FIDELITY(registered trademark)
DESTINY
PORTFOLIOS:
DESTINY I - CLASS N
DESTINY II - CLASS N
Semiannual Report
March 31, 2000
Printed on recycled paper
6i-102150
FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I - CLASS N
DESTINY II - CLASS N
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments
Japan Ltd.
OFFICERS
Edward C. Johnson 3d, PRESIDENT
Robert C. Pozen, SENIOR VICE PRESIDENT
Abigail P. Johnson, VICE PRESIDENT
Karen Firestone, VICE PRESIDENT (DESTINY I)
Beth Terrana, VICE PRESIDENT (DESTINY II)
Eric D. Roiter, SECRETARY
Robert A. Dwight, TREASURER
Matthew N. Karstetter, DEPUTY TREASURER
Maria F. Dwyer, DEPUTY TREASURER
John H. Costello, ASSISTANT TREASURER
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Michael Cook
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Boston, MA
DESN-SANN-0500
1.741002.100
6i
* INDEPENDENT TRUSTEES
CONTENTS
SEMIANNUAL REPORT
PERFORMANCE 2 How the funds have done over
time.
FUND TALK 5 The managers' review of the
funds' performance,
strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in
the funds' investments over
the past six months.
DESTINY I
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 17 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
DESTINY II
INVESTMENTS 22 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 28 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 33 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
THIS REPORT IS PRINTED ON RECYCLED PAPER USING SOY-BASED INKS.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS
REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN
THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK OR DEPOSITORY INSTITUTION.
SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FIDELITY DESTINY PORTFOLIOS: DESTINY I: CLASS N
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
Destiny I - CL N S&P 500
00395 SP001
1990/03/31 10000.00 10000.00
1990/04/30 9668.87 9750.00
1990/05/31 10730.25 10700.63
1990/06/30 10699.82 10627.86
1990/07/31 10391.42 10593.85
1990/08/31 9319.69 9636.17
1990/09/30 8684.74 9166.89
1990/10/31 8615.60 9127.47
1990/11/30 9346.20 9717.10
1990/12/31 9809.40 9988.21
1991/01/31 10859.08 10423.70
1991/02/28 11602.18 11168.99
1991/03/31 11867.31 11439.28
1991/04/30 12007.04 11466.73
1991/05/31 12716.48 11962.10
1991/06/30 11872.39 11414.23
1991/07/31 12651.02 11946.14
1991/08/31 13070.95 12229.26
1991/09/30 12840.93 12025.03
1991/10/31 12774.41 12186.17
1991/11/30 11982.43 11695.06
1991/12/31 13510.90 13032.98
1992/01/31 13647.01 12790.57
1992/02/29 14134.82 12956.84
1992/03/31 13807.11 12704.18
1992/04/30 14294.07 13077.69
1992/05/31 14403.49 13141.77
1992/06/30 14144.74 12945.96
1992/07/31 14707.34 13475.45
1992/08/31 14306.63 13199.20
1992/09/30 14440.26 13354.95
1992/10/31 14343.26 13401.69
1992/11/30 15023.53 13858.69
1992/12/31 15423.30 14029.15
1993/01/31 15888.27 14147.00
1993/02/28 15927.25 14339.40
1993/03/31 16704.85 14641.96
1993/04/30 16793.72 14287.62
1993/05/31 17256.31 14670.53
1993/06/30 17374.92 14713.07
1993/07/31 17584.16 14654.22
1993/08/31 18177.05 15209.62
1993/09/30 18163.72 15092.50
1993/10/31 18818.34 15404.92
1993/11/30 18686.12 15258.57
1993/12/31 19330.36 15443.20
1994/01/31 20546.62 15968.27
1994/02/28 20221.28 15535.53
1994/03/31 19253.38 14858.18
1994/04/30 19812.96 15048.36
1994/05/31 19947.48 15295.16
1994/06/30 19371.44 14920.43
1994/07/31 19998.37 15409.82
1994/08/31 20887.52 16041.62
1994/09/30 20220.54 15648.60
1994/10/31 20651.25 16000.69
1994/11/30 19928.32 15417.95
1994/12/31 20010.18 15646.60
1995/01/31 20187.25 16052.31
1995/02/28 20856.76 16677.87
1995/03/31 21429.56 17170.03
1995/04/30 22220.19 17675.69
1995/05/31 23241.83 18382.19
1995/06/30 24016.35 18809.21
1995/07/31 24857.93 19432.92
1995/08/31 25057.75 19481.70
1995/09/30 25556.87 20303.82
1995/10/31 25742.26 20231.34
1995/11/30 26457.71 21119.50
1995/12/31 27169.97 21526.26
1996/01/31 27657.49 22259.01
1996/02/29 27535.79 22465.35
1996/03/31 27443.21 22681.69
1996/04/30 27943.89 23016.02
1996/05/31 28530.56 23609.60
1996/06/30 28711.88 23699.56
1996/07/31 27810.27 22652.51
1996/08/31 28020.66 23130.25
1996/09/30 29398.26 24432.02
1996/10/31 30500.21 25105.86
1996/11/30 32795.22 27003.61
1996/12/31 31930.37 26468.67
1997/01/31 33469.20 28122.43
1997/02/28 33747.33 28342.91
1997/03/31 31987.46 27178.30
1997/04/30 33570.53 28800.84
1997/05/31 35707.65 30554.24
1997/06/30 36825.13 31923.07
1997/07/31 39591.75 34463.19
1997/08/31 38135.13 32532.56
1997/09/30 39723.87 34314.37
1997/10/31 38886.95 33168.27
1997/11/30 40267.04 34703.63
1997/12/31 41446.11 35299.49
1998/01/31 41573.51 35689.90
1998/02/28 44223.49 38263.86
1998/03/31 45626.66 40223.35
1998/04/30 45505.72 40628.00
1998/05/31 45087.75 39929.60
1998/06/30 46207.64 41551.54
1998/07/31 46330.87 41109.02
1998/08/31 40278.76 35165.48
1998/09/30 42811.31 37418.18
1998/10/31 46054.33 40461.77
1998/11/30 48962.05 42914.16
1998/12/31 51620.60 45386.87
1999/01/31 52080.75 47284.95
1999/02/28 49630.88 45815.34
1999/03/31 50875.90 47648.41
1999/04/30 53015.57 49493.83
1999/05/31 52671.81 48325.28
1999/06/30 54944.45 51007.33
1999/07/31 53664.90 49414.89
1999/08/31 52308.95 49170.28
1999/09/30 50513.76 47822.52
1999/10/31 52499.93 50848.73
1999/11/30 52480.83 51882.49
1999/12/31 53750.92 54938.37
2000/01/31 49764.45 52178.26
2000/02/29 50849.66 51190.53
2000/03/31 51779.83 56198.50
IMATRL PRASUN SHR__CHT 20000331 20000417 104406 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Destiny I: Class N on March 31, 1990. As the chart shows,
by March 31, 2000, the value of the investment would have grown to
$51,780 - a 417.80% increase on the initial investment. For
comparison, look at how the S&P 500 (registered trademark) did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $56,198 - a 461.98%
increase.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY I: CL N 2.51% 1.78% 141.63% 417.80%
S&P 500 17.51% 17.94% 227.31% 461.98%
Lipper Growth Funds Average 29.97% 32.16% 213.63% 423.04%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY I: CL N 1.78% 19.30% 17.87%
$50/month 15-Year Plan -49.11% 16.81% 17.27%
S&P 500 17.94% 26.76% 18.84%
Lipper Growth Funds Average 32.16% 24.90% 17.43%
Destiny I began offering Class N shares on April 30, 1999. The total
returns for Class N reported for periods 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 charts above show Destiny I: Class N total returns, which include
changes in share price and reinvestment of dividends and capital
gains. The fund's cumulative total returns and average annual total
returns do not include the effects of the separate sales charges
assessed through Destiny Plans I: N (the Plans); the figures provided
for a "$50/month 15-year plan" illustrate the fund's performance
adjusted to reflect fees and sales charges assessed by the Plans. The
illustrations assume an initial investment at the beginning of each
period shown. Because the illustrations assume yearly lump sum
investments, they do not reflect what investors would have earned had
they made regular monthly investments over the period. As shares of
the funds may be acquired only through the Plans, investors should
consult the Plans' prospectus for more complete information on the
impact of the separate charges and fees applicable to each Plan. The
rate (%) of deductions decreases proportionately as Plan sizes
increase. Figures for the S&P 500, a market capitalization-weighted
index of common stocks, include reinvestment of dividends.
All performance numbers are historical; the fund's share price and
return will vary and you may have a gain or loss when you sell your
shares. Lipper's new comparison categories are listed on page 4.*
FIDELITY DESTINY PORTFOLIOS: DESTINY II: CLASS N
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
Destiny II - CL N S&P 500
00396 SP001
1990/03/31 10000.00 10000.00
1990/04/30 9685.13 9750.00
1990/05/31 10784.32 10700.63
1990/06/30 10796.88 10627.86
1990/07/31 10405.37 10593.85
1990/08/31 9271.91 9636.17
1990/09/30 8573.10 9166.89
1990/10/31 8504.42 9127.47
1990/11/30 9370.97 9717.10
1990/12/31 9921.67 9988.21
1991/01/31 11028.43 10423.70
1991/02/28 11882.75 11168.99
1991/03/31 12250.11 11439.28
1991/04/30 12481.22 11466.73
1991/05/31 13181.40 11962.10
1991/06/30 12238.77 11414.23
1991/07/31 13089.11 11946.14
1991/08/31 13593.84 12229.26
1991/09/30 13351.74 12025.03
1991/10/31 13285.38 12186.17
1991/11/30 12416.33 11695.06
1991/12/31 13911.96 13032.98
1992/01/31 14169.75 12790.57
1992/02/29 14754.48 12956.84
1992/03/31 14291.68 12704.18
1992/04/30 14762.55 13077.69
1992/05/31 14977.37 13141.77
1992/06/30 14634.09 12945.96
1992/07/31 15210.38 13475.45
1992/08/31 14757.94 13199.20
1992/09/30 14792.66 13354.95
1992/10/31 14775.31 13401.69
1992/11/30 15505.19 13858.69
1992/12/31 15926.82 14029.15
1993/01/31 16465.04 14147.00
1993/02/28 16493.67 14339.40
1993/03/31 17173.05 14641.96
1993/04/30 17160.46 14287.62
1993/05/31 17743.58 14670.53
1993/06/30 17886.15 14713.07
1993/07/31 18042.03 14654.22
1993/08/31 18691.35 15209.62
1993/09/30 18726.82 15092.50
1993/10/31 19414.99 15404.92
1993/11/30 19323.60 15258.57
1993/12/31 20022.61 15443.20
1994/01/31 21269.02 15968.27
1994/02/28 20995.48 15535.53
1994/03/31 19956.45 14858.18
1994/04/30 20537.86 15048.36
1994/05/31 20669.87 15295.16
1994/06/30 20044.83 14920.43
1994/07/31 20683.60 15409.82
1994/08/31 21614.93 16041.62
1994/09/30 20917.20 15648.60
1994/10/31 21356.11 16000.69
1994/11/30 20659.57 15417.95
1994/12/31 20736.39 15646.60
1995/01/31 20938.40 16052.31
1995/02/28 21607.64 16677.87
1995/03/31 22175.78 17170.03
1995/04/30 22968.18 17675.69
1995/05/31 23984.37 18382.19
1995/06/30 24774.31 18809.21
1995/07/31 25604.69 19432.92
1995/08/31 25810.37 19481.70
1995/09/30 26331.41 20303.82
1995/10/31 26527.93 20231.34
1995/11/30 27230.15 21119.50
1995/12/31 27952.38 21526.26
1996/01/31 28454.35 22259.01
1996/02/29 28311.66 22465.35
1996/03/31 28195.25 22681.69
1996/04/30 28695.91 23016.02
1996/05/31 29273.96 23609.60
1996/06/30 29443.37 23699.56
1996/07/31 28563.45 22652.51
1996/08/31 28776.41 23130.25
1996/09/30 30131.80 24432.02
1996/10/31 31199.74 25105.86
1996/11/30 33536.94 27003.61
1996/12/31 32659.31 26468.67
1997/01/31 34182.53 28122.43
1997/02/28 34522.90 28342.91
1997/03/31 32755.99 27178.30
1997/04/30 34275.74 28800.84
1997/05/31 36382.32 30554.24
1997/06/30 37448.79 31923.07
1997/07/31 40194.28 34463.19
1997/08/31 38681.31 32532.56
1997/09/30 40247.18 34314.37
1997/10/31 39407.13 33168.27
1997/11/30 40830.52 34703.63
1997/12/31 41975.97 35299.49
1998/01/31 42097.38 35689.90
1998/02/28 44864.89 38263.86
1998/03/31 46260.61 40223.35
1998/04/30 45983.69 40628.00
1998/05/31 45373.28 39929.60
1998/06/30 47857.37 41551.54
1998/07/31 48216.29 41109.02
1998/08/31 40730.42 35165.48
1998/09/30 42546.43 37418.18
1998/10/31 45841.54 40461.77
1998/11/30 48890.21 42914.16
1998/12/31 53313.18 45386.87
1999/01/31 55182.14 47284.95
1999/02/28 53758.38 45815.34
1999/03/31 56035.16 47648.41
1999/04/30 57263.08 49493.83
1999/05/31 55621.66 48325.28
1999/06/30 58755.27 51007.33
1999/07/31 57001.94 49414.89
1999/08/31 56218.54 49170.28
1999/09/30 54912.87 47822.52
1999/10/31 57374.99 50848.73
1999/11/30 59762.51 51882.49
1999/12/31 66362.19 54938.37
2000/01/31 63284.16 52178.26
2000/02/29 65459.30 51190.53
2000/03/31 68496.28 56198.50
IMATRL PRASUN SHR__CHT 20000331 20000417 105408 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Destiny II: Class N on March 31, 1990. As the chart shows,
by March 31, 2000, the value of the investment would have grown to
$68,496 - a 584.96% increase on the initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $56,198 - a 461.98% increase.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY II: CL N 24.74% 22.24% 208.88% 584.96%
S&P 500 17.51% 17.94% 227.31% 461.98%
Lipper Growth Funds Average 29.97% 32.16% 213.63% 423.04%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY II: CL N 22.24% 25.30% 21.22%
$50/month 15-Year Plan -38.88% 22.69% 20.60%
S&P 500 17.94% 26.76% 18.84%
Lipper Growth Funds Average 32.16% 24.90% 17.43%
Destiny II began offering Class N shares on April 30, 1999. The total
returns for Class N reported for periods prior to April 30, 1999 are
those of Class O, restated to reflect the higher 12b-1 and transfer
agent fee applicable to Class N.
