3d family and is entitled to 49% of the vote on
any matter acted upon by the voting common stock. Class A is held
predominantly by non-Johnson family member employees of FMR Corp. and
its affiliates and is entitled to 51% of the vote on any such matter.
The Johnson family group and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B
shares will be voted in accordance with the majority vote of Class B
shares. Under the 1940 Act, control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting
common stock and the execution of the shareholders' voting agreement,
members of the Johnson family may be deemed, under the 1940 Act, to
form a controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.
MANAGEMENT SERVICES. Under the terms of 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 the
fund in accordance with its investment objective, policies and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the 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 securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and the
costs associated with securities lending, each fund or each class
thereof, as applicable, pays all of its expenses that are not assumed
by those parties. Each fund pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Each
fund's management contract further provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders of the applicable classes. Other expenses paid by each
fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. Each fund is also liable for such non-recurring expenses as may
arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
MANAGEMENT FEES. 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 Destiny I's performance to that of the S&P 500 or
Destiny II's performance to that of the 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .5200% $ 1 billion .5200%
3 - 6 .4900 50 .3823
6 - 9 .4600 100 .3512
9 - 12 .4300 150 .3371
12 - 15 .4000 200 .3284
15 - 18 .3850 250 .3219
18 - 21 .3700 300 .3163
21 - 24 .3600 350 .3113
24 - 30 .3500 400 .3067
30 - 36 .3450 450 .2024
36 - 42 .3400 500 .2982
42 - 48 .3350 550 .2942
48 - 66 .3250 600 .2904
66 - 84 .3200 650 .2870
84 - 102 .3150 700 .2838
102 - 138 .3100 750 .2809
138 - 174 .3050 800 .2782
174 - 210 .3000 850 .2756
210 - 246 .2950 900 .2732
246 - 282 .2900 950 .2710
282 - 318 .2850 1,000 .2689
318 - 354 .2800 1,050 .2669
354 - 390 .2750 1,100 .2649
390 - 426 .2700 1,150 .2631
426 - 462 .2650 1,200 .2614
462 - 498 .2600 1,250 .2597
498 - 534 .2550 1,300 .2581
534 - 587 .2500 1,350 .2566
587 - 646 .2463 1,400 .2551
646 - 711 .2426
711 - 782 .2389
782 - 860 .2352
860 - 946 .2315
946 - 1,041 .2278
1,041 - 1,145 .2241
1,145 - 1,260 .2204
Over 1,260 .2167
</TABLE>
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above 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 $ 764 billion of group net assets - the approximate
level for September 1999 - was 0.2801 %, which is the weighted
average of the respective fee rates for each level of group net assets
up to $ 764 billion.
Destiny I's individual fund fee rate is 0.17% and Destiny II's
individual fund fee rate is 0.30%. Based on the average group net
assets of the funds advised by FMR for September 1999, each fund's
annual basic fee rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
Destiny I 0.2801% + 0.17% = 0.4501%
Destiny II 0.2801% + 0.30% = 0.5801%
One-twelfth of the basic fee rate is applied to each fund's average
net assets for the month, giving a dollar amount which is the fee for
that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for each of
Destiny I and Destiny II is subject to downward adjustment, depending
upon whether, and to what extent, the fund's Class O investment
performance for the performance period is exceeded by the record over
the same period of the S&P 500. The performance period consists of the
most recent month plus the previous 35 months. After December 31,
2000, no performance adjustment will be applied to the basic fee for
each of Destiny I and Destiny II.
Each percentage point of difference, calculated to the nearest 1.00%
(up to a maximum difference of -10.00) is multiplied by a performance
adjustment rate of 0.02%.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets throughout the month, giving a dollar amount which will be
added to (or subtracted from) the basic fee.
The maximum annualized performance adjustment rate is limited to
- -0.24% of each fund's average net assets up to and including
$100,000,000 and -0.20% of each fund's average net assets in excess of
$100,000,000 over the performance period.
A class's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the class are treated as if
reinvested in that class's shares at the NAV as of the record date for
payment.
The record of the S&P 500 Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index. Because the adjustment to the basic fee
is based on a fund's performance compared to the investment record of
the Index, the controlling factor is not whether the fund's
performance is up or down per se, but whether it is up or down more or
less than the record of the Index. Moreover, the comparative
investment performance of each fund is based solely on the relevant
performance period without regard to the cumulative performance over a
longer or shorter period of time.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Years Ended September Performance Adjustment Management Fees Paid to FMR
30#
Destiny I 1999 $ (11,707,748) $ 21,060,540*
1998 $ (9,828,127) $ 19,657,092*
1997 $ (5,561,177) $ 19,154,944*
Destiny II 1999 $ (6,765,297) $ 22,975,734*
1998 $ (5,588,522) $ 18,377,658*
1997 $ (3,137,435) $ 15,305,746*
</TABLE>
* Including the amount of the performance adjustment.
# Prior to July 1, 1999, each of Destiny I and Destiny II paid FMR a
monthly management fee with two components: a basic fee and a
performance adjustment. The basic fee was subject to upward or
downward adjustment depending on whether, and to what extent, the
fund's investment performance for the performance period exceeded, or
was exceeded by, the record over the same period of the S&P 500. The
maximum annualized performance adjustment rate for each fund was
limited to (plus/minus) 0.24% of the fund's average net assets
up to and including $100,000,000 and (plus/minus) 0.20% of the
fund's average net assets in excess of $100,000,000 over the
performance period.
FMR may, from time to time, voluntarily reimburse all or a portion of
a class's operating expenses (exclusive of interest, taxes, securities
lending costs , brokerage commissions, and extraordinary
expenses), which is subject to revision or discontinuance . FMR
retains the ability to be repaid for these expense reimbursements in
the amount that expenses fall below the limit prior to the end of the
fiscal year.
Expense reimbursements by FMR will increase a class's returns, and
repayment of the reimbursement by a class will lower its returns.
SUB-ADVISERS. 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.
On behalf of each fund, FMR may also grant FMR U.K. and FMR Far East
investment management authority as well as the authority to buy and
sell securities if FMR believes it would be beneficial to the funds.
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.
On behalf of each fund, for providing discretionary investment
management and executing portfolio transactions, FMR pays FMR U.K. and
FMR Far East a fee equal to 50% of its monthly management fee rate
(including any performance adjustment) with respect to each fund's
average net assets managed by the sub-adviser on a discretionary
basis.
For providing investment advice and research services, fees paid to
FMR U.K. and FMR Far East for the past three fiscal years are
shown in the table below.
Fiscal Year Ended September 30 FMR U.K. FMR Far East
Destiny I
1999 $ 441,660 $ 288,014
1998 $ 325,286 $ 311,961
1997 $ 257,649 $ 238,595
Fiscal Year Ended September 30 FMR U.K. FMR Far East
Destiny II
1999 $ 199,188 $ 131,555
1998 $ 173,011 $ 165,398
1997 $ 146,081 $ 135,752
For discretionary investment management and execution of portfolio
transactions, no fees were paid to FMR U.K. and FMR Far East on behalf
of the funds for the past three fiscal years.
DISTRIBUTION SERVICES
Each fund has entered into a franchise agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The franchise agreements call
for each fund to issue a sufficient number of shares, which are
continuously offered at NAV, to meet the requirements of all
Destiny Plans sold, distributed, and/or issued by FDC.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
The Trustees have approved Distribution and Service Plans on behalf of
Class O and Class N of each fund (the Plans) pursuant to Rule 12b-1
under the 1940 Act (the Rule). The Rule provides in substance that a
mutual fund may not engage directly or indirectly in financing any
activity that is primarily intended to result in the sale of shares of
the fund except pursuant to a plan approved on behalf of the fund
under the Rule. The Plans, as approved by the Trustees, allow Class O
and Class N and FMR to incur certain expenses that might be considered
to constitute direct or indirect payment by the funds of distribution
expenses.
Pursuant to the Class N Plan for each fund, FDC is paid a monthly
12b-1 (distribution) fee at an annual rate of up to 0.50% of Class N's
average net assets determined at the close of business on each day
throughout the month. Currently, the Board of Trustees has not
approved such payments. The Board of Trustees may approve monthly
12b-1 (distribution) fee payments for Class N of each of Destiny I and
Destiny II at an annual rate of up to 0.50% of its average net assets
only when, in the opinion of the Trustees, it is in the best interests
of the shareholders of the class to do so.