The charts above show Destiny II: Class N total returns, which include
changes in share price and reinvestment of dividends and capital
gains. The fund's cumulative total returns and average annual total
returns do not include the effects of the separate sales charges
assessed through Destiny Plans II: N (the Plans); the figures provided
for a "$50/month 15-year plan" illustrate the fund's performance
adjusted to reflect fees and sales charges assessed by the Plans. The
illustrations assume an initial investment at the beginning of each
period shown. Because the illustrations assume yearly lump sum
investments, they do not reflect what investors would have earned had
they made regular monthly investments over the period. As shares of
the funds may be acquired only through the Plans, investors should
consult the Plans' prospectus for more complete information on the
impact of the separate charges and fees applicable to each Plan. The
rate (%) of deductions decreases proportionately as Plan sizes
increase. Figures for the S&P 500, a market capitalization-weighted
index of common stocks, include reinvestment of dividends.
All performance numbers are historical; the fund's share price and
return will vary and you may have a gain or loss when you sell your
shares. Lipper's new comparison categories are listed on page 4.*
FIDELITY DESTINY PORTFOLIOS: DESTINY I & II: CLASS N
PERFORMANCE: THE BOTTOM LINE
To measure how the funds' performance stacked up against its peers,
you can compare it to the growth funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past six month average represents a peer group of 1333 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges. Lipper has
created new comparison categories that group funds according to
portfolio characteristics and capitalization, as well as by
capitalization only. These averages are listed below.
Destiny I: Class N
*THE LIPPER LARGE CAP VALUE FUNDS AVERAGE REFLECTS 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. AS OF MARCH 31, 2000, THE SIX
MONTH, ONE YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR
THE LARGE CAP VALUE FUNDS AVERAGE WERE, 9.84%, 9.37%, 154.02%, AND
325.27%, RESPECTIVELY; AND THE ONE YEAR, FIVE YEAR, AND 10 YEAR
AVERAGE ANNUAL TOTAL RETURNS WERE 9.37%, 20.30%, AND 15.41%,
RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR
CUMULATIVE TOTAL RETURNS FOR THE LARGE CAP SUPERGROUP AVERAGE WERE,
24.36%, 24.31%, 214.69%, AND 427.31%, RESPECTIVELY; AND THE ONE YEAR,
FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 24.31%,
25.21%, AND 17.70%, RESPECTIVELY.
Destiny II: Class N
*THE LIPPER LARGE CAP CORE FUNDS AVERAGE REFLECTS 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. AS OF MARCH 31, 2000, THE SIX
MONTH, ONE YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR
THE LARGE CAP CORE FUNDS AVERAGE WERE, 21.66%, 21.70%, 199.85%, AND
393.33%, RESPECTIVELY; AND THE ONE YEAR, FIVE YEAR, AND 10 YEAR
AVERAGE ANNUAL TOTAL RETURNS WERE 21.70%, 24.42%, AND 17.13%,
RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR
CUMULATIVE TOTAL RETURNS FOR THE LARGE CAP SUPERGROUP AVERAGE WERE,
24.36%, 24.31%, 214.69%, AND 427.31%, RESPECTIVELY; AND THE ONE YEAR,
FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 24.31%,
25.21%, AND 17.70%, RESPECTIVELY.
FIDELITY DESTINY PORTFOLIOS: DESTINY I
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Euphoria over technology stocks, perceived to
be the driving forces behind the new economy,
continued unabated during the majority of the
six-month period ending March 31, 2000. Investors
poured record amounts of new money into tech-
nology sector mutual funds during the period,
hoping to capture a percentage of the staggering
growth seen in many Internet-related companies,
even if they had yet to show profits. The high-
octane boost provided by these technology issues
helped propel the tech-heavy NASDAQ Index to a
66.69% gain during the period. The rise in many
small- and mid-cap stocks engaged in building
out the Internet infrastructure, in addition to many
biotechnology companies trying to decode the
human genetic structure, fueled a strong advance
in the Russell 2000(Registered trademark) Index - a popular measure
of small-cap stock performance - which rose
26.84%. Meanwhile, investors continued to shun
industrial stocks and value-oriented stocks as the
period progressed, particularly those in the
financial and health care sectors. The increasing gulf
between new economy stocks - as evidenced by
the return of the NASDAQ index - and old economy
stocks was apparent as the blue chips'
benchmark - the Dow Jones Industrial Average -
rose a more modest 6.44%. The Standard & Poor's
500SM Index - a measure of 500 commonly held
large-cap stocks - gained 17.51% during the
period. However, the divergence in U.S. equity
markets reversed course late in the period, as many
investors began to question the soaring valuations in
the technology sector and retreated to the more
established, blue-chip stocks. This turn to quality
was illustrated by the S&P 500(Registered trademark) index's 9.78%
return and the Dow's 7.97% return in March,
compared to a -2.62% loss in the NASDAQ index
during the month.
(photograph of Karen Firestone)
NOTE TO SHAREHOLDERS: Karen Firestone became Portfolio Manager of
Destiny I on February 1, 2000.
Q. HOW DID THE FUND PERFORM, KAREN?
A. For the six months that ended March 31, 2000, the fund's Class N
shares returned 2.51%, trailing the Standard & Poor's 500 Index, which
returned 17.51%. Fund performance also fell short of the growth funds
average tracked by Lipper Inc., which delivered a 29.97% return during
this same time frame. For the 12-month period that ended March 31,
2000, the fund's Class N shares' 1.78% return lagged the S&P 500 index
and the Lipper peer group, which posted returns of 17.94% and 32.16%,
respectively.
Q. WHAT WAS BEHIND THE FUND'S GENERALLY WEAK SHOWING OVER THE PAST SIX
MONTHS?
A. The fund's underweighting in technology relative to the index
sealed its fate, as stocks in this sector jumped 50% or higher on
average during the period. Our underexposure to names such as Oracle,
Nortel and Intel proved particularly damaging to relative performance.
Having out-of-benchmark interest in tech players such as LAM Research
- - a maker of semiconductor processing equipment - and electronic
products manufacturer SCI Systems helped, but we didn't hold enough of
the winners in this space to allow us to keep pace with our tech-heavy
peers throughout the period. The fund no longer held Nortel or SCI
Systems at the close of the period. Our heavy stake in financial
stocks such as Fannie Mae and FleetBoston also hurt returns, as rising
short-term interest rates and declining investor interest in the
sector drove share prices markedly lower.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STYLE?
A. I'm very revenue-growth oriented. I'm certainly more product and
sales growth driven than I am guided by cost-control, turnaround and
restructuring stories. The fund's former manager, George Vanderheiden,
to his credit, had a keen eye for restructuring situations that would
emerge over the long term, calling it right countless times over his
career. In contrast, I'd say my success has been tied more to
short-term results over the next product cycle, or the next year for
that matter. I'm a big believer in certain sectors of the market, such
as health care and media and leisure, where I've seen growth work over
the years. So, my bias has been and will continue to be toward growth,
but I overlay some valuation parameters on it. I'm just not willing to
pay any price for growth; there are constraints. Comparatively, I'd
say that George's tolerance level was even lower than mine in that
regard, which is perfectly reasonable. But, even though we share a
similar aversion to inordinate risk, I'm willing to pay a little bit
more for a stock if I feel that the growth is coming with it.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND ON FEBRUARY
1, 2000?
A. I boosted the fund's weighting in technology and communications
stocks and scaled back on our exposure to financial and industrial
issues. In so doing, I increased the overall capitalization and
average price to earnings, or P/E ratio, of the portfolio, while
scaling back the total number of stocks by about 25%. I didn't add
tech stocks indiscriminately, however. Ever watchful of risk, I was
careful to consider only those companies that I knew well and whose
growth prospects I believed in. Cisco, Intel, Nokia and Lucent are
good examples of the firms I invested in for their extremely favorable
risk/return profiles. In an effort to further manage risk, I held on
to some of the more stable, attractively priced financials with solid
earnings growth, such as Fannie Mae, which I felt was underappreciated
by the market.
Q. WHAT WAS YOUR STRATEGY IN TERMS OF MEDIA AND HEALTH CARE STOCKS?
A. Having spent a lot of time tracking media stocks, I've grown quite
familiar with the industry and its cycles. We experienced a very
strong advertising environment over the past year thanks to the
Internet, something I expected to continue. So, I added the
traditional media companies I thought were reasonably priced and in
the best position to benefit from this trend, namely CBS, FOX and The
New York Times. I also raised the fund's exposure to the world of
cable and wireless, through firms such as Cox Communications and
EchoStar, as plays on "new media" and the Net. Like my exposure to the
media sector, I feel my years covering companies in the health care
arena offered me an advantage picking stocks in this space. By
establishing positions in the fastest-growing emerging markets within
health care, such as biotechnology and genomics, we were able to
effectively balance some of the industrial and value-type names that
are traditional components of the fund. I felt it important that the
fund have some exposure to the compelling growth stories found in
names such as Human Genome and Immunex. I also felt that many of the
large pharmaceutical stocks, many of which languished in 1999, still
offered very consistent growth opportunities. There seemed to be a
negative bias in the market last year toward the big drug companies,
partly due to the impending election year - a nemesis for drug stocks
- - and partly attributable to their association with the old economy
image. So, although I added some of these stocks during the period, I
don't intend to raise the fund's stake any further in this area until
I feel sentiment is beginning to turn.
Q. WHICH STOCKS WORKED OUT WELL FOR THE FUND? WHICH DIDN'T?
A. Methode Electronics, a maker of electronic components and devices,
jumped higher on strong earnings reports and the announcement of its
intention to spin out its fiber-optics division. Other tech stocks
that added meaningfully to performance included Texas Instruments,
Juniper Networks, Metromedia Fiber Network and Altera. Home Depot was
rewarded for beating the Street's earnings expectations by wide
margins. Columbia/HCA Healthcare got a lift from rising admissions at
the company's hospitals, although I sold it prior to period end.
Looking downward, Philip Morris suffered from more bad news on the
legal front in terms of tobacco litigation. Freddie Mac, Bank of
America and MGIC Investment - a leading provider of private mortgage
insurance - were caught in the downdraft that kept financial stocks
grounded during the period. We didn't own Bank of America or MGIC
Investment at the close of the period. The fund's stake in
pharmaceutical giant Merck also detracted from returns.
Q. WHAT'S YOUR OUTLOOK?
A. I believe we'll continue to see volatility over the coming months,
with a lot of rotation among the various segments of the market. To
me, that emphasizes the importance of maintaining a balanced approach
in the fund, which would allow us to be somewhat defensive and
aggressive at the same time. When one side isn't working, the other
side is and, in the core of the portfolio, you have what you feel
strongly about and have conviction in over the long term. I will
continue to think seriously about where I want to push the envelope on
the growth extreme in terms of tech stocks. But my feeling right now
is that in this unforgiving market environment that seems to be
favoring the well-established, larger-cap tech stocks, I don't want to
push too hard.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER 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.
(checkmark)FUND FACTS
GOAL: seeks capital growth
START DATE: July 10, 1970
SIZE: as of March 31, 2000, more than $6.7 billion
MANAGER: Karen Firestone, since February 2000;
manager, Fidelity Advisor Large Cap Stock Fund,
since 1998; Fidelity Large Cap Stock Fund, since
1998; several Fidelity Select Portfolios, 1986-1997;
joined Fidelity in 1983
KAREN FIRESTONE ON THE CHALLENGES OF
FUND MANAGEMENT IN A MOMENTUM-DRIVEN
MARKET:
"The biggest challenge of managing through a
heavily momentum-driven market is resisting the
urge to dive in with all of the other fish and follow
the trend. So, what I try to do is be early, to not
worry about whether or not I'm selling a stock at
the top, and to pay close attention to what
valuation a company is selling for based on the
earnings picture and the underlying
fundamentals. Admittedly, it takes a lot of
discipline and guts to sell when everything seems
to be riding in your favor. You've got to mentally
review whether you still want to be there when
a stock is selling for 50 times revenue, and that's
not an easy task.
"I'll avoid a stock for which I cannot create a
model that justifies its value. I have to be able to
show myself or have someone walk me through
the story to prove that it warrants consideration.
The rationale can't be based solely on the fact
that every other company in this space sells at
that level. That makes no sense to me
whatsoever. What does make some sense is if I
can create a scenario in which a company's
revenues and profits will grow over time so that
its stock more than justifies the price. Only then
will I be willing to buy it. But, until I hear a logical
and rational explanation for doing so, I won't be
willing to make the commitment."
FIDELITY DESTINY PORTFOLIOS: DESTINY II
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Euphoria over technology stocks, perceived to
be the driving forces behind the new economy,
continued unabated during the majority of the
six-month period ending March 31, 2000. Investors
poured record amounts of new money into tech-
nology sector mutual funds during the period,
hoping to capture a percentage of the staggering
growth seen in many Internet-related companies,
even if they had yet to show profits. The high-
octane boost provided by these technology issues
helped propel the tech-heavy NASDAQ Index to a
66.69% gain during the period. The rise in many
small- and mid-cap stocks engaged in building
out the Internet infrastructure, in addition to many
biotechnology companies trying to decode the
human genetic structure, fueled a strong advance
in the Russell 2000(Registered trademark) Index - a popular measure
of small-cap stock performance - which rose
26.84%. Meanwhile, investors continued to shun
industrial stocks and value-oriented stocks as the
period progressed, particularly those in the
financial and health care sectors. The increasing gulf
between new economy stocks - as evidenced by
the return of the NASDAQ index - and old economy
stocks was apparent as the blue chips'
benchmark - the Dow Jones Industrial Average -
rose a more modest 6.44%. The Standard & Poor's
500SM Index - a measure of 500 commonly held
large-cap stocks - gained 17.51% during the
period. However, the divergence in U.S. equity
markets reversed course late in the period, as many
investors began to question the soaring valuations in
the technology sector and retreated to the more
established, blue-chip stocks. This turn to quality
was illustrated by the S&P 500(Registered trademark) index's 9.78%
return and the Dow's 7.97% return in March,
compared to a -2.62% loss in the NASDAQ index
during the month.
(photograph of Beth Terrana)
An interview with Beth Terrana, Portfolio Manager of Destiny II
Q. HOW DID THE FUND PERFORM OVER THE PAST SIX MONTHS, BETH?
A. The fund performed extremely well relative to the Standard & Poor's
500 Index, but not quite as well relative to its growth fund peers.
For the six-month period ending March 31, 2000, the fund's Class N
shares returned 24.74%. This outdistanced the Standard & Poor's 500
Index, which returned 17.51%, but, as I mentioned, fell short of the
growth funds average tracked by Lipper Inc., which gained 29.97% over
the past six months. For the 12-month period ending March 31, 2000,
the fund's Class N shares returned 22.24%, again outdistancing the S&P
500, which returned 17.94%, but trailing the growth funds average of
32.16%.
Q. WHAT WERE SOME OF THE FACTORS THAT CONTRIBUTED TO THE FUND'S
OUTPERFORMANCE OF THE S&P 500 INDEX DURING THE SIX-MONTH PERIOD?
A. Strong stock picking in utilities - more specifically, the wireless
segment - was the largest contributor relative to the index. As
mentioned in my report to shareholders six months ago, I felt the
prospects for the wireless sector were very positive. At that point,
the utilities category was only the sixth-largest sector weighting in
the fund; by the end of this period, however, utilities was the
second-largest sector weighting. Winners in that sector include Nokia,
Motorola and China Telecom, which were among the strongest-performing
stocks for the fund. Another significant contributor to performance
was underweighting the poorly performing nondurables sector.
Nondurables are extremely interest-rate sensitive and, by holding a
roughly one-third market weighting in this sector, the fund was able
to avoid most of the damage from the losses incurred by Procter &
Gamble and Coca-Cola. The fund no longer held Coca-Cola at the end of
the period. Some solid stock picks in the health care sector also
benefited the fund. While health care struggled throughout much of
1999, pharmaceuticals in particular, the sector exhibited renewed
signs of strength in the first quarter of 2000, primarily within the
realm of biotechnology. Genentech, a leading biotechnology company
that develops, manufactures and markets pharmaceuticals for a variety
of medical needs, saw its stock price increase more than 100% during
the course of the period and was one of the fund's best-performing
stocks.
Q. OF COURSE, ONE CAN'T TALK ABOUT THE PAST SIX MONTHS WITHOUT SOME
MENTION OF TECHNOLOGY. HOW DID THE FUND'S EXPOSURE TO THAT SECTOR
AFFECT PERFORMANCE?
A. Technology was a significant part of the fund, both in terms of
performance and positioning. I increased the fund's technology sector
dramatically during the past six months, beginning the period with
about 20% of net assets in the sector and ending with a tech exposure
of over 37%. This strategy was especially beneficial to the fund's
returns. While recognizing that valuations were high for many
technology stocks, I found a number of companies where I could make a
compelling case for continued high earnings growth as well as
improvements in profitability and return on assets. Cisco and Texas
Instruments were two of the fund's best performers during the period,
as was SCI Systems, an electronics manufacturer that provides products
and systems to a variety of aerospace, commercial and industrial
customers.
Q. WHAT CAUSED THE FUND TO UNDERPERFORM ITS GROWTH FUND PEERS?
A. While the fund had a higher weighting in technology than the S&P
500 index by the end of the period, its growth fund peers were even
more aggressive in their tech exposure. And, of course, technology is
what really drove the market for most of the past six months.
Q. WHAT OTHER STRATEGIES DID YOU USE TO BOOST THE FUND'S PERFORMANCE?
A. Underweighting the lagging finance sector relative to the S&P 500
enhanced Destiny II's performance. Rising interest rates took their
toll on most of this sector. But that was just one of its problems.
Overall, I felt the fundamentals of the finance sector deteriorated.
Revenue growth slowed, credit risk was on the rise and many banks
poorly executed the integration of recent mergers.
Q. WHAT STOCKS DID NOT PERFORM AS WELL AS YOU HAD HOPED?
A. Fortunately, the fund had no real blow-ups. But there were several
disappointments, including Schering-Plough and Lucent, two of the
fund's larger holdings. After 15 straight quarters of upside earnings
since going public in 1996, Lucent's earnings fell 30% in the fourth
quarter of 1999 when it underestimated demand for bandwidth.
Meanwhile, Schering-Plough fell on slower earnings growth rates.
Unisys was another disappointment. Early in the period, it
preannounced future weakness in revenues on Y2K concerns and saw its
stock price drop from $42 to $26 in a single day.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS, BETH?
A. I think the U.S. market is in for a very bumpy ride for the
remainder of 2000. Valuations are still extreme, and I expect the
volatility we saw toward the end of the period to continue. Even as we
determine how successfully traditional companies transform their
businesses to the world of e-commerce, there's still the problem of
excess global capacity, which raises questions about profitability in
many industries. Who the winners are will be difficult to gauge. The
Japanese market also has been struggling. And if the U.S. stock market
weakens, the Japanese market, which is very NASDAQ-sensitive, could
follow. Overall, this is one of the toughest periods I've ever been
through. But I still believe the best areas for growth are in
technology and telecommunications. That's where I plan on focusing the
majority of my attention in the months ahead.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER 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.
(checkmark)FUND FACTS
GOAL: seeks capital growth
START DATE: December 30, 1985
SIZE: as of March 31, 2000,
more than $6.5 billion
MANAGER: Beth Terrana, since 1998; manager,
Fidelity Fund, since 1993; Fidelity Advisor
Growth & Income Fund, since 1996; Fidelity
Equity Income Fund, 1990-1993; Fidelity Growth
& Income Fund, 1985-1990; joined Fidelity in
1983
NOTE TO SHAREHOLDERS:
Effective June 1, 2000, Adam Hetnarski will become portfolio manager
of Destiny II.
BETH TERRANA ON THE GROWING IMPORTANCE
OF TECHNOLOGY:
"Over the past five years new advances and
improvements in technology, as in the case of
the Internet, have changed the world
tremendously. These innovations have had an
extraordinary impact on how we work, how we
communicate, how we access information . . . the
list goes on. With that, it also has changed the
way in which I analyze companies and stocks.
Today, across all sectors, our assessment of how
well a particular company has harnessed the
power of technology - particularly the Internet -
is part of the analysis I use in every investment
decision I make. That was not the case five years
ago.
"Today, the Internet matters to every company,
not just the providers of key technologies or the
infrastructure suppliers. It's just as critical for the
more traditional businesses to evolve their
business models and practices to utilize the
Internet effectively. The ones that are successful
in this regard are the ones that will emerge as the
winners. And that's where I'm focusing more time
and energy than ever - analyzing and
researching who the eventual winners will be.