Pursuant to the Class N Plan for each fund, FDC is paid a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class N's average
net assets determined at the close of business on each day throughout
the month.
Currently, FDC may reallow up to the full amount of 12b-1 (service)
fees paid by Class N to intermediaries (such as banks, broker-dealers
and other service providers), including its affiliates, for providing
shareholder support services. Any amounts of 12b-1 (service) fees paid
by Class N that are not reallowed to intermediaries will be returned
to Class N of each fund.
For the fiscal year ended September, 1999, Class N of Destiny I paid
FDC 12b-1 (service) fees of $ 175 , of which FDC paid $0 to
intermediaries and retained $175. Amounts retained by FDC represent
fees paid to FDC but not yet reallowed to intermediaries as of the
close of the period reported.
For the fiscal year ended September, 1999, Class N of Destiny II paid
FDC 12b-1 (service) fees of $ 558 , of which FDC paid $0 to
intermediaries and retained $558. Amounts retained by FDC represent
fees paid to FDC but not yet reallowed to intermediaries as of the
close of the period reported.
Under each Class O Plan, if the payment of management fees by the fund
to FMR is deemed to be indirect financing by the fund of the
distribution of its shares, such payment is authorized by the Plan.
Each Class O Plan specifically recognizes that FMR may use its
management fee revenue, as well as its past profits or its other
resources, to pay FDC for expenses incurred in connection with
providing services intended to result in the sale of Class O shares
and/or shareholder support services. In addition, each Class O Plan
provides that FMR, directly or through FDC, may pay intermediaries,
such as banks, broker-dealers and other service-providers, that
provide those services. Currently, the Board of Trustees has
authorized such payments for Class O shares.
Under each Class N Plan, if the payment of management fees by the fund
to FMR is deemed to be indirect financing by the fund of the
distribution of its shares, such payment is authorized by the Plan.
Each Class N Plan specifically recognizes that FMR may use its
management fee revenue, as well as its past profits or its other
resources, to pay FDC for expenses incurred in connection with
providing services intended to result in the sale of Class N shares
and/or shareholder support services, including payments made to
intermediaries that provide those services. Currently, the Board of
Trustees has authorized such payments for Class N shares.
Payments made by FMR either directly or through FDC to
intermediaries for the fiscal year ended 1999 amounted to $862,056 for
Class O of Destiny I and $637,944 for Class O of Destiny II.
For Class N of Destiny I and Class N of Destiny II, FMR made no
payments through FDC to intermediaries for the fiscal year ended 1999.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the applicable class of the fund and its shareholders. In
particular, the Trustees noted that the Class O Plan does not
authorize payments by Class O of the fund other than those made to FMR
under its management contract with the fund. To the extent that each
Plan gives FMR and FDC greater flexibility in connection with the
distribution of shares of the applicable class, additional sales of
fund shares or stabilization of cash flows may result. Furthermore,
certain shareholder support services may be provided more effectively
under the Plans by local entities with whom shareholders have other
relationships.
Each Class N Plan does not provide for specific payments by Class N of
any of the expenses of FDC, or obligate FDC or FMR to perform any
specific type or level of distribution activities or incur any
specific level of expense in connection with distribution activities.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
FDC may compensate intermediaries that satisfy certain criteria
established from time to time by FDC relating to the level or type of
services provided by the intermediary, the sale or expected sale of
significant amounts of shares, or other factors.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each class of each fund has entered into a transfer agent agreement
with FSC, an affiliate of FMR. Under the terms of the agreements, FSC
performs transfer agency, dividend disbursing, and shareholder
services for each class of each fund.
FSC receives no fees for providing transfer agency services for Class
O shares in a Destiny Plan account. For providing transfer
agency services for Class O shares in a non- Destiny Plan
account, FSC receives an account fee and an asset-based fee each paid
monthly with respect to each account in a fund. For retail accounts
and certain institutional accounts, these fees are based on account
size and fund type. For certain institutional retirement accounts,
these fees are based on fund type. For certain other institutional
retirement accounts, these fees are based on account type and fund
type. The account fees are subject to increase based on postage rate
changes.
The asset-based fees are subject to adjustment if the year-to-date
total return of the S&P 500 exceeds a positive or negative 15%.
For providing transfer agency services for Class N shares in a
Destiny Plan account, FSC receives a monthly fee equal
to the aggregate of certain fees payable by Class N
shareholders based on monthly Destiny Plan payment amounts or
per transaction. The transfer agency fees paid by Class N to FSC will
not exceed an annual rate of 0.63% of Class N's monthly net assets.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with FSC.
Under the terms of the agreements, FSC calculates the NAV and
dividends for each class of each fund, maintains each fund's portfolio
and general accounting records, and administers each fund's securities
lending program.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month.
The annual rates for pricing and bookkeeping services for the funds
are 0.0450% of the first $500 million of average net assets, 0.0265%
of average net assets between $500 million and $3 billion, and 0.0010%
of average net assets in excess of $3 billion. The fee, not including
reimbursement for out-of-pocket expenses, is limited to a minimum of
$60,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
Fund 1999 1998 1997
Destiny I $ 923,683 $ 824,006 $ 810,796
Destiny II $ 893,302 $ 812,105 $ 806,279
For administering each fund's securities lending program, FSC receives
fees based on the number and duration of individual securities loans.
Securities lending fees paid by the funds to FSC for the past three
fiscal years are shown in the table below.
Fund 1999 1998 1997
Destiny I $ 980 $ 0 $ 0
Destiny II $ 2,820 $ 0 $ 0
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Destiny I and Destiny II are funds of Fidelity
Destiny Portfolios, an open-end management investment company
organized as a Massachusetts business trust on June 20, 1984.
Currently, there are 2 funds in Destiny Portfolios: Destiny I and
Destiny II. The Trustees are permitted to create additional funds in
the trust and to create additional classes of the funds.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject to the rights of creditors, are allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets
of each fund in the trust shall be charged with the liabilities and
expenses attributable to such fund, except that liabilities and
expenses may be allocated to a particular class. Any general expenses
of the trust shall be allocated between or among any one or more of
the funds or classes.
SHAREHOLDER LIABILITY. The trust is an entity commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust.
The Declaration of Trust contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
trust or fund. The Declaration of Trust provides that the trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation,
or instrument entered into or executed by the trust or the Trustees
relating to the trust or to a fund shall include a provision limiting
the obligations created thereby to the trust or to one or more funds
and its or their assets. The Declaration of Trust further provides
that shareholders of a fund shall not have a claim on or right to any
assets belonging to any other fund.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. The Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote. Claims asserted against one class of shares may subject
holders of another class of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you are entitled to one vote for each
dollar of net asset value that you own. The voting rights of
shareholders can be changed only by a shareholder vote. Shares may be
voted in the aggregate, by fund and by class.
The shares have no preemptive or conversion rights. Shares are fully
paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale of its
assets to, or merger with, another open-end management investment
company or series thereof, or upon liquidation and distribution of its
assets. Generally, the merger of the trust or a fund with another
entity or the sale of substantially all of the assets of the trust or
a fund to another entity requires approval by a vote of shareholders
of the trust or the fund. The Trustees may, however, reorganize or
terminate the trust or any of its funds without prior shareholder
approval. In the event of the dissolution or liquidation of the trust,
shareholders of each of its funds are entitled to receive the
underlying assets of such fund available for distribution. In the
event of the dissolution or liquidation of a fund, shareholders of
that fund are entitled to receive the underlying assets of the fund
available for distribution.
CUSTODIAN. State Street Bank and Trust Company, 1776 Heritage Drive,
Quincy, Massachusetts, is custodian of the assets of each fund. The
custodian is responsible for the safekeeping of a fund's assets and
the appointment of any subcustodian banks and clearing agencies.
FMR, its officers and directors, its affiliated companies, and members
of the Board of Trustees may, from time to time, conduct transactions
with various banks, including banks serving as custodians for certain
funds advised by FMR. Transactions that have occurred to date include
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.
AUDITOR. Deloitte & Touche LLP, 200 Berkeley Street, Boston
Massachusetts serves as independent accountant for each fund. The
auditor examines financial statements for the funds and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal year ended September 30, 1999, and report of the auditor, are
included in the fund's annual report and are incorporated herein by
reference.
APPENDIX
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity Focus,
Fidelity Investments and Magellan are registered trademarks of FMR
Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.