"Technology also has leveled the corporate playing
field to a greater extent than ever. Now every
company can reap the benefits of technology
without exorbitant capital expenditures, so small
companies can compete quite more effectively with
larger corporations. Also, thanks in large part to
technology, small companies can become big
companies very quickly. That forces me to be more
nimble than ever. But that's what it takes today.
And that's what I will continue to do to ensure that
my investment decisions are as informed as they
can possibly be."
INVESTMENT CHANGES
TOP TEN EQUITY HOLDINGS - DESTINY I
AS OF MARCH 31, 2000 AS OF SEPTEMBER 30, 1999
Cisco Systems, Inc. Fannie Mae
Microsoft Corp. Philip Morris Companies, Inc.
Intel Corp. Freddie Mac
General Electric Co. Fleet Financial Group, Inc.
Fannie Mae Solectron Corp.
Lucent Technologies, Inc. Home Depot, Inc.
Texas Instruments, Inc. Columbia/HCA Healthcare Corp.
Home Depot, Inc. Vodafone AirTouch PLC
sponsored ADR
Wal-Mart Stores, Inc. MCI WorldCom, Inc.
Bristol-Myers Squibb Co. General Motors Corp.
TOP TEN EQUITY HOLDINGS - DESTINY II
AS OF MARCH 31, 2000 AS OF SEPTEMBER 30, 1999
General Electric Co. General Electric Co.
Cisco Systems, Inc. Microsoft Corp.
Microsoft Corp. Chase Manhattan Corp.
Texas Instruments, Inc. International Business
Machines Corp.
Chase Manhattan Corp. Tyco International Ltd.
Nokia AB sponsored ADR American Express Co.
Home Depot, Inc. Citigroup, Inc.
Sun Microsystems, Inc. Cisco Systems, Inc.
American Express Co. Lucent Technologies, Inc.
Warner-Lambert Co. Exxon Corp.
<TABLE>
<CAPTION>
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TOP FIVE MARKET SECTORS - DESTINY I
AS OF MARCH 31, 2000 % OF FUND'S NET ASSETS AS OF SEPTEMBER 30, 1999 % OF FUND'S NET ASSETS
Technology 40.8% Finance 20.7%
Health 11.3% Technology 12.4%
Media & Leisure 10.1% Health 9.4%
Finance 10.0% Energy 8.1%
Industrial Machinery & 6.7% Retail & Wholesale 7.6%
Equipment
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TOP FIVE MARKET SECTORS - DESTINY II
AS OF MARCH 31, 2000 % OF FUND'S NET ASSETS AS OF SEPTEMBER 30, 1999 % OF FUND'S NET ASSETS
Technology 37.1% Technology 20.1%
Utilities 12.2% Finance 10.8%
Finance 11.0% Industrial Machinery & 9.1%
Equipment
Media & Leisure 8.6% Media & Leisure 9.0%
Health 8.0% Health 8.7%
</TABLE>
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS MARCH 31, 2000 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 99.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
Boeing Co. 702,050 $ 26,634,022
United Technologies Corp. 688,400 43,498,275
70,132,297
BASIC INDUSTRIES - 1.1%
CHEMICALS & PLASTICS - 0.1%
Lyondell Chemical Co. 30,000 442,500
Union Carbide Corp. 140,400 8,187,075
8,629,575
PACKAGING & CONTAINERS - 1.0%
Corning, Inc. 263,100 51,041,400
Owens-Illinois, Inc. (a) 950,500 16,039,688
67,081,088
TOTAL BASIC INDUSTRIES 75,710,663
CONSTRUCTION & REAL ESTATE -
0.0%
CONSTRUCTION - 0.0%
Kaufman & Broad Home Corp. 48,100 1,031,144
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES -
0.1%
Barrett Resources Corp. (a) 324,600 9,677,138
CONSUMER DURABLES - 0.6%
Minnesota Mining & 436,400 38,648,675
Manufacturing Co.
CONSUMER ELECTRONICS - 0.6%
Sony Corp. sponsored ADR 74,400 20,841,300
The Swatch Group AG (Reg.) 77,200 18,207,000
39,048,300
TOTAL DURABLES 87,374,113
ENERGY - 2.1%
ENERGY SERVICES - 1.0%
Halliburton Co. 689,700 28,277,700
Schlumberger Ltd. 514,400 39,351,600
67,629,300
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - 1.1%
Chevron Corp. 351,100 $ 32,454,806
Exxon Mobil Corp. 557,700 43,396,031
75,850,837
TOTAL ENERGY 143,480,137
FINANCE - 10.0%
BANKS - 1.3%
FleetBoston Financial Corp. 1,850,069 67,527,519
State Street Corp. 214,800 20,808,750
88,336,269
CREDIT & OTHER FINANCE - 2.2%
American Express Co. 379,500 56,521,781
Associates First Capital 1,526,000 32,713,625
Corp. Class A
Citigroup, Inc. 1,072,100 63,588,931
152,824,337
FEDERAL SPONSORED CREDIT - 3.2%
Fannie Mae 3,125,000 176,367,188
Freddie Mac 897,500 39,658,281
216,025,469
INSURANCE - 1.8%
American International Group, 703,843 77,070,809
Inc.
Marsh & McLennan Companies, 250,500 27,633,281
Inc.
The Chubb Corp. 221,000 14,931,313
119,635,403
SECURITIES INDUSTRY - 1.5%
Charles Schwab Corp. 613,400 34,848,788
Goldman Sachs Group, Inc. 234,100 24,609,763
Morgan Stanley Dean Witter & 341,000 27,812,813
Co.
The Bear Stearns Companies, 316,000 14,417,500
Inc.
101,688,864
TOTAL FINANCE 678,510,342
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - 11.3%
DRUGS & PHARMACEUTICALS - 10.0%
Alkermes, Inc. (a) 164,400 $ 15,207,000
Amgen, Inc. (a) 607,100 37,260,763
Ariad Pharmaceuticals, Inc. 722,700 11,518,031
(a)
Arqule, Inc. (a) 482,600 6,515,100
Bristol-Myers Squibb Co. 1,901,100 109,788,525
Cell Therapeutics, Inc. (a) 658,000 15,421,875
Cephalon, Inc. (a) 501,400 18,802,500
Eli Lilly & Co. 458,000 28,854,000
Enzon, Inc. (a) 316,400 11,924,325
Gilead Sciences, Inc. (a) 82,700 5,241,113
Human Genome Sciences, Inc. 248,800 20,665,950
(a)
Immunex Corp. (a) 598,500 37,967,344
Merck & Co., Inc. 1,627,600 101,114,650
Millennium Pharmaceuticals, 298,500 38,767,688
Inc. (a)
Pfizer, Inc. 581,200 21,250,125
Protein Design Labs, Inc. (a) 159,750 12,700,125
QLT PhotoTherapeutics, Inc. 272,700 14,866,163
(a)
Roche Holding AG 1,800 19,533,123
participation certificates
Schering-Plough Corp. 1,610,100 59,171,175
Ventana Medical Systems, Inc. 236,200 10,200,888
(a)
Warner-Lambert Co. 833,000 81,217,500
677,987,963
MEDICAL EQUIPMENT & SUPPLIES
- - 1.3%
Arrow International, Inc. 78,700 2,469,213
Johnson & Johnson 737,300 51,657,081
Medtronic, Inc. 647,900 33,326,356
87,452,650
TOTAL HEALTH 765,440,613
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.7%
ELECTRICAL EQUIPMENT - 5.9%
Emerson Electric Co. 671,500 35,505,563
Furukawa Electric Co. Ltd. 1,341,000 22,507,663
General Electric Co. 1,990,000 308,823,125
NDS Group PLC sponsored ADR 129,400 9,122,700
Omron Corp. 670,000 19,035,758
394,994,809
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.8%
Illinois Tool Works, Inc. 400,400 $ 22,122,100
Ingersoll-Rand Co. 776,300 34,351,275
56,473,375
TOTAL INDUSTRIAL MACHINERY & 451,468,184
EQUIPMENT
MEDIA & LEISURE - 10.1%
BROADCASTING - 6.4%
AT&T Corp. - Liberty Media 945,592 56,026,326
Group Class A (a)
Audiofina 118,500 14,551,921
Cablevision Systems Corp. 392,300 23,832,225
Class A (a)
Carlton Communications PLC 1,770,200 21,446,230
CBS Corp. (a) 871,300 49,337,363
Chris-Craft Industries, Inc. 1,860 118,459
Comcast Corp. Class A 845,100 36,656,213
(special)
Cox Communications, Inc. 760,700 36,893,950
Class A (a)
EchoStar Communications Corp. 218,900 17,293,100
Class A (a)
Grupo Televisa SA de CV 494,700 33,639,600
sponsored ADR (a)
Infinity Broadcasting Corp. 783,700 25,372,288
Class A (a)
Societe Europeen Des 115,895 20,212,798
Satellite unit
Television Francaise 1 SA 27,622 20,325,663
Time Warner, Inc. 768,100 76,810,000
432,516,136
ENTERTAINMENT - 2.1%
Fox Entertainment Group, Inc. 925,200 27,698,175
Class A (a)
Ticketmaster Online 774,400 19,408,400
CitySearch, Inc. (a)
Walt Disney Co. 2,376,700 98,335,963
145,442,538
PUBLISHING - 0.8%
The New York Times Co. Class A 1,310,500 56,269,594
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.8%
McDonald's Corp. 1,368,600 $ 51,408,038
TOTAL MEDIA & LEISURE 685,636,306
NONDURABLES - 3.7%
BEVERAGES - 1.6%
Anheuser-Busch Companies, 684,000 42,579,000
Inc.
Seagram Co. Ltd. 288,500 17,140,979
The Coca-Cola Co. 1,058,300 49,673,956
109,393,935
FOODS - 0.6%
H.J. Heinz Co. 385,500 13,444,313
Quaker Oats Co. 436,800 26,481,000
39,925,313
HOUSEHOLD PRODUCTS - 1.2%
Gillette Co. 939,000 35,388,563
Procter & Gamble Co. 778,100 43,768,125
79,156,688
TOBACCO - 0.3%
Philip Morris Companies, Inc. 875,800 18,501,275
TOTAL NONDURABLES 246,977,211
PRECIOUS METALS - 0.2%
Newmont Mining Corp. 459,000 10,298,813
RETAIL & WHOLESALE - 3.4%
GENERAL MERCHANDISE STORES -
1.8%
Costco Wholesale Corp. (a) 156,400 8,220,775
Wal-Mart Stores, Inc. 1,997,200 110,844,600
119,065,375
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.6%
Home Depot, Inc. 1,728,000 111,456,000
TOTAL RETAIL & WHOLESALE 230,521,375
SERVICES - 1.9%
ADVERTISING - 1.9%
DoubleClick, Inc. (a) 170,300 15,944,338
Omnicom Group, Inc. 316,600 29,582,313
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
ADVERTISING - CONTINUED
TMP Worldwide, Inc. (a) 504,700 $ 39,240,425
WPP Group PLC sponsored ADR 465,800 40,408,150
125,175,226
TECHNOLOGY - 40.8%
COMMUNICATIONS EQUIPMENT - 7.9%
Cisco Systems, Inc. (a) 4,893,200 378,305,507
Lucent Technologies, Inc. 1,952,800 118,632,600
Nokia AB sponsored ADR 111,300 24,179,925
UTStarcom, Inc. 210,600 16,439,963
537,557,995
COMPUTER SERVICES & SOFTWARE
- - 12.1%
Aether Systems, Inc. 56,200 10,200,300
Affymetrix, Inc. (a) 81,000 12,023,438
America Online, Inc. (a) 1,009,600 67,895,600
Automatic Data Processing, 1,247,200 60,177,400
Inc.