Fidelity Destiny Portfolios
PART C - OTHER INFORMATION
Item 23. Exhibits
(a) Amended and Restated Declaration of Trust, dated June 16, 1999,
is incorporated herein by reference to Exhibit a(1) of
Post-Effective Amendment No. 67.
(b) Bylaws of the Trust, as amended and dated May 19, 1994, are
incorporated herein by reference to Exhibit 2(a) of Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment
No. 87.
(c) Not applicable.
(d) (1) Management Contract, dated July 1, 1999, between Destiny I
and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit d(1) of Post-Effective
Amendment No. 67.
(2) Management Contract, dated July 1, 1999, between Destiny II
and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit d(2) of Post-Effective
Amendment No. 67.
(3) Sub-Advisory Agreement, dated July 1, 1999, between Fidelity
Management & Research Company, on behalf of Destiny I, and
Fidelity Management & Research (U.K.) Inc., is incorporated
herein by reference to Exhibit d(3) of Post-Effective
Amendment No. 67.
(4) Sub-Advisory Agreement, dated July 1, 1999, between Fidelity
Management & Research Company, on behalf of Destiny I, and
Fidelity Management & Research (Far East) Inc., is
incorporated herein by reference to Exhibit d(4) of
Post-Effective Amendment No. 67.
(5) Sub-Advisory Agreement, dated July 1, 1999, between Fidelity
Management & Research Company, on behalf of Destiny II, and
Fidelity Management & Research (U.K.) Inc., is incorporated
herein by reference to Exhibit d(5) of Post-Effective
Amendment No. 67.
(6) Sub-Advisory Agreement, dated July 1, 1999, between Fidelity
Management & Research Company, on behalf of Destiny II, and
Fidelity Management & Research (Far East) Inc., is
incorporated herein by reference to Exhibit d(6) of
Post-Effective Amendment No. 67.
(e) (1) Franchise Agreement, dated March 30, 1999, between
Registrant, on behalf of Destiny I, and Fidelity Distributors
Corporation, is filed herein as Exhibit e(1).
(2) Franchise Agreement, dated March 30, 1999, between
Registrant, on behalf of Destiny II, and Fidelity
Distributors Corporation, is filed herein as Exhibit e(2).
(f) (1) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 14,
1995 and amended through November 14, 1996, is incorporated
herein by reference to Exhibit 7(b) of Fidelity Aberdeen
Street Trust's (File No. 33-43529) Post-Effective Amendment
No. 19.
(g) (1) Custodian Agreement, and Appendix C, dated February 1, 1996,
between State Street Bank and Trust Company and the
Registrant are incorporated herein by reference to Exhibit
8(b) of Fidelity Institutional Trust's (File No. 33-15983)
Post-Effective Amendment No. 22.
(2) Appendix A, dated November 19, 1998, to the Custodian
Agreement, dated February 1, 1996, between State Street Bank
and Trust Company and the Registrant is incorporated herein
by reference to Exhibit g(2) of Fidelity Advisor Series
VIII's (File No. 2-86711) Post-Effective Amendment No. 53.
(3) Appendix B, dated September 16, 1999, to the Custodian
Agreement, dated February 1, 1996, between State Street Bank
and Trust Company and the Registrant is incorporated herein
by reference to Exhibit g(11) of Fidelity Advisor Series I's
(File No. 2-84776) Post-Effective Amendment No. 50.
(4) Addendum, dated October 21, 1996, to the Custodian Agreement,
dated February 1, 1996, between State Street Bank and Trust
Company and the Registrant is incorporated herein by
reference to Exhibit g(4) of Fidelity Advisor Series VIII's
(File No. 2-86711) Post-Effective Amendment No. 54.
(5) Fidelity Group Repo Custodian Agreement among The Bank of New
York, J.P. Morgan Securities, Inc., and the Registrant, dated
February 12, 1996, is incorporated herein by reference to
Exhibit 8(d) of Fidelity Institutional Cash Portfolios' (File
No. 2-74808) Post-Effective Amendment No. 31.
(6) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and the Registrant, dated
February 12, 1996, is incorporated herein by reference to
Exhibit 8(e) of Fidelity Institutional Cash Portfolios' (File
No. 2-74808) Post Effective Amendment No. 31.
(7) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and the Registrant, dated
November 13, 1995, is incorporated herein by reference to
Exhibit 8(f) of Fidelity Institutional Cash Portfolios' (File
No. 2-74808) Post-Effective Amendment No. 31.
(8) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and the Registrant, dated November 13,
1995, is incorporated herein by reference to Exhibit 8(g) of
Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(9) Joint Trading Account Custody Agreement between The Bank of
New York and the Registrant, dated May 11, 1995, is
incorporated herein by reference to Exhibit 8(h) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(10) First Amendment to Joint Trading Account Custody Agreement
between The Bank of New York and the Registrant, dated July
14, 1995, is incorporated herein by reference to Exhibit 8(i)
of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(h) Not applicable.
(i) (1) Legal Opinion of Kirkpatrick & Lockhart LLP for Classes O and
N of Destiny I and Destiny II, dated November 17, 1999, is
filed herein as Exhibit i(1).
(j) (1) Consent of Deloitte & Touche LLP, dated November 22, 1999, is
filed herein as Exhibit j(1).
(2) Consent of PricewaterhouseCoopers LLP, dated November 22,
1999, is filed herein as Exhibit j(2).
(k) Not applicable.
(l) Not applicable.
(m) (1) Distribution and Service Plan pursuant to Rule 12b-1 for
Destiny I: Class O is incorporated herein by reference to
Exhibit m(1) of Post-Effective Amendment No. 67.
(2) Distribution and Service Plan pursuant to Rule 12b-1 for
Destiny II: Class O is incorporated herein by reference to
Exhibit m(2) of Post-Effective Amendment No. 67.
(3) Distribution and Service Plan pursuant to Rule 12b-1 for
Destiny I: Class N is incorporated herein by reference to
Exhibit 15(a) of Post-Effective Amendment No. 66.
(4) Distribution and Service Plan pursuant to Rule 12b-1 for
Destiny II: Class N is incorporated herein by reference to
Exhibit 15(b) of Post-Effective Amendment No. 66.
(n) Not applicable.
(o) (1) Multiple Class of Shares Plan pursuant to Rule 18f-3, dated
March 18, 1999, is incorporated herein by reference to
Exhibit 18(a) of Post-Effective Amendment No. 66.
(2) Schedule I to Multiple Class of Shares Plan pursuant to Rule
18f-3 on behalf of Fidelity Destiny Portfolios is
incorporated herein by reference to Exhibit 18(b) of
Post-Effective Amendment No. 66.
Item 24. Trusts Controlled by or under Common Control with this Trust
The Board of Trustees of the Trust is the same as the board of other
Fidelity funds, each of which has Fidelity Management & Research
Company, or an affiliate, as its investment adviser. In addition, the
officers of the Trust are substantially identical to those of the
other Fidelity funds. Nonetheless, the Trust takes the position that
it is not under common control with other Fidelity funds because the
power residing in the respective boards and officers arises as the
result of an official position with the respective trusts.
Item 25. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Trust shall indemnify any present or past trustee or officer
to the fullest extent permitted by law against liability, and all
expenses reasonably incurred by him or her in connection with any
claim, action, suit or proceeding in which he or she is involved by
virtue of his or her service as a trustee or officer and against any
amount incurred in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other adjudicatory body to
be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties (collectively, "disabling conduct"), or not to have
acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement,
no indemnification may be provided unless there has been a
determination, as specified in the Declaration of Trust, that the
officer or trustee did not engage in disabling conduct.
Pursuant to Section 5 of the Franchise Agreement, the Registrant
shall indemnify and hold harmless Fidelity Distributors Corporation
(Distributors) and each person, if any, subjected to liability because
of connection with Distributors and their respective successors (all
hereinafter in this paragraph referred to as the "Defendants") against
any liability, claims, damage or expense (including, unless the
Registrant elects to assume the defense, the reasonable cost of
investigating and defending any alleged liability, claim, damage, or
expense and reasonable counsel fees in connection therewith), joint or
several, arising by reason of any person acquiring any Plans for
Registrant shares on the ground that the registration statement or
prospectus for shares of the Registrant includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make statements therein not
misleading, unless such statement or omission occurred by reason of a
variance in the prospectus prepared by Distributors from the
prospectus as contained in the composition, etc., supplied by the
Registrant or was made in reliance upon information furnished by
Distributors for use therein. In no case is the indemnity of the
Registrant in favor of Distributors or any person indemnified to be
deemed to protect Distributors or any such person against any
liability to the Registrant or its security holders to which
Distributors or any controlling person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement. Upon the commencement
of any suit against any Defendant in respect of which indemnity may be
sought as aforesaid, such Defendant shall promptly notify the
Registrant, but failure so to notify the Registrant shall not relieve
the Registrant from any liability the Registrant may have to the
Defendants otherwise than on account of said indemnity agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("FSC") is appointed transfer agent, the Trust agrees to indemnify and
hold FSC harmless against any losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting
from:
(1) any claim, demand, action or suit brought by any person other
than the Trust, including by a shareholder, which names FSC and/or the
Trust as a party and is not based on and does not result from FSC's
willful misfeasance, bad faith or negligence or reckless disregard of
duties, and arises out of or in connection with FSC's performance
under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FSC's willful misfeasance, bad faith or negligence
or reckless disregard of its duties) which results from the negligence
of the Trust, or from FSC's acting upon any instruction(s) reasonably
believed by it to have been executed or communicated by any person
duly authorized by the Trust, or as a result of FSC's acting in
reliance upon advice reasonably believed by FSC to have been given by
counsel for the Trust, or as a result of FSC's acting in reliance upon
any instrument or stock certificate reasonably believed by it to have
been genuine and signed, countersigned or executed by the proper
person.
Item 26. Business and Other Connections of Investment Advisers
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
82 Devonshire Street, Boston, MA 02109
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
Edward C. Johnson 3d Chairman of the Board and
Director of FMR; President
and Chief Executive Officer
of FMR Corp.; Chairman of
the Board and Director of
FMR Corp., Fidelity
Investments Money
Management, Inc. (FIMM),
Fidelity Management &
Research (U.K.) Inc. (FMR
U.K.), and Fidelity
Management & Research (Far
East) Inc. (FMR Far East);
Chairman of the Executive
Committee of FMR; Chairman
and Representative Director
of Fidelity Investments
Japan Limited (FIJ);
President and Trustee of
funds advised by FMR.
Robert C. Pozen President and Director of
FMR; Senior Vice President
and Trustee of funds advised
by FMR; President and
Director of FIMM, FMR U.K.,
and FMR Far East; Director
of Strategic Advisers, Inc.;
Previously, General Counsel,
Managing Director, and
Senior Vice President of FMR
Corp.
Peter S. Lynch Vice Chairman of the Board
and Director of FMR.
John Avery Vice President of FMR.
Robert Bertelson Vice President of FMR.
John H. Carlson Vice President of FMR and of
funds advised by FMR.
Robert C. Chow Vice President of FMR.
Dwight D. Churchill Senior Vice President of FMR
and Vice President of Bond
Funds advised by FMR; Vice
President of FIMM.
Laura B. Cronin Vice President of FMR and
Treasurer of FMR, FIMM, FMR
U.K., and FMR Far East.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Catherine Collins Vice President of FMR.
Frederic G. Corneel Tax Counsel of FMR.
William Danoff Senior Vice President of FMR
and Vice President of funds
advised by FMR.
Scott E. DeSano Vice President of FMR.
Penelope Dobkin Vice President of FMR and of
a fund advised by FMR.
Walter C. Donovan Vice President of FMR.
Bettina Doulton Senior Vice President of FMR
and of funds advised by FMR.
Stephen DuFour Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of
a fund advised by FMR.
William R. Ebsworth Vice President of FMR.
David Felman Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR
and Vice President of a fund
advised by FMR.
Karen Firestone Vice President of FMR.
Michael B. Fox Assistant Treasurer of FMR,
FIMM, FMR U.K., and FMR Far
East; Vice President and
Treasurer of FMR Corp. and
Strategic Advisers, Inc.;
Vice President of FMR U.K.,
FMR Far East, and FIMM.
Gregory Fraser Vice President of FMR and of
a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk
of FMR Corp., FMR U.K., FMR
Far East, and Strategic
Advisers, Inc.; Secretary of
FIMM; Vice President Deputy
General Counsel FMR Corp.
David L. Glancy Vice President of FMR and of
a fund advised by FMR.
Barry A. Greenfield Vice President of FMR.
Boyce I. Greer Senior Vice President of FMR
and Vice President of Money
Market Funds advised by FMR;
Vice President of FIMM.
Bart A. Grenier Senior Vice President of FMR
and Vice President of
High-Income Funds advised by
FMR.
Robert J. Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR
and Vice President of funds
advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR;
Senior Vice President of
FIMM; Vice President of
Fixed-Income Funds advised
by FMR.
Bruce T. Herring Vice President of FMR.
Robert F. Hill Vice President of FMR and
Director of Technical
Research.
Frederick Hoff Vice President of FMR.
Abigail P. Johnson Senior Vice President of FMR
and Vice President of funds
advised by FMR; Director of
FMR Corp.; Associate
Director and Senior Vice
President of Equity Funds
advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Senior Vice President of FMR
and of a fund advised by FMR.
Francis V. Knox Vice President of FMR;
Compliance Officer of FMR
U.K. and FMR Far East.
Harris Leviton Vice President of FMR.
Bradford E. Lewis Vice President of FMR and of
funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of
funds advised by FMR.
Shigeki Makino Vice President of FMR.
Charles A. Mangum Vice President of FMR and of
a fund advised by FMR.
Kevin McCarey Vice President of FMR and of
a fund advised by FMR.
James McDowell Senior Vice President of FMR.
Neal P. Miller Vice President of FMR.
Jacques Perold Vice President of FMR.
Stephen Petersen Senior Vice President of FMR.
Alan Radlo Vice President of FMR.
Eric D. Roiter Vice President, General
Counsel, and Clerk of FMR
and Secretary of funds
advised by FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of
a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Richard A. Silver Vice President of FMR.
Carol A. Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR and of
funds advised by FMR.
Thomas T. Soviero Vice President of FMR and of
a fund advised by FMR.
Richard Spillane Senior Vice President of FMR;
Associate Director and
Senior Vice President of
Equity Funds advised by FMR;
Previously, Senior Vice
President and Director of
Operations and Compliance of
FMR U.K.
Thomas M. Sprague Vice President of FMR and of
a fund advised by FMR.
Robert E. Stansky Senior Vice President of FMR
and Vice President of a fund
advised by FMR.
Scott D. Stewart Vice President of FMR.
Beth F. Terrana Senior Vice President of FMR
and Vice President of funds
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of
a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of
funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR
and Vice President of funds
advised by FMR; Director of
FMR Corp.
Jason Weiner Vice President of FMR.
Steven S. Wymer Vice President of FMR and of
a fund advised by FMR.
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
25 Lovat Lane, London, EC3R 8LL, England
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and
Director of FMR U.K., FMR,
FMR Corp., FIMM, and FMR Far
East; President and Chief
Executive Officer of FMR
Corp.; Chairman of the
Executive Committee of FMR;
Chairman and Representative
Director of Fidelity
Investments Japan Limited
(FIJ); President and Trustee
of funds advised by FMR.
Robert C. Pozen President and Director of FMR
U.K.; Senior Vice President
and Trustee of funds advised
by FMR; President and
Director of FIMM, FMR, and
FMR Far East; Director of
Strategic Advisers, Inc.;
Previously, General Counsel,
Managing Director, and
Senior Vice President of FMR
Corp.
Laura B. Cronin Treasurer of FMR U.K., FMR
Far East, FMR, and FIMM and
Vice President of FMR.
Michael B. Fox Assistant Treasurer of FMR
U.K., FMR, FMR Far East, and
FIMM; Vice President of FMR
U.K., FMR Far East, and
FIMM; Vice President and
Treasurer of FMR Corp. and
Strategic Advisers, Inc.
Simon Fraser Senior Vice President of FMR
U.K. and Director and
President of FIIA.
Jay Freedman Clerk of FMR U.K., FMR Far
East, FMR Corp., and
Strategic Advisers, Inc.;
Assistant Clerk of FMR;
Secretary of FIMM; Vice
President Deputy General
Counsel FMR Corp.
Susan Englander Hislop Assistant Clerk of FMR U.K.,
FMR Far East, and Strategic
Advisers, Inc.; Assistant
Secretary of FIMM.