Be Free, Inc. 405,500 8,921,000
BEA Systems, Inc. (a) 224,500 16,472,688
Citrix Systems, Inc. (a) 381,700 25,287,625
CNET Networks, Inc. (a) 372,900 18,901,369
Commerce One, Inc. 100,600 15,014,550
Exodus Communications, Inc. 152,600 21,440,300
(a)
First Data Corp. 526,400 23,293,200
GoTo.com, Inc. 295,900 12,150,394
Intuit, Inc. (a) 142,600 7,753,875
Juno Online Services, Inc. 362,100 5,703,075
Lycos, Inc. (a) 270,300 18,988,575
Microsoft Corp. (a) 3,105,700 329,980,625
Oracle Corp. (a) 409,900 31,997,819
Priceline.com, Inc. 190,500 15,240,000
Puma Technology, Inc. (a) 140,800 7,128,000
Trans Cosmos, Inc. 44,900 12,669,424
Verio, Inc. (a) 160,600 7,237,038
VERITAS Software Corp. (a) 87,800 11,501,800
Vignette Corp. 110,700 17,739,675
Yahoo!, Inc. (a) 335,900 57,564,863
815,282,633
COMPUTERS & OFFICE EQUIPMENT
- - 7.8%
Brocade Communications 81,300 14,578,106
Systems, Inc.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Comdisco, Inc. 350,800 $ 15,479,050
Dell Computer Corp. (a) 1,949,000 105,124,188
EMC Corp. (a) 778,300 97,287,500
Hewlett-Packard Co. 476,400 63,152,775
International Business 732,400 86,423,200
Machines Corp.
Juniper Networks, Inc. 69,600 18,343,950
Lexmark International Group, 131,200 13,874,400
Inc. Class A (a)
Network Appliance, Inc. (a) 109,700 9,077,675
RSA Security, Inc. (a) 229,500 11,890,969
Sun Microsystems, Inc. (a) 996,400 93,365,794
528,597,607
ELECTRONIC INSTRUMENTS - 1.3%
Agilent Technologies, Inc. 339,900 35,349,600
Applied Materials, Inc. (a) 176,600 16,644,550
LAM Research Corp. (a) 859,700 38,740,231
90,734,381
ELECTRONICS - 11.7%
Altera Corp. (a) 503,700 44,955,225
Chartered Semiconduct 273,300 25,758,525
Manufacturing Ltd. ADR
GlobeSpan, Inc. 125,200 12,762,575
Infineon Technologies AG (a) 13,000 706,273
Inktomi Corp. (a) 25,300 4,933,500
Intel Corp. 2,384,900 314,657,744
Linear Technology Corp. 549,200 30,206,000
LSI Logic Corp. (a) 350,900 25,484,113
Methode Electronics, Inc. 390,000 19,695,000
Class A
Micron Technology, Inc. (a) 131,220 16,533,720
Motorola, Inc. 745,600 106,154,800
PMC-Sierra, Inc. (a) 79,500 16,193,156
Samsung Electronics Co. Ltd. 73,800 22,368,703
Solectron Corp. (a) 132,600 5,312,288
Texas Instruments, Inc. 728,800 116,608,000
Vitesse Semiconductor Corp. 187,200 18,018,000
(a)
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
World Access, Inc. (a) 636,800 $ 12,178,800
792,526,422
TOTAL TECHNOLOGY 2,764,699,038
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.1%
Travelocity.com, Inc. (a) 196,500 5,772,188
TRUCKING & FREIGHT - 0.5%
United Parcel Service, Inc. 567,300 35,739,900
Class B
TOTAL TRANSPORTATION 41,512,088
UTILITIES - 4.9%
CELLULAR - 1.9%
Nextel Communications, Inc. 218,600 32,407,450
Class A (a)
Powertel, Inc. (a) 245,000 16,950,938
QUALCOMM, Inc. (a) 70,800 10,571,325
Sprint Corp. - PCS Group 404,400 26,412,375
Series 1 (a)
Vodafone AirTouch PLC 5,961,321 33,122,624
Western Wireless Corp. Class A 193,600 8,869,300
128,334,012
ELECTRIC UTILITY - 0.8%
AES Corp. (a) 352,300 27,743,625
Calpine Corp. (a) 292,600 27,504,400
55,248,025
TELEPHONE SERVICES - 2.2%
Allegiance Telecom, Inc. (a) 217,550 17,539,969
AT&T Corp. 481,478 27,083,138
DDI Corp. 1,059 8,645,109
Focal Communications Corp. 182,000 10,192,000
MCI WorldCom, Inc. (a) 291,117 13,191,239
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Metromedia Fiber Network, 473,500 $ 45,811,125
Inc. Class A (a)
SBC Communications, Inc. 597,800 25,107,600
147,570,180
TOTAL UTILITIES 331,152,217
TOTAL COMMON STOCKS 6,709,119,767
(Cost $5,602,485,596)
CASH EQUIVALENTS - 1.1%
Taxable Central Cash Fund, 75,964,420 75,964,420
5.85% (b) (Cost $75,964,420)
TOTAL INVESTMENT PORTFOLIO - 6,785,084,187
100.2%
(Cost $5,678,450,016)
NET OTHER ASSETS - (0.2)% (14,670,640)
NET ASSETS - 100% $ 6,770,413,547
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
INCOME TAX INFORMATION
At March 31, 2000, the aggregate cost of investment securities for
income tax purposes was $5,716,523,636. Net unrealized appreciation
aggregated $1,068,560,551, of which $1,477,903,011 related to
appreciated investment securities and $409,342,460 related to
depreciated investment securities.
FIDELITY DESTINY PORTFOLIOS: DESTINY I
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 6,785,084,187
value (cost $5,678,450,016)
- - See accompanying schedule
Receivable for investments 165,911,635
sold
Receivable for fund shares 420,010
sold
Dividends receivable 4,373,332
Interest receivable 535,982
Other receivables 1,058,327
TOTAL ASSETS 6,957,383,473
LIABILITIES
Payable for investments $ 148,648,482
purchased
Payable for fund shares 5,145,828
redeemed
Accrued management fee 1,418,922
Distribution fees payable 204
Other payables and accrued 303,690
expenses
Collateral on securities 31,452,800
loaned, at value
TOTAL LIABILITIES 186,969,926
NET ASSETS $ 6,770,413,547
Net Assets consist of:
Paid in capital $ 4,450,870,777
Undistributed net investment 9,929,754
income
Accumulated undistributed net 1,203,006,451
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,106,606,565
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 6,770,413,547
CLASS O: NET ASSET VALUE, $23.50
offering price and
redemption price per share
($6,769,310,698 (divided by)
288,104,788 shares)
CLASS N: NET ASSET VALUE, $23.38
offering price and
redemption price per share
($1,102,849 (divided by)
47,171 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31,
2000 (UNAUDITED)
INVESTMENT INCOME $ 30,951,819
Dividends
Interest 17,639,324
Security lending 76,554
TOTAL INCOME 48,667,697
EXPENSES
Management fee Basic fee $ 15,586,213
Performance adjustment (6,520,628)
Transfer agent fees 230,263
Distribution fees 706
Accounting and security 422,047
lending fees
Non-interested trustees' 9,085
compensation
Custodian fees and expenses 117,173
Registration fees 18,901
Audit 20,151
Legal 38,879
Interest 3,396
Miscellaneous 37,726
Total expenses before 9,963,912
reductions
Expense reductions (807,209) 9,156,703
NET INVESTMENT INCOME 39,510,994
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,231,779,813
Foreign currency transactions (74,806) 1,231,705,007
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,065,692,608)
Assets and liabilities in (19,813) (1,065,712,421)
foreign currencies
NET GAIN (LOSS) 165,992,586
NET INCREASE (DECREASE) IN $ 205,503,580
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1999
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 39,510,994 $ 111,568,555
income
Net realized gain (loss) 1,231,705,007 979,781,946
Change in net unrealized (1,065,712,421) 90,347,540
appreciation (depreciation)
NET INCREASE (DECREASE) IN 205,503,580 1,181,698,041
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (114,849,977) (105,484,207)
From net investment income
From net realized gain (897,917,070) (544,915,685)
TOTAL DISTRIBUTIONS (1,012,767,047) (650,399,892)
Share transactions - net 600,266,460 240,053,910
increase (decrease)
TOTAL INCREASE (DECREASE) (206,997,007) 771,352,059
IN NET ASSETS
NET ASSETS
Beginning of period 6,977,410,554 6,206,058,495
End of period (including $ 6,770,413,547 $ 6,977,410,554
undistributed net investment
income of $9,929,754 and
$88,705,313, respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
SIX MONTHS ENDED MARCH 31, 1999 1998 1997 1996
2000 (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.54 $ 24.58 $ 25.08 $ 20.41 $ 18.78
period
Income from Investment
Operations
Net investment income .14 D .42 D .44 D .49 D .45
Net realized and unrealized .70 4.13 1.56 6.36 2.42
gain (loss)
Total from investment .84 4.55 2.00 6.85 2.87
operations
Less Distributions
From net investment income (.44) (.42) (.47) (.45) (.43)
From net realized gain (3.44) (2.17) (2.03) (1.73) (.81)
Total distributions (3.88) (2.59) (2.50) (2.18) (1.24)
Net asset value, end of period $ 23.50 $ 26.54 $ 24.58 $ 25.08 $ 20.41
TOTAL RETURN B, C 2.94% 18.99% 8.72% 36.29% 16.04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 6,769,311 $ 6,977,155 $ 6,206,058 $ 5,960,742 $ 4,565,482
(000 omitted)
Ratio of expenses to average .28% A .32% .33% .39% .65%
net assets
Ratio of expenses to average .26% A, E .31% E .33% .38% E .65%
net assets after expense
reductions
Ratio of net investment 1.13% A 1.55% 1.71% 2.20% 2.40%
income to average net assets
Portfolio turnover 206% A 36% 27% 32% 42%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEARS ENDED SEPTEMBER 30,
1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 17.70
period
Income from Investment
Operations
Net investment income .41
Net realized and unrealized 3.54
gain (loss)
Total from investment 3.95
operations
Less Distributions
From net investment income (.34)
From net realized gain (2.53)
Total distributions (2.87)
Net asset value, end of period $ 18.78
TOTAL RETURN B, C 27.49%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,053,389
(000 omitted)
Ratio of expenses to average .68%
net assets
Ratio of expenses to average .68%
net assets after expense
reductions
Ratio of net investment 2.35%
income to average net assets
Portfolio turnover 55%
</TABLE>
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 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>
FINANCIAL HIGHLIGHTS - CLASS N
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, 1999 E
2000 (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.45 $ 27.76
period
Income from Investment
Operations
Net investment income D .03 .08
Net realized and unrealized .70 (1.39) G
gain (loss)
Total from investment .73 (1.31)
operations
Less Distributions
From net investment income (.36) -
From net realized gain (3.44) -
Total distributions (3.80) -
Net asset value, end of period $ 23.38 $ 26.45
TOTAL RETURN B, C 2.51% (4.72)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,103 $ 256
(000 omitted)
Ratio of expenses to average 1.14% A 1.18% A
net assets
Ratio of expenses to average 1.11% A, F 1.17% A, F
net assets after expense
reductions
Ratio of net investment .27% A .68% A
income to average net assets
Portfolio turnover 206% A 36%
</TABLE>
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.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS MARCH 31, 2000 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. 590,600 $ 22,405,888
British Aerospace PLC 309,974 1,748,066
Textron, Inc. 171,400 10,433,975
34,587,929
SHIP BUILDING & REPAIR - 0.3%
General Dynamics Corp. 367,600 18,288,100
TOTAL AEROSPACE & DEFENSE 52,876,029
BASIC INDUSTRIES - 0.5%
CHEMICALS & PLASTICS - 0.2%
Praxair, Inc. 370,200 15,409,575
METALS & MINING - 0.3%
Alcoa, Inc. 252,000 17,703,000
PACKAGING & CONTAINERS - 0.0%
Owens-Illinois, Inc. (a) 85,020 1,434,713
TOTAL BASIC INDUSTRIES 34,547,288
CONSTRUCTION & REAL ESTATE -
0.2%
BUILDING MATERIALS - 0.1%
Masco Corp. 217,000 4,448,500
ENGINEERING - 0.1%
Fluor Corp. 191,500 5,936,500
TOTAL CONSTRUCTION & REAL 10,385,000
ESTATE
DURABLES - 1.6%
AUTOS, TIRES, & ACCESSORIES -
0.9%
Danaher Corp. 395,400 20,165,400
Delphi Automotive Systems 1,527,500 24,440,000
Corp.