Francis V. Knox Compliance Officer of FMR
U.K. and FMR Far East; Vice
President of FMR.
(3) FIDELITY MANAGEMENT & RESEARCH (Far East) INC. (FMR Far East)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
FMR Far East provides investment advisory services to Fidelity
Management & Research Company and Fidelity Management Trust Company.
The directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and
Director of FMR Far East,
FMR, FMR Corp., FIMM, and
FMR U.K.; Chairman of the
Executive Committee of FMR;
President and Chief
Executive Officer of FMR
Corp.; Chairman and
Representative Director of
Fidelity Investments Japan
Limited (FIJ); President and
Trustee of funds advised by
FMR.
Robert C. Pozen President and Director of FMR
Far East; Senior Vice
President and Trustee of
funds advised by FMR;
President and Director of
FIMM, FMR U.K., and FMR;
Director of Strategic
Advisers, Inc.; Previously,
General Counsel, Managing
Director, and Senior Vice
President of FMR Corp.
Robert H. Auld Senior Vice President of FMR
Far East.
Laura B. Cronin Treasurer of FMR Far East,
FMR U.K., FMR, and FIMM and
Vice President of FMR.
Michael B. Fox Assistant Treasurer of FMR
Far East, FMR, FMR U.K., and
FIMM; Vice President of FMR
Far East and FMR U.K.; Vice
President and Treasurer of
FMR Corp. and Strategic
Advisers, Inc.
Francis V. Knox Compliance Officer of FMR Far
East and FMR U.K.; Vice
President of FMR.
Jay Freedman Clerk of FMR Far East, FMR
U.K., FMR Corp., and
Strategic Advisers, Inc.;
Assistant Clerk of FMR;
Secretary of FIMM; Vice
President Deputy General
Counsel FMR Corp.
Susan Englander Hislop Assistant Clerk of FMR Far
East, FMR U.K., and
Strategic Advisers, Inc.;
Assistant Secretary of FIMM.
Billy Wilder Vice President of FMR Far
East; President and
Representative Director of
FIJ.
Item 27. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
all funds advised by FMR or an affiliate.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Fund
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Eric D. Roiter Vice President Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 28. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company, Fidelity Service
Company, Inc. or Fidelity Investments Institutional Operations
Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian, State Street Bank & Trust Company, 1776 Heritage Drive,
Quincy, MA.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 68 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston, and Commonwealth of Massachusetts, on the 22th day
of November 1999.
FIDELITY DESTINY PORTFOLIOS
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
(Signature) (Title) (Date)
/s/Edward C. Johnson 3d President and Trustee November 22, 1999
(dagger)
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer November 22, 1999
Richard A. Silver
/s/Robert C. Pozen Trustee November 22, 1999
Robert C. Pozen
/s/Ralph F. Cox Trustee November 22, 1999
*
Ralph F. Cox
/s/Phyllis Burke Davis Trustee November 22, 1999
*
Phyllis Burke Davis
/s/Robert M. Gates Trustee November 22, 1999
**
Robert M. Gates
/s/E. Bradley Jones Trustee November 22, 1999
*
E. Bradley Jones
/s/Donald J. Kirk Trustee November 22, 1999
*
Donald J. Kirk
/s/Peter S. Lynch Trustee November 22, 1999
*
Peter S. Lynch
/s/Marvin L. Mann Trustee November 22, 1999
*
Marvin L. Mann
/s/William O. McCoy Trustee November 22, 1999
*
William O. McCoy
/s/Gerald C. McDonough Trustee November 22, 1999
*
Gerald C. McDonough
/s/Thomas R. Williams Trustee November 22, 1999
*
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash
Fidelity Advisor Series III Portfolios
Fidelity Advisor Series IV Fidelity Institutional
Fidelity Advisor Series V Tax-Exempt Cash Portfolios
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts
Fidelity Beacon Street Trust Municipal Trust
Fidelity Boston Street Trust Fidelity Money Market Trust
Fidelity California Municipal Fidelity Mt. Vernon Street
Trust Trust
Fidelity California Municipal Fidelity Municipal Trust
Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal
Fidelity Charles Street Trust Trust
Fidelity Commonwealth Trust Fidelity New York Municipal
Fidelity Concord Street Trust Trust II
Fidelity Congress Street Fund Fidelity Phillips Street Trust
Fidelity Contrafund Fidelity Puritan Trust
Fidelity Corporate Trust Fidelity Revere Street Trust
Fidelity Court Street Trust Fidelity School Street Trust
Fidelity Court Street Trust II Fidelity Securities Fund
Fidelity Covington Trust Fidelity Select Portfolios
Fidelity Daily Money Fund Fidelity Sterling Performance
Fidelity Destiny Portfolios Portfolio, L.P.
Fidelity Deutsche Mark Fidelity Summer Street Trust
Performance Fidelity Trend Fund
Portfolio, L.P. Fidelity U.S.
Fidelity Devonshire Trust Investments-Bond Fund, L.P.
Fidelity Exchange Fund Fidelity U.S.
Fidelity Financial Trust Investments-Government
Fidelity Fixed-Income Trust Securities
Fidelity Government Fund, L.P.
Securities Fund Fidelity Union Street Trust
Fidelity Hastings Street Trust Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Newbury Street Trust
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
Variable Insurance Products
Fund III
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Government
Fidelity Advisor Annuity Fund Securities Fund
Fidelity Advisor Series I Fidelity Hastings Street Trust
Fidelity Advisor Series II Fidelity Hereford Street Trust
Fidelity Advisor Series III Fidelity Income Fund
Fidelity Advisor Series IV Fidelity Institutional Cash
Fidelity Advisor Series V Portfolios
Fidelity Advisor Series VI Fidelity Institutional
Fidelity Advisor Series VII Tax-Exempt Cash Portfolios
Fidelity Advisor Series VIII Fidelity Institutional Trust
Fidelity Beacon Street Trust Fidelity Investment Trust
Fidelity Boston Street Trust Fidelity Magellan Fund
Fidelity California Municipal Fidelity Massachusetts
Trust Municipal Trust
Fidelity California Municipal Fidelity Money Market Trust
Trust II Fidelity Mt. Vernon Street
Fidelity Capital Trust Trust
Fidelity Charles Street Trust Fidelity Municipal Trust
Fidelity Commonwealth Trust Fidelity Municipal Trust II
Fidelity Congress Street Fund Fidelity New York Municipal
Fidelity Contrafund Trust
Fidelity Corporate Trust Fidelity New York Municipal
Fidelity Court Street Trust Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Covington Trust Fidelity Puritan Trust
Fidelity Daily Money Fund Fidelity Revere Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity School Street Trust
Fidelity Destiny Portfolios Fidelity Securities Fund
Fidelity Deutsche Mark Fidelity Select Portfolios
Performance Fidelity Sterling Performance
Portfolio, L.P. Portfolio, L.P.
Fidelity Devonshire Trust Fidelity Summer Street Trust
Fidelity Exchange Fund Fidelity Trend Fund
Fidelity Financial Trust Fidelity U.S.
Fidelity Fixed-Income Trust Investments-Bond Fund, L.P.
Fidelity U.S.
Investments-Government
Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Government
Fidelity Advisor Annuity Fund Securities Fund
Fidelity Advisor Series I Fidelity Hastings Street Trust
Fidelity Advisor Series II Fidelity Hereford Street Trust
Fidelity Advisor Series III Fidelity Income Fund
Fidelity Advisor Series IV Fidelity Institutional Cash
Fidelity Advisor Series V Portfolios
Fidelity Advisor Series VI Fidelity Institutional
Fidelity Advisor Series VII Tax-Exempt Cash Portfolios
Fidelity Advisor Series VIII Fidelity Institutional Trust
Fidelity Beacon Street Trust Fidelity Investment Trust
Fidelity Boston Street Trust Fidelity Magellan Fund
Fidelity California Municipal Fidelity Massachusetts
Trust Municipal Trust
Fidelity California Municipal Fidelity Money Market Trust
Trust II Fidelity Mt. Vernon Street
Fidelity Capital Trust Trust
Fidelity Charles Street Trust Fidelity Municipal Trust
Fidelity Commonwealth Trust Fidelity Municipal Trust II
Fidelity Congress Street Fund Fidelity New York Municipal
Fidelity Contrafund Trust
Fidelity Corporate Trust Fidelity New York Municipal
Fidelity Court Street Trust Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Covington Trust Fidelity Puritan Trust
Fidelity Daily Money Fund Fidelity Revere Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity School Street Trust
Fidelity Destiny Portfolios Fidelity Securities Fund
Fidelity Deutsche Mark Fidelity Select Portfolios
Performance Fidelity Sterling Performance
Portfolio, L.P. Portfolio, L.P.
Fidelity Devonshire Trust Fidelity Summer Street Trust
Fidelity Exchange Fund Fidelity Trend Fund
Fidelity Financial Trust Fidelity U.S.
Fidelity Fixed-Income Trust Investments-Bond Fund, L.P.
Fidelity U.S.
Investments-Government
Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson /s/Peter S.
3d___________ Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary /s/William O.
Burkhead_______________ McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox /s/Gerald C.
__________________ McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke /s/Marvin L.
Davis_____________ Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley /s/Thomas R. Williams
Jones________________ ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
__________________
Donald J. Kirk
Exhibit e(1)
FRANCHISE AGREEMENT
between
Fidelity Destiny Portfolios:
Destiny I
and
Fidelity Distributors Corporation
THIS AGREEMENT made this 30th day of March, 1999 between FIDELITY
DESTINY PORTFOLIOS, a Massachusetts business trust having its
principal office in Boston, Massachusetts which may issue one or more
series of beneficial interest (hereinafter called the "Issuer"), on
behalf of Destiny I, (hereinafter called the "Portfolio"), and
FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts corporation, having
its principal office in Boston, Massachusetts (hereinafter called
"Distributors").
WITNESSETH:
WHEREAS Distributors has been formed for the purpose, among other
things, of sponsoring Periodic Payment Plan Certificates based upon
open-end investment company shares and other securities, and is able
and desirous of sponsoring Periodic Payment Plan Certificates based
upon the various classes of the Portfolio's shares as hereinafter
provided; and
WHEREAS Distributors desires to arrange for the acquisition of shares
of each class of the Portfolio for deposit and use under Systematic
Investment Plans (hereinafter sometimes collectively referred to as
the "Plans"), of which the STATE STREET BANK AND TRUST COMPANY will be
the Custodian; and
WHEREAS Distributors represents it is a member in good standing of
the National Association of Securities Dealers, Inc.; and
WHEREAS the Issuer is registered under the Investment Company Act of
1940, as amended (hereinafter called the "1940 Act"), shares of the
Portfolio are registered under the Securities Act of 1933, as amended,
(hereinafter called the "1933 Act") and the Issuer is willing to take
the necessary steps, subject to approval of its shareholders, to
continue to register Portfolio shares under the 1933 Act to the end
that there will be available for sale such number of Portfolio shares
as Distributors may reasonably be expected to sell.
NOW, THEREFORE in consideration of the sum of one dollar and other
good and valuable considerations by each of the parties hereto to the
other in hand paid, the receipt whereof is hereby acknowledged, and
the mutual covenants herein set forth, the parties hereto agree as
follows:
1. The Franchise Agreement, for Destiny I, previously in effect is
hereby terminated, effective as of the opening of business this date,
and relations between the Portfolio and Distributors thereafter will
be governed by the terms of this Agreement.
2. The Issuer agrees to sell upon demand at the net asset value,
determined as provided by the then current prospectus (as determined
by Fidelity Service Company, Inc., Boston, Massachusetts, as agent for
the Portfolio), which is without imposition of any sales charge, to
Distributors, or any bank or banks acting as Custodian for the Plans
sponsored and issued by Distributors, a sufficient number of Portfolio
shares to meet the requirements of all such Plans as are sold,
distributed and/or issued by Distributors.
3. The Issuer agrees that it will comply to the best of its ability
with the federal securities laws, and the Issuer agrees it will use
its best efforts to maintain enough shares of each class of the
Portfolio registered under the 1933 Act to permit the continued sale
of Portfolio shares. The Issuer further agrees to make readily
available to Distributors any data, information or material in its
possession that may be necessary to the registration or qualification
for the Plans for sale under the federal securities laws, or the laws
of any state.
4. The Issuer agrees to supply to Distributors or the bank or banks
acting as Custodian for the Plans issued by Distributors a sufficient
number of copies of any and all general mailings, together with the
necessary envelopes, including without limitation, proxy material,
proxies, annual, semi-annual and quarterly reports, notices and
prospectuses, sent from time to time to the holders of Portfolio
shares so as to provide a single copy, together with the necessary
envelope and postage, to each of Distributors' Planholders. The
Issuer agrees to furnish all the above mentioned material at no cost
to Distributors. Additional copies of any current prospectus and any
printed information issued as supplemental to such prospectus of the
Portfolio will be supplied by the Issuer at Distributors' expense in
sufficient quantities to accommodate Distributors in selling,
distributing and/or issuing the Plans. It is understood that
Distributors is an affiliate of Fidelity Management & Research Company
(hereinafter called "FMR"), investment adviser of the Portfolio and
that the Issuer's agreement to supply information and printed
materials described in this agreement may be fulfilled by FMR.
Distributors agrees that it will furnish the Issuer for its files two
copies of all material supplied to Planholders by Distributors. It is
recognized by the Issuer that FMR may make payment to Distributors
with respect to any expenses incurred in the distribution of shares of
the Portfolio, such payments payable from the past profits or other
resources of FMR including management fees paid to it by the Issuer.
5. The Issuer shall indemnify and hold harmless Distributors and each
person, if any, subjected to liability because of connection with
Distributors and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability,
claims, damage or expense (including, unless the Issuer elects to
assume the defense, the reasonable cost of investigating and defending
any alleged liability, claim, damage, or expense and reasonable
counsel fees in connection therewith), joint or several, arising by
reason of any person acquiring any Plans for Portfolio shares on the
ground that the registration statement or prospectus for shares of the
Portfolio includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in
order to make statements therein not misleading, unless such statement
or omission occurred by reason of a variance in the prospectus
prepared by Distributors from the prospectus as contained in the
composition, etc., supplied by the Issuer or was made in reliance upon
information furnished by Distributors for use therein. In no case is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any such person
against any liability to the Issuer or its security holders to which
Distributors or any controlling person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement. Upon the commencement
of any suit against any Defendant in respect of which indemnity may be
sought as aforesaid, such Defendant shall promptly notify the Issuer,
but failure so to notify the Issuer shall not relieve the Issuer from
any liability the Issuer may have to the Defendants otherwise than on
account of said indemnity agreement.
6. Distributors shall indemnify and hold harmless the Issuer and each
person, if any, subjected to liability because of connection with the
Issuer and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability,
claims, damages, or expense (including, unless Distributors elects to
assume the defense, the reasonable cost of investigating and defending
any alleged liability, claim, damages or expense and reasonable
counsel fees in connection therewith), joint or several, arising by
reason of the sponsorship or distribution by Distributors of Plans
based upon the Portfolio shares unless such liability, claim, damages
or expense arise by reason of an untrue statement of a material fact
or omission to state a material fact required to be stated in the
prospectus or registration statement of the Portfolio, or necessary in
order to make the statements therein not misleading. In no case is
the indemnity of Distributors in favor of the Issuer or any person
indemnified to be deemed to protect the Issuer or any such person
would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties under this
Agreement. Upon the commencement of any suit against any Defendant in
respect of which indemnity may be sought as aforesaid, such Defendant
shall promptly notify Distributors but failure to notify Distributors
shall not relieve Distributors from any liability Distributors may
have to the Defendants otherwise than on account of said indemnity
agreement.
7. The Agreement on the part of the Issuer to sell Portfolio shares
upon demand, at net asset value set forth in paragraph 2 hereof, is
subject to the following limitations:
(a) That the Plans are maintained in good standing as unit investment
trusts under the federal securities laws, provided, however, that
Distributors reserves the right to change the terms or conditions of,
or suspend or discontinue, any Plans at any time after notification
thereof to the Issuer by letter or prepaid telegram; and
(b) That the membership of Distributors in the National Association of
Securities Dealers, Inc. and its registration as a broker-dealer under
the Securities Exchange Act of 1934, as amended, have not been
cancelled, revoked or suspended; and
(c) That Distributors is not in violation of any of the federal or
state laws and regulations relating to the registration and sale of
said Plans.