General Motors Corp. 165,000 13,664,063
58,269,463
CONSUMER ELECTRONICS - 0.6%
Sony Corp. 258,800 36,248,176
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
HOME FURNISHINGS - 0.1%
Leggett & Platt, Inc. 368,400 $ 7,920,600
TOTAL DURABLES 102,438,239
ENERGY - 1.9%
OIL & GAS - 1.9%
BP Amoco PLC sponsored ADR 307,812 16,333,274
Exxon Mobil Corp. 849,466 66,099,073
Royal Dutch Petroleum Co. 742,800 42,757,425
(NY Shares)
125,189,772
FINANCE - 10.8%
BANKS - 2.9%
Bank of New York Co., Inc. 1,038,640 43,168,475
Chase Manhattan Corp. 1,583,300 138,043,969
U.S. Bancorp 421,600 9,222,500
190,434,944
CREDIT & OTHER FINANCE - 2.9%
American Express Co. 612,400 91,209,325
Associates First Capital 425,700 9,125,944
Corp. Class A
Citigroup, Inc. 1,501,950 89,084,409
189,419,678
FEDERAL SPONSORED CREDIT - 0.7%
Fannie Mae 435,400 24,572,888
Freddie Mac 512,600 22,650,513
47,223,401
INSURANCE - 1.6%
AFLAC, Inc. 320,200 14,589,113
American International Group, 805,221 88,171,700
Inc.
102,760,813
SECURITIES INDUSTRY - 2.7%
Daiwa Securities Group, Inc. 2,377,000 44,637,413
Merrill Lynch & Co., Inc. 192,000 20,160,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Morgan Stanley Dean Witter & 813,600 $ 66,359,250
Co.
Nikko Securities Co. Ltd. 3,114,000 47,084,954
178,241,617
TOTAL FINANCE 708,080,453
HEALTH - 8.0%
DRUGS & PHARMACEUTICALS - 7.2%
Allergan, Inc. 39,300 1,965,000
American Home Products Corp. 509,300 27,311,213
Amgen, Inc. (a) 527,800 32,393,725
Biogen, Inc. (a) 50,700 3,542,663
Bristol-Myers Squibb Co. 1,353,500 78,164,625
Elan Corp. PLC sponsored ADR 18,400 874,000
(a)
Eli Lilly & Co. 1,254,200 79,014,600
Genentech, Inc. 341,600 51,923,200
Merck & Co., Inc. 337,900 20,992,038
Millennium Pharmaceuticals, 42,600 5,532,675
Inc. (a)
PE Corp. - Celera Genomics 46,900 4,294,281
Group (a)
Pfizer, Inc. 31,100 1,137,094
Schering-Plough Corp. 1,927,400 70,831,950
Warner-Lambert Co. 931,700 90,840,750
468,817,814
MEDICAL EQUIPMENT & SUPPLIES
- - 0.8%
Biomet, Inc. 433,550 15,770,381
Cardinal Health, Inc. 511,054 23,444,602
Johnson & Johnson 170,200 11,924,638
51,139,621
TOTAL HEALTH 519,957,435
INDUSTRIAL MACHINERY &
EQUIPMENT - 7.3%
ELECTRICAL EQUIPMENT - 7.2%
ABB Ltd. (Sweden) 178,287 20,969,852
Furukawa Electric Co. Ltd. 1,884,000 31,621,504
General Electric Co. 1,787,900 277,459,717
Hutchison Whampoa Ltd. 2,220,000 40,057,021
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT -
CONTINUED
Koninklijke Philips 156,000 $ 26,724,750
Electronics NV (NY Shares)
Mitsubishi Electric Corp. 3,744,000 35,263,363
Murata Manufacturing Co. Ltd. 96,000 23,305,279
Research in Motion Ltd. (a) 122,400 12,838,423
468,239,909
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Ingersoll-Rand Co. 228,100 10,093,425
TOTAL INDUSTRIAL MACHINERY & 478,333,334
EQUIPMENT
MEDIA & LEISURE - 7.8%
BROADCASTING - 4.8%
AT&T Corp. - Liberty Media 858,892 50,889,351
Group Class A (a)
CBS Corp. (a) 993,300 56,245,613
Clear Channel Communications, 692,900 47,853,406
Inc. (a)
Comcast Corp. Class A 811,200 35,185,800
(special)
Infinity Broadcasting Corp. 917,900 29,717,013
Class A (a)
Time Warner, Inc. 588,262 58,826,200
USA Networks, Inc. (a) 1,630,000 36,776,875
315,494,258
ENTERTAINMENT - 1.1%
News Corp. Ltd. sponsored ADR 271,700 12,973,675
(preferred ltd. vtg.)
Viacom, Inc. Class B 1,123,300 59,254,075
(non-vtg.) (a)
72,227,750
PUBLISHING - 1.1%
McGraw-Hill Companies, Inc. 1,497,600 68,140,800
Reader's Digest Association, 99,200 3,509,200
Inc. Class A (non-vtg.)
71,650,000
RESTAURANTS - 0.8%
McDonald's Corp. 1,310,000 49,206,875
TOTAL MEDIA & LEISURE 508,578,883
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - 1.3%
BEVERAGES - 0.4%
Anheuser-Busch Companies, 402,100 $ 25,030,725
Inc.
HOUSEHOLD PRODUCTS - 0.6%
Avon Products, Inc. 196,700 5,716,594
Clorox Co. 463,366 15,059,395
Colgate-Palmolive Co. 223,400 12,594,175
Estee Lauder Companies, Inc. 91,300 4,570,706
Procter & Gamble Co. 102,300 5,754,375
43,695,245
TOBACCO - 0.3%
Philip Morris Companies, Inc. 856,800 18,099,900
TOTAL NONDURABLES 86,825,870
RETAIL & WHOLESALE - 5.2%
APPAREL STORES - 0.7%
Abercrombie & Fitch Co. 949,900 15,198,400
Class A (a)
Gap, Inc. 290,100 14,450,606
The Limited, Inc. 323,400 13,623,225
43,272,231
DRUG STORES - 0.1%
CVS Corp. 150,300 5,645,644
GENERAL MERCHANDISE STORES -
2.7%
Costco Wholesale Corp. (a) 755,200 39,695,200
Kohls Corp. (a) 167,000 17,117,500
Nordstrom, Inc. 323,300 9,537,350
Target Corp. 579,000 43,280,250
Wal Mart de Mexico SA de CV 4,883,000 11,846,050
Series V (a)
Wal-Mart Stores, Inc. 950,800 52,769,400
174,245,750
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.7%
Home Depot, Inc. 1,530,850 98,739,825
Staples, Inc. (a) 616,600 12,332,000
Webvan Group, Inc. 244,100 1,876,519
112,948,344
TOTAL RETAIL & WHOLESALE 336,111,969
SHARES VALUE (NOTE 1)
SERVICES - 1.8%
ADVERTISING - 1.3%
DoubleClick, Inc. (a) 95,800 $ 8,969,275
Omnicom Group, Inc. 824,300 77,020,531
85,989,806
LEASING & RENTAL - 0.1%
Marubeni Corp. 2,147,000 8,084,544
SERVICES - 0.4%
Ecolab, Inc. 633,239 23,231,956
Gartner Group, Inc. Class B 38,966 518,735
(a)
23,750,691
TOTAL SERVICES 117,825,041
TECHNOLOGY - 37.0%
COMMUNICATIONS EQUIPMENT -
10.1%
ADC Telecommunications, Inc. 667,600 35,966,950
(a)
Cabletron Systems, Inc. (a) 472,600 13,853,088
Ciena Corp. (a) 38,500 4,855,813
Cisco Systems, Inc. (a) 3,247,400 251,064,613
Comverse Technology, Inc. (a) 67,700 12,795,300
Jabil Circuit, Inc. (a) 272,400 11,781,300
Lucent Technologies, Inc. 1,361,595 82,716,896
Marconi PLC 326 3,890
NEC Corp. 581,000 17,128,972
Nokia AB sponsored ADR 590,300 128,242,675
Nortel Networks Corp. 238,000 29,907,049
Telefonaktiebolaget LM 716,400 67,207,275
Ericsson sponsored ADR
Tellabs, Inc. (a) 91,400 5,756,772
661,280,593
COMPUTER SERVICES & SOFTWARE
- - 10.2%
America Online, Inc. (a) 1,117,900 75,178,775
Automatic Data Processing, 40,900 1,973,425
Inc.
BEA Systems, Inc. (a) 208,200 15,276,675
CMGI, Inc. (a) 137,100 15,535,144
Computer Sciences Corp. (a) 211,000 16,695,375
Covad Communications Group, 120,700 8,750,750
Inc. (a)
Electronic Data Systems Corp. 117,800 7,561,288
Exodus Communications, Inc. 241,300 33,902,650
(a)
Fujitsu Ltd. 903,000 27,676,479
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
Healtheon/Web Maryland Corp. 565,870 $ 13,015,010
(a)
IMS Health, Inc. 60,600 1,026,413
Intuit, Inc. (a) 771,800 41,966,625
Microsoft Corp. (a) 1,575,700 167,418,125
Novell, Inc. (a) 313,400 8,971,075
Oracle Corp. (a) 1,140,000 88,991,250
Phone.com, Inc. 19,400 3,164,625
Software.com, Inc. 121,100 15,606,763
Trans Cosmos, Inc. 30,000 8,465,094
Unisys Corp. (a) 1,486,545 37,906,898
VERITAS Software Corp. (a) 35,700 4,676,700
Vignette Corp. 47,100 7,547,775
Yahoo Japan Corp. 36 21,822,428
Yahoo!, Inc. (a) 254,500 43,614,938
666,744,280
COMPUTERS & OFFICE EQUIPMENT
- - 6.8%
Apple Computer, Inc. (a) 235,300 31,956,681
Dell Computer Corp. (a) 668,200 36,041,038
EMC Corp. (a) 721,100 90,137,500
International Business 252,000 29,736,000
Machines Corp.
Juniper Networks, Inc. 13,300 3,505,381
Lexmark International Group, 312,200 33,015,150
Inc. Class A (a)
Pitney Bowes, Inc. 544,700 24,341,281
SCI Systems, Inc. (a) 1,546,200 83,204,888
Softbank Corp. 22,500 20,031,623
Sun Microsystems, Inc. (a) 974,000 91,266,844
443,236,386
ELECTRONIC INSTRUMENTS - 0.8%
Applied Materials, Inc. (a) 240,200 22,638,850
KLA-Tencor Corp. (a) 201,400 16,967,950
PE Corp. - Biosystems Group 85,000 8,202,500
47,809,300
ELECTRONICS - 9.1%
Altera Corp. (a) 171,800 15,333,150
Analog Devices, Inc. (a) 752,600 60,631,338
Broadcom Corp. Class A (a) 70,400 17,098,400
Conexant Systems, Inc. (a) 231,600 16,443,600
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
DII Group, Inc. (a) 278,100 $ 31,442,681
Flextronics International 133,200 9,382,275
Ltd. (a)
Inktomi Corp. (a) 143,600 28,002,000
Intel Corp. 63,500 8,378,031
Micron Technology, Inc. (a) 99,500 12,537,000
Motorola, Inc. 350,900 49,959,388
Samsung Electronics Co. Ltd. 172,330 52,233,043
Sanmina Corp. (a) 728,600 49,226,038
Solectron Corp. (a) 857,784 34,364,972
Texas Instruments, Inc. 909,700 145,552,000
Tyco International Ltd. 1,000,600 49,904,925
Xilinx, Inc. (a) 170,500 14,119,531
594,608,372
TOTAL TECHNOLOGY 2,413,678,931
UTILITIES - 11.8%
CELLULAR - 8.0%
ALLTEL Corp. 50,800 3,203,575
China Telecom (Hong Kong) 6,053,300 53,647,374
Ltd. (a)
Hikari Tsushin, Inc. 7,900 4,904,111
Nextel Communications, Inc. 421,100 62,428,075
Class A (a)
NTT Mobile Communication 686 28,100,804
Network, Inc.
QUALCOMM, Inc. (a) 348,200 51,990,613
Sprint Corp. - PCS Group 1,137,100 74,266,844
Series 1 (a)
Vodafone AirTouch PLC 15,260,038 84,788,673
Vodafone AirTouch PLC 1,436,800 79,832,200
sponsored ADR
VoiceStream Wireless Corp. (a) 604,400 77,854,275
521,016,544
ELECTRIC UTILITY - 0.5%
AES Corp. (a) 444,100 34,972,875
GAS - 0.4%
Dynegy, Inc. Class A 423,702 26,587,301
TELEPHONE SERVICES - 2.9%
Allegiance Telecom, Inc. (a) 384,450 30,996,281
Level 3 Communications, Inc. 192,100 20,314,575
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
McLeodUSA, Inc. Class A (a) 406,000 $ 34,433,875
Metromedia Fiber Network, 132,300 12,800,025
Inc. Class A (a)
NEXTLINK Communications, Inc. 305,600 37,798,900
Class A (a)
Telefonica SA sponsored ADR 264,300 19,723,388
Telefonos de Mexico SA de CV 502,800 33,687,600
Series L sponsored ADR
189,754,644
TOTAL UTILITIES 772,331,364
TOTAL COMMON STOCKS 6,267,159,608
(Cost $4,081,586,709)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
Cox Communications, Inc. 59,800 7,131,150
$6.858 PRIZES
UnitedGlobalCom, Inc. $3.50 96,800 6,461,400
13,592,550
UTILITIES - 0.1%
ELECTRIC UTILITY - 0.1%
Alliant Energy Resources, 92,200 7,813,950
Inc. $4.91 (c)
TOTAL CONVERTIBLE PREFERRED 21,406,500
STOCKS
(Cost $16,794,852)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 1.2%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
CONVERTIBLE BONDS - 1.2%
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.2%
Elan Finance Corp. Ltd. Baa3 $ 19,620,000 $ 14,126,400
liquid yield option notes 0%
12/14/18 (c)
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.6%
Liberty Media Corp.:
3.75% 2/15/30 (c) Baa3 16,020,000 18,663,300
4% 11/15/29 (c) Baa3 4,330,000 6,727,738
4% 11/15/29 Baa3 6,100,000 9,462,625
34,853,663
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Digital Island, Inc. 6% - 5,890,000 4,126,681
2/15/05
UTILITIES - 0.3%
CELLULAR - 0.2%
Nextel Communications, Inc. B1 11,780,000 14,018,200
5.25% 1/15/10 (c)
TELEPHONE SERVICES - 0.1%
Level 3 Communications, Inc. Caa1 7,070,000 7,061,163
6% 3/15/10
TOTAL UTILITIES 21,079,363
TOTAL CONVERTIBLE BONDS 74,186,107
NONCONVERTIBLE BONDS - 0.0%
AEROSPACE & DEFENSE - 0.0%
British Aerospace PLC 7.45% - GBP 97,901 152,842
11/30/03
TOTAL CORPORATE BONDS 74,338,949
(Cost $62,816,001)
</TABLE>
CASH EQUIVALENTS - 2.9%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 190,281,672 $ 190,281,672
5.85% (b) (Cost $190,281,672)
TOTAL INVESTMENT PORTFOLIO - 6,553,186,729
100.4%
(Cost $4,351,479,234)
NET OTHER ASSETS - (0.4)% (25,575,381)
NET ASSETS - 100% $ 6,527,611,348
CURRENCY ABBREVIATIONS
GBP - British pound
SECURITY TYPE ABBREVIATIONS
PRIZES - Participating Redeemable
Indexed Zero-Premium
Exchangeable Securities
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $61,349,588 or 0.9% of net assets.
Distribution of investments by country of issue, as a percentage of
total net assets, is as follows:
United States of America 83.2%
Japan 5.4
United Kingdom 2.7
Finland 2.0
Hong Kong 1.4
Sweden 1.3
Netherlands 1.1
Others (individually less 2.9
than 1%)
100.0%
INCOME TAX INFORMATION
At March 31, 2000, the aggregate cost of investment securities for
income tax purposes was $4,366,076,341. Net unrealized appreciation
aggregated $2,187,110,388, of which $2,364,771,749 related to
appreciated investment securities and $177,661,361 related to
depreciated investment securities.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 6,553,186,729
value (cost $4,351,479,234)
- - See accompanying schedule
Cash 158,851
Receivable for investments 59,854,703
sold
Receivable for fund shares 594,235
sold
Dividends receivable 3,632,906
Interest receivable 2,161,579
Other receivables 157,420
TOTAL ASSETS 6,619,746,423
LIABILITIES
Payable for investments $ 28,575,784
purchased
Payable for fund shares 3,241,487
redeemed
Accrued management fee 3,073,837
Distribution fees payable 1,620
Other payables and accrued 971,747
expenses
Collateral on securities 56,270,600
loaned, at value
TOTAL LIABILITIES 92,135,075
NET ASSETS $ 6,527,611,348
Net Assets consist of:
Paid in capital $ 4,165,514,207
Undistributed net investment 9,378,238
income
Accumulated undistributed net 150,959,606
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 2,201,759,297
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 6,527,611,348
CLASS O: NET ASSET VALUE, $16.81
offering price and
redemption price per share
($6,518,950,819 (divided by)
387,687,030 shares)
CLASS N: NET ASSET VALUE, $16.69
offering price and
redemption price per share
($8,660,529 (divided by)
519,002 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31,
2000 (UNAUDITED)
INVESTMENT INCOME $ 18,717,242
Dividends
Interest 6,924,743
Security lending 616,999
TOTAL INCOME 26,258,984
EXPENSES
Management fee Basic fee $ 17,133,900
Performance adjustment (1,329,807)
Transfer agent fees 145,109
Distribution fees 5,529
Accounting and security 423,879
lending fees
Non-interested trustees' 13,325
compensation
Custodian fees and expenses 178,642
Registration fees 18,259
Audit 22,940
Legal 28,865
Miscellaneous 70,835
Total expenses before 16,711,476
reductions
Expense reductions (517,510) 16,193,966
NET INVESTMENT INCOME 10,065,018
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 175,533,555
Foreign currency transactions 85,641 175,619,196
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,142,169,831
Assets and liabilities in 55,848 1,142,225,679
foreign currencies
NET GAIN (LOSS) 1,317,844,875
NET INCREASE (DECREASE) IN $ 1,327,909,893
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, 1999
2000 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 10,065,018 $ 40,217,501
income
Net realized gain (loss) 175,619,196 514,603,714
Change in net unrealized 1,142,225,679 644,423,653
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,327,909,893 1,199,244,868
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (39,209,992) (34,149,944)
From net investment income
From net realized gain (509,476,717) (864,396,346)
TOTAL DISTRIBUTIONS (548,686,709) (898,546,290)
Share transactions - net 520,560,963 957,719,512
increase (decrease)
TOTAL INCREASE (DECREASE) 1,299,784,147 1,258,418,090
IN NET ASSETS
NET ASSETS
Beginning of period 5,227,827,201 3,969,409,111
End of period (including $ 6,527,611,348 $ 5,227,827,201
undistributed net investment
income of $9,378,238 and
$39,810,345, respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
SIX MONTHS ENDED MARCH 31, 1999 1998 1997 1996 F
2000 (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 14.76 $ 14.07 $ 14.40 $ 11.61 $ 10.57
period
Income from Investment
Operations
Net investment income .03 D .12 D .18 D .27 D .24
Net realized and unrealized 3.56 3.73 .71 3.52 1.34
gain (loss)
Total from investment 3.59 3.85 .89 3.79 1.58
operations
Less Distributions
From net investment income (.11) (.12) (.25) (.25) (.22)
From net realized gain (1.43) (3.04) (.97) (.75) (.32)
Total distributions (1.54) (3.16) (1.22) (1.00) (.54)
Net asset value, end of period $ 16.81 $ 14.76 $ 14.07 $ 14.40 $ 11.61
TOTAL RETURN B, C 25.31% 30.06% 6.64% 34.72% 15.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 6,518,951 $ 5,226,303 $ 3,969,409 $ 3,609,144 $ 2,538,407
(000 omitted)
Ratio of expenses to average .56% A .48% .48% .54% .78%
net assets
Ratio of expenses to average .54% A, E .47% E .48% .53% E .78%
net assets after expense
reductions
Ratio of net investment .34% A .79% 1.23% 2.11% 2.38%
income to average net assets
Portfolio turnover 92% A 77% 106% 35% 37%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.52
period
Income from Investment
Operations
Net investment income .22
Net realized and unrealized 1.99
gain (loss)
Total from investment 2.21
operations
Less Distributions
From net investment income (.17)
From net realized gain (.99)
Total distributions (1.16)
Net asset value, end of period $ 10.57
TOTAL RETURN B, C 26.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,031,762
(000 omitted)
Ratio of expenses to average .80%
net assets
Ratio of expenses to average .80%
net assets after expense
reductions
Ratio of net investment 2.33%
income to average net assets
Portfolio turnover 52%
</TABLE>
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 FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F PER-SHARE DATA HAVE BEEN ADJUSTED FOR A 3 FOR 1 SHARE SPLIT PAID
JUNE 21, 1996.
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS N
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30,
2000 (UNAUDITED) 1999 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 14.72 $ 15.35
period
Income from Investment
Operations
Net investment income (loss) D (.02) (.00)
Net realized and unrealized 3.52 (.63) G
gain (loss)
Total from investment 3.50 (.63)
operations
Less Distributions
From net investment income (.10) -
From net realized gain (1.43) -
Total distributions (1.53) -
Net asset value, end of period $ 16.69 $ 14.72
TOTAL RETURN B, C 24.74% (4.10)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 8,661 $ 1,524
(000 omitted)
Ratio of expenses to average 1.43% A 1.35% A
net assets
Ratio of expenses to average 1.42% A, F 1.33% A,F
net assets after expense
reductions
Ratio of net investment (.54)% A (.07)% A
income to average net assets
Portfolio turnover 92% A 77%
</TABLE>
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Destiny I and Destiny II (the funds) are funds of Fidelity Destiny
Portfolios (the trust). The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 act), as an open-end
management investment company organized as a Massachusetts business
trust. Each fund is authorized to issue an unlimited number of shares.
Each fund offers two classes of shares, Class O and Class N, each of
which has equal rights as to assets and voting privileges. Effective
the close of business on December 15, 1999, Class O of each fund was
closed to new accounts. Each class has exclusive voting rights with
respect to matters that affect that class. Investment income, realized
and unrealized capital gains and losses, the common expenses of the
funds, and certain fund-level expense reductions, if any, are
allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of each fund. Each class
of shares differs in its respective distribution and transfer agent
expenses, and expense reductions. Shares of each fund are offered to
the general public through Fidelity Systematic Investment Plans:
Destiny Plans I and Destiny Plans II (the Plans), a unit investment
trust with four series.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the funds:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities (including
restricted securities) for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange) are valued primarily using dealer-supplied valuations or at
their fair value. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the funds
are informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan
non-interested Trustees must defer receipt of a portion of, and may
elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Deferred Compensation
Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
partnerships, non-taxable dividends and losses deferred due to wash
sales. Each fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The funds generally use foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency or
other obligations found to be satisfactory by FMR are transferred to
an account of the funds, or to the Joint Trading Account, at a bank
custodian. The securities are marked-to-market daily and maintained at
a value at least equal to the principal amount of the repurchase
agreement (including accrued interest). FMR, the funds' investment
adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the funds may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income. Income distributions from the Cash Fund
are declared daily and paid monthly from net interest income. Income
distributions earned by the funds are recorded as interest income in
the accompanying financial statements.