If Distributors shall, within thirty days after a default under any of
the provisions of this paragraph, cure such default to the reasonable
satisfaction of the Issuer, then the agreement of the Issuer to sell
at the net asset value Portfolio shares in accordance with paragraph 2
hereof shall remain unimpaired, anything in this paragraph 7 to the
contrary notwithstanding.
8. This Agreement shall have a term of two years from the effective
date of the registration of the Plans under the 1933 Act. Thereafter
this Agreement shall continue from year to year, unless either party
shall serve a notice upon the other by certified or registered mail,
return receipt requested, 120 days prior to the end of the year after
which termination is desired, canceling this Agreement, provided that
it shall be approved by the directors or shareholders of the Issuer as
required by Section 15 of the 1940 Act. Notwithstanding to the
termination of this Agreement, the Issuer agrees to sell sufficient
Portfolio shares to Distributors or any bank or banks acting as
Custodian for the Plans to permit completion of all Plans begun prior
to such termination. Distributors represents and agrees that it will
use its best efforts to sell Plans based upon Portfolio shares
throughout the term of this Agreement.
9. Distributors or any bank or banks acting as Custodian for the
Plans may from time to time substitute a new investment medium for the
Portfolio shares in accordance with the provisions of the Plan
certificate and prospectus in effect at the time.
10. All communications provided for hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed by
first class mail prepaid (unless delivery by certified or registered
mail, return receipt requested, is provided for) to the respective
parties as follows:
Fidelity Destiny Portfolios: Destiny I Fidelity Distributors
Corporation
82 Devonshire Street 82 Devonshire Street
Boston, Massachusetts 02109 Boston, Massachusetts 02109
or to such other address as the Issuer or Distributors designates by
written notice to that effect to the other.
11. This Agreement contains the entire understanding between the
parties and any modification, alteration, change or subsequent
agreement hereafter made shall be ineffective to change, modify or
discharge this Agreement in whole or in part unless such modification,
alteration, change or subsequent agreement is in writing and signed by
the party against whom enforcement of the change, modification,
discharge or alteration is sought.
12. This Agreement shall be construed in accordance with the laws of
Massachusetts.
13. This Agreement shall be binding upon and enforceable by and shall
bind and inures to the benefit of the Issuer and Distributors and
their respective heirs, executors, administrators, successors and
assigns.
14. Distributors is expressly put on notice of the limitation of
shareholder liability as set forth in Article XI Section 3 of the
"Declaration of Trust" of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all
cases to the Portfolio and its assets and Distributors shall not seek
satisfaction of any obligation from the shareholders or any
shareholder of the Issuer, or out of any assets of the Issuer other
than the assets of the Portfolio. Nor shall Distributors seek
satisfaction of any obligations from the trustees or any individual
trustee of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
FIDELITY DESTINY PORTFOLIOS:
on behalf of Destiny I
By /s/Robert C. Pozen
Senior Vice President
WITNESS:
/s/Eric D. Roiter FIDELITY DISTRIBUTORS CORPORATION
Secretary
By /s/Martha B. Willis
President
ATTEST:
/s/Eric D. Roiter
Clerk
Exhibit e(2)
FRANCHISE AGREEMENT
between
Fidelity Destiny Portfolios:
Destiny II
and
Fidelity Distributors Corporation
THIS AGREEMENT made this 30th day of March, 1999 between FIDELITY
DESTINY PORTFOLIOS, a Massachusetts business trust having its
principal office in Boston, Massachusetts which may issue one or more
series of beneficial interest (hereinafter called the "Issuer"), on
behalf of Destiny II, (hereinafter called the "Portfolio"), and
FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts corporation, having
its principal office in Boston, Massachusetts (hereinafter called
"Distributors").
WITNESSETH:
WHEREAS Distributors has been formed for the purpose, among other
things, of sponsoring Periodic Payment Plan Certificates based upon
open-end investment company shares and other securities, and is able
and desirous of sponsoring Periodic Payment Plan Certificates based
upon the various classes of the Portfolio's shares as hereinafter
provided; and
WHEREAS Distributors desires to arrange for the acquisition of shares
of each class of the Portfolio for deposit and use under Systematic
Investment Plans (hereinafter sometimes collectively referred to as
the "Plans"), of which the STATE STREET BANK AND TRUST COMPANY will be
the Custodian; and
WHEREAS Distributors represents it is a member in good standing of
the National Association of Securities Dealers, Inc.; and
WHEREAS the Issuer is registered under the Investment Company Act of
1940, as amended (hereinafter called the "1940 Act"), shares of the
Portfolio are registered under the Securities Act of 1933, as amended,
(hereinafter called the "1933 Act") and the Issuer is willing to take
the necessary steps, subject to approval of its shareholders, to
continue to register Portfolio shares under the 1933 Act to the end
that there will be available for sale such number of Portfolio shares
as Distributors may reasonably be expected to sell.
NOW, THEREFORE in consideration of the sum of one dollar and other
good and valuable considerations by each of the parties hereto to the
other in hand paid, the receipt whereof is hereby acknowledged, and
the mutual covenants herein set forth, the parties hereto agree as
follows:
1. The Franchise Agreement, for Destiny II, previously in effect is
hereby terminated, effective as of the opening of business this date,
and relations between the Portfolio and Distributors thereafter will
be governed by the terms of this Agreement.
2. The Issuer agrees to sell upon demand at the net asset value,
determined as provided by the then current prospectus (as determined
by Fidelity Service Company, Inc., Boston, Massachusetts, as agent for
the Portfolio), which is without imposition of any sales charge, to
Distributors, or any bank or banks acting as Custodian for the Plans
sponsored and issued by Distributors, a sufficient number of Portfolio
shares to meet the requirements of all such Plans as are sold,
distributed and/or issued by Distributors.
3. The Issuer agrees that it will comply to the best of its ability
with the federal securities laws, and the Issuer agrees it will use
its best efforts to maintain enough shares of each class of the
Portfolio registered under the 1933 Act to permit the continued sale
of Portfolio shares. The Issuer further agrees to make readily
available to Distributors any data, information or material in its
possession that may be necessary to the registration or qualification
for the Plans for sale under the federal securities laws, or the laws
of any state.
4. The Issuer agrees to supply to Distributors or the bank or banks
acting as Custodian for the Plans issued by Distributors a sufficient
number of copies of any and all general mailings, together with the
necessary envelopes, including without limitation, proxy material,
proxies, annual, semi-annual and quarterly reports, notices and
prospectuses, sent from time to time to the holders of Portfolio
shares so as to provide a single copy, together with the necessary
envelope and postage, to each of Distributors' Planholders. The
Issuer agrees to furnish all the above mentioned material at no cost
to Distributors. Additional copies of any current prospectus and any
printed information issued as supplemental to such prospectus of the
Portfolio will be supplied by the Issuer at Distributors' expense in
sufficient quantities to accommodate Distributors in selling,
distributing and/or issuing the Plans. It is understood that
Distributors is an affiliate of Fidelity Management & Research Company
(hereinafter called "FMR"), investment adviser of the Portfolio and
that the Issuer's agreement to supply information and printed
materials described in this agreement may be fulfilled by FMR.
Distributors agrees that it will furnish the Issuer for its files two
copies of all material supplied to Planholders by Distributors. It is
recognized by the Issuer that FMR may make payment to Distributors
with respect to any expenses incurred in the distribution of shares of
the Portfolio, such payments payable from the past profits or other
resources of FMR including management fees paid to it by the Issuer.
5. The Issuer shall indemnify and hold harmless Distributors and each
person, if any, subjected to liability because of connection with
Distributors and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability,
claims, damage or expense (including, unless the Issuer elects to
assume the defense, the reasonable cost of investigating and defending
any alleged liability, claim, damage, or expense and reasonable
counsel fees in connection therewith), joint or several, arising by
reason of any person acquiring any Plans for Portfolio shares on the
ground that the registration statement or prospectus for shares of the
Portfolio includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in
order to make statements therein not misleading, unless such statement
or omission occurred by reason of a variance in the prospectus
prepared by Distributors from the prospectus as contained in the
composition, etc., supplied by the Issuer or was made in reliance upon
information furnished by Distributors for use therein. In no case is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any such person
against any liability to the Issuer or its security holders to which
Distributors or any controlling person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement. Upon the commencement
of any suit against any Defendant in respect of which indemnity may be
sought as aforesaid, such Defendant shall promptly notify the Issuer,
but failure so to notify the Issuer shall not relieve the Issuer from
any liability the Issuer may have to the Defendants otherwise than on
account of said indemnity agreement.
6. Distributors shall indemnify and hold harmless the Issuer and each
person, if any, subjected to liability because of connection with the
Issuer and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability,
claims, damages, or expense (including, unless Distributors elects to
assume the defense, the reasonable cost of investigating and defending
any alleged liability, claim, damages or expense and reasonable
counsel fees in connection therewith), joint or several, arising by
reason of the sponsorship or distribution by Distributors of Plans
based upon the Portfolio shares unless such liability, claim, damages
or expense arise by reason of an untrue statement of a material fact
or omission to state a material fact required to be stated in the
prospectus or registration statement of the Portfolio, or necessary in
order to make the statements therein not misleading. In no case is
the indemnity of Distributors in favor of the Issuer or any person
indemnified to be deemed to protect the Issuer or any such person
would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties under this
Agreement. Upon the commencement of any suit against any Defendant in
respect of which indemnity may be sought as aforesaid, such Defendant
shall promptly notify Distributors but failure to notify Distributors
shall not relieve Distributors from any liability Distributors may
have to the Defendants otherwise than on account of said indemnity
agreement.
7. The Agreement on the part of the Issuer to sell Portfolio shares
upon demand, at net asset value set forth in paragraph 2 hereof, is
subject to the following limitations:
(a) That the Plans are maintained in good standing as unit investment
trusts under the federal securities laws, provided, however, that
Distributors reserves the right to change the terms or conditions of,
or suspend or discontinue, any Plans at any time after notification
thereof to the Issuer by letter or prepaid telegram; and
(b) That the membership of Distributors in the National Association of
Securities Dealers, Inc. and its registration as a broker-dealer under
the Securities Exchange Act of 1934, as amended, have not been
cancelled, revoked or suspended; and
(c) That Distributors is not in violation of any of the federal or
state laws and regulations relating to the registration and sale of
said Plans.
If Distributors shall, within thirty days after a default under any of
the provisions of this paragraph, cure such default to the reasonable
satisfaction of the Issuer, then the agreement of the Issuer to sell
at the net asset value Portfolio shares in accordance with paragraph 2
hereof shall remain unimpaired, anything in this paragraph 7 to the
contrary notwithstanding.
8. This Agreement shall have a term of two years from the effective
date of the registration of the Plans under the 1933 Act. Thereafter
this Agreement shall continue from year to year, unless either party
shall serve a notice upon the other by certified or registered mail,
return receipt requested, 120 days prior to the end of the year after
which termination is desired, canceling this Agreement, provided that
it shall be approved by the directors or shareholders of the Issuer as
required by Section 15 of the 1940 Act. Notwithstanding to the
termination of this Agreement, the Issuer agrees to sell sufficient
Portfolio shares to Distributors or any bank or banks acting as
Custodian for the Plans to permit completion of all Plans begun prior
to such termination. Distributors represents and agrees that it will
use its best efforts to sell Plans based upon Portfolio shares
throughout the term of this Agreement.
9. Distributors or any bank or banks acting as Custodian for the
Plans may from time to time substitute a new investment medium for the
Portfolio shares in accordance with the provisions of the Plan
certificate and prospectus in effect at the time.
10. All communications provided for hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed by
first class mail prepaid (unless delivery by certified or registered
mail, return receipt requested, is provided for) to the respective
parties as follows:
Fidelity Destiny Portfolios: Destiny II Fidelity Distributors
Corporation
82 Devonshire Street 82 Devonshire Street
Boston, Massachusetts 02109 Boston, Massachusetts 02109
or to such other address as the Issuer or Distributors designates by
written notice to that effect to the other.
11. This Agreement contains the entire understanding between the
parties and any modification, alteration, change or subsequent
agreement hereafter made shall be ineffective to change, modify or
discharge this Agreement in whole or in part unless such modification,
alteration, change or subsequent agreement is in writing and signed by
the party against whom enforcement of the change, modification,
discharge or alteration is sought.
12. This Agreement shall be construed in accordance with the laws of
Massachusetts.
13. This Agreement shall be binding upon and enforceable by and shall
bind and inures to the benefit of the Issuer and Distributors and
their respective heirs, executors, administrators, successors and
assigns.
14. Distributors is expressly put on notice of the limitation of
shareholder liability as set forth in Article XI Section 3 of the
"Declaration of Trust" of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all
cases to the Portfolio and its assets and Distributors shall not seek
satisfaction of any obligation from the shareholders or any
shareholder of the Issuer, or out of any assets of the Issuer other
than the assets of the Portfolio. Nor shall Distributors seek
satisfaction of any obligations from the trustees or any individual
trustee of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
FIDELITY DESTINY PORTFOLIOS:
on behalf of Destiny II
By /s/Robert C. Pozen
Senior Vice President
WITNESS:
/s/Eric D. Roiter FIDELITY DISTRIBUTORS CORPORATION
Secretary
By /s/Martha B. Willis
President
ATTEST:
/s/Eric D. Roiter
Clerk
Exhibit i(1)
Kirkpatrick & Lockhart llp 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778.9000
www.kl.com
November 17, 1999
Fidelity Destiny Portfolios
82 Devonshire Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
You have requested our opinion, as counsel to Fidelity Destiny
Portfolios (the "Trust"), as to certain matters regarding the issuance
of Shares of the Trust. As used in this letter, the term "Shares"
means the Class N and Class O shares of beneficial interest of Destiny
I and Destiny II, each a series of the Trust.
As such counsel, we have examined certified or other copies, believed
by us to be genuine, of the Trust's Declaration of Trust and by-laws
and such resolutions and minutes of meetings of the Trust's Board of
Trustees as we have deemed relevant to our opinion, as set forth
herein. Our opinion is limited to the laws and facts in existence on
the date hereof, and it is further limited to the laws (other than the
conflict of law rules) in the Commonwealth of Massachusetts that in
our experience are normally applicable to the issuance of shares by
unincorporated voluntary associations and to the Securities Act of
1933 ("1933 Act"), the Investment Company Act of 1940 ("1940 Act") and
the regulations of the Securities and Exchange Commission ("SEC")
thereunder.
Based on present laws and facts, we are of the opinion that the
issuance of the Shares has been duly authorized by the Trust and that,
when sold in accordance with the terms contemplated by Post-Effective
Amendment No. 68 to the Trust's Registration Statement on Form N-1A
and each subsequent Post-Effective Amendment ("PEA") to said
registration statement, including receipt by the Trust of full payment
for the Shares and compliance with the 1933 Act and the 1940 Act, the
Shares will have been validly issued, fully paid and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the obligations
of the Trust. The Declaration of Trust states that 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 of the Trust 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. It also requires that every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the Trustees
relating to the Trust shall include a recitation limiting the
obligation represented thereby to the Trust and its assets. The
Declaration of Trust further provides: (1) for indemnification from
the assets of the series of the Trust for all loss and expense of any
shareholder held personally liable for the obligations of the Trust by
virtue of ownership of shares of the Trust; and (2) for the series of
the Trust to assume the defense of any claim against the shareholder
for any act or obligation of the series of the Trust. Thus, the risk
of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust or series
would be unable to meet its obligations.
We hereby consent to this opinion accompanying or being incorporated
by reference in the PEA when it is filed with the SEC.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
/s/Kirkpatrick & Lockhart LLP
exhibit j(1)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective
Amendment No. 68 to the Registration Statement No. 811-1796 on Form
N-1A of Fidelity Destiny Portfolios, of our reports dated November 05,
1999 appearing in the Annual Reports to Shareholders of Destiny I and
Destiny II for the year ended September 30, 1999.
We also consent to the references to us under the headings "Financial
Highlights" in the Prospectus and "Auditor" in the Statement of
Additional Information, which are a part of such Registration
Statement.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
November 22, 1999
exhibit j(2)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the
Prospectuses and Statement of Additional Information in Post-Effective
Amendment No. 68 to the Registration Statement on Form N-1A of
Fidelity Destiny Portfolios: Destiny I and Destiny II of our report
dated November 12, 1998 on the financial statements and financial
highlights included in the Annual Report to Shareholders of Destiny I
and Destiny II.
We further consent to the reference to our Firm under the heading
"Financial Highlights" in the Prospectuses.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 22, 1999