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES. The funds are permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the funds had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Destiny I: Purchases and sales of securities, other than short-term
securities, aggregated $6,937,537,408 and $6,944,072,146,
respectively, of which U.S. government and government agency
obligations aggregated $0 and $513,842,688, respectively.
Destiny II: Purchases and sales of securities, other than short-term
securities, aggregated $2,815,542,734 and $2,637,442,807,
respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of each fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2167% to
.5200% for the period. The annual individual fund fee rates are .17%
and .30 % for Destiny I and Destiny II, respectively. In the event
that these rates were lower than the contractual rates in effect
during the period, FMR voluntarily implemented the above rates, as
they resulted in the same or a lower management fee. The basic fee is
subject to a performance adjustment (up to a maximum of -.24% of each
fund's average net assets up to and including $100,000,000 and -.20%
of each fund's average net assets in excess of $100,000,000 over the
performance period) based on each fund's investment performance as
compared to the appropriate index over a specified period of time. For
the period, the management fees were equivalent to annualized rates of
.26% and .53%, respectively of average net assets after the
performance adjustment for the Destiny I and Destiny II funds,
respectively. Effective July 1, 1999 each fund's performance
adjustment will be phased out over an 18 month period. During the
phase out period the performance adjustment can decrease, but not
increase, the management fee owed by the funds.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has adopted a Distribution and Service
Plan for Class N of each fund. During the period, Class N of each fund
paid Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
service fee based on an annualized rate of .25% of its average net
assets pursuant to the Distribution and Service Plan. For the period,
the following amounts were paid to FDC:
PAID TO FDC
Destiny I $ 706
Destiny II $ 5,529
TRANSFER AGENT FEES. Fidelity Service Company, Inc., (FSC), an
affiliate of FMR, is the transfer, dividend disbursing and shareholder
servicing agent for each class of the funds. For Class O non-Destiny
Plan accounts, FSC receives account fees and asset-based fees that
vary according to account size and type of account. FSC does not
receive a fee for Class O Destiny Plan accounts. For Class N, FSC
receives a fee based on monthly Plan payment amounts or per
transaction that may not exceed an annualized rate of .63% of the
Class N shares' average net assets. In addition, FSC pays for
typesetting, printing, and mailing of all shareholder reports, except
proxy statements. For the period, the following amounts were paid to
FSC:
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
Destiny I
AMOUNT % OF AVERAGE NET ASSETS
CLASS O $ 228,521 .01*
CLASS N 1,742 .61 *
$ 230,263
Destiny II
AMOUNT % OF AVERAGE NET ASSETS
CLASS O $ 130,947 .00*
CLASS N 14,162 .63 *
$ 145,109
* ANNUALIZED
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. Each fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms for Destiny I and Destiny
II were $246,673 and $85,000, respectively for the period.
5. SECURITY LENDING.
The funds lend portfolio securities from time to time in order to earn
additional income. Each fund receives collateral (in the form of U.S.
Treasury obligations, letters of credit and/or cash) against the
loaned securities and maintains collateral in an amount not less than
100% of the market value of the loaned securities during the period of
the loan. The market value of the loaned securities is determined at
the close of business of the funds and any additional required
collateral is delivered to the funds on the next business day. 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. At period end, the value of the securities loaned
amounted to $29,978,338 and $54,123,006 for Destiny I and Destiny II,
respectively. Destiny I and Destiny II received cash collateral of
$31,452,800 and $56,270,600, respectively, which was invested in the
Taxable Central Cash Fund.
6. BANK BORROWINGS.
The funds are permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The funds have
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. For Destiny I, the average daily loan balance during the
period for which the loan was outstanding amounted to $6,895,000. The
weighted average interest rate was 5.9%. For Destiny II, there were no
loans during the period.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, each fund's expenses
were reduced by $795,799 and $508,440 under this arrangement for
Destiny I and Destiny II, respectively.
In addition, each fund has entered into arrangements with its
custodian and each class' transfer agent whereby credits realized as a
result of uninvested cash balances were used to reduce a portion of
expenses. During the period, each fund's custodian fees were reduced
by $2,009 and $725 for Destiny I and Destiny II, respectively under
the custodian arrangement. Each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
Destiny I
TRANSFER AGENT CREDITS
CLASS O $ 9,401
Destiny II
TRANSFER AGENT CREDITS
CLASS O $ 8,345
8. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Destiny I
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30, 1999 A
FROM NET INVESTMENT INCOME
Class O $ 114,843,907 $ 105,484,207
Class N 6,070 -
Total $ 114,849,977 $ 150,484,207
FROM NET REALIZED GAIN
Class O $ 897,861,180 $ 544,915,685
Class N 55,890 -
Total $ 897,917,070 $ 544,915,685
$ 1,012,767,047 $ 650,399,892
Destiny II
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30, 1999 A
FROM NET INVESTMENT INCOME
Class O $ 39,182,723 $ 34,149,944
Class N 27,269 -
Total $ 39,209,992 $ 34,149,944
FROM NET REALIZED GAIN
Class O $ 509,166,630 $ 864,396,346
Class N 310,087 -
Total $ 509,476,717 $ 864,396,346
$ 548,686,709 $ 898,546,290
</TABLE>
A DISTRIBUTIONS FOR DESTINY I: CLASS N AND DESTINY II: CLASS N ARE FOR
THE PERIOD APRIL 30, 1999 (COMMENCEMENT OF SALE OF SHARES) TO
SEPTEMBER 30, 1999.
9. SHARE TRANSACTIONS.
Transactions for each fund's class of shares for the periods are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Destiny I
SHARES DOLLARS
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
2000 1999 A 2000
CLASS O Shares sold 5,978,542 9,223,182 $ 153,976,837
Reinvestment of distributions 36,918,568 22,671,053 880,877,026
Shares redeemed (17,661,156) (21,478,357) (435,488,098)
Net increase (decrease) 25,235,954 10,415,878 $ 599,365,765
CLASS N Shares sold 35,282 9,786 $ 847,844
Reinvestment of distributions 2,601 - 61,912
Shares redeemed (384) (114) (9,061)
Net increase (decrease) 37,499 9,672 $ 900,695
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED SEPTEMBER 30,
1999 A
CLASS O Shares sold $ 248,764,091
Reinvestment of distributions 575,618,075
Shares redeemed (584,597,461)
Net increase (decrease) $ 239,784,705
CLASS N Shares sold $ 272,403
Reinvestment of distributions -
Shares redeemed (3,198)
Net increase (decrease) $ 269,205
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Destiny II
SHARES DOLLARS
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
2000 1999 A 2000
CLASS O Shares sold 32,200,326 42,363,720 $ 505,121,825
Reinvestment of distributions 34,358,830 66,407,354 527,406,144
Shares redeemed (32,851,697) (36,859,021) (518,506,094)
Net increase (decrease) 33,707,459 71,912,053 $ 514,021,875
CLASS N Shares sold 411,930 105,039 $ 6,496,352
Reinvestment of distributions 22,043 - 336,824
Shares redeemed (18,549) (1,461) (294,088)
Net increase (decrease) 415,424 103,578 $ 6,539,088
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Destiny II
DOLLARS
YEAR ENDED SEPTEMBER 30,
1999 A
CLASS O Shares sold $ 629,670,010
Reinvestment of distributions 875,248,918
Shares redeemed (548,780,811)
Net increase (decrease) $ 956,138,117
CLASS N Shares sold $ 1,603,569
Reinvestment of distributions -
Shares redeemed (22,174)
Net increase (decrease) $ 1,581,395
</TABLE>
A SHARE TRANSACTIONS FOR DESTINY I: CLASS N AND DESTINY II: CLASS N
ARE FOR THE PERIOD APRIL 30, 1999 (COMMENCEMENT OF SALE OF SHARES) TO
SEPTEMBER 30, 1999.
FIDELITY(registered trademark)
DESTINY
PORTFOLIOS:
DESTINY I - CLASS O
DESTINY II - CLASS O
Semiannual Report
March 31, 2000
Printed on recycled paper
6i-102148
FIDELITY
DESTINY
PORTFOLIOS:
DESTINY I - CLASS O
DESTINY II - CLASS O
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments Japan Ltd.
OFFICERS
Edward C. Johnson 3d, PRESIDENT
Robert C. Pozen, SENIOR VICE PRESIDENT
Abigail P. Johnson, VICE PRESIDENT
Karen Firestone, VICE PRESIDENT (DESTINY I)
Beth Terrana, VICE PRESIDENT (DESTINY II)
Eric D. Roiter, SECRETARY
Robert A. Dwight, TREASURER
Matthew N. Karstetter, DEPUTY TREASURER
Maria F. Dwyer, DEPUTY TREASURER
John H. Costello, ASSISTANT TREASURER
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Michael Cook
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Boston, MA
DES-SANN-0500
1.702317.102
6i
* INDEPENDENT TRUSTEES
CONTENTS
SEMIANNUAL REPORT
PERFORMANCE 2 How the funds have done over
time.
FUND TALK 5 The managers' review of the
funds' performance,
strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in
the funds' investments over
the past six months.
DESTINY I
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 17 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
DESTINY II
INVESTMENTS 22 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 28 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 33 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
THIS REPORT IS PRINTED ON RECYCLED PAPER USING SOY-BASED INKS.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS
REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN
THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK OR DEPOSITORY INSTITUTION.
SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FIDELITY DESTINY PORTFOLIOS: DESTINY I: CLASS O
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
Destiny I - CL O S&P 500
00006 SP001
1990/03/31 10000.00 10000.00
1990/04/30 9676.20 9750.00
1990/05/31 10745.48 10700.63
1990/06/30 10722.89 10627.86
1990/07/31 10421.69 10593.85
1990/08/31 9354.48 9636.17
1990/09/30 8724.02 9166.89
1990/10/31 8660.97 9127.47
1990/11/30 9401.76 9717.10
1990/12/31 9874.61 9988.21
1991/01/31 10938.51 10423.70
1991/02/28 11695.07 11168.99
1991/03/31 11970.89 11439.28
1991/04/30 12120.63 11466.73
1991/05/31 12845.66 11962.10
1991/06/30 12002.42 11414.23
1991/07/31 12798.38 11946.14
1991/08/31 13232.59 12229.26
1991/09/30 13009.43 12025.03
1991/10/31 12951.57 12186.17
1991/11/30 12158.11 11695.06
1991/12/31 13717.90 13032.98
1992/01/31 13866.16 12790.57
1992/02/29 14371.97 12956.84
1992/03/31 14049.30 12704.18
1992/04/30 14555.11 13077.69
1992/05/31 14677.20 13141.77
1992/06/30 14424.29 12945.96
1992/07/31 15008.59 13475.45
1992/08/31 14610.68 13199.20
1992/09/30 14757.87 13354.95
1992/10/31 14669.56 13401.69
1992/11/30 15376.05 13858.69
1992/12/31 15796.48 14029.15
1993/01/31 16284.28 14147.00
1993/02/28 16336.18 14339.40
1993/03/31 17145.72 14641.96
1993/04/30 17249.51 14287.62
1993/05/31 17737.31 14670.53
1993/06/30 17872.24 14713.07
1993/07/31 18100.57 14654.22
1993/08/31 18724.14 15209.62
1993/09/30 18724.14 15092.50
1993/10/31 19412.69 15404.92
1993/11/30 19290.53 15258.57
1993/12/31 19969.76 15443.20
1994/01/31 21240.89 15968.27
1994/02/28 20920.13 15535.53
1994/03/31 19934.12 14858.18
1994/04/30 20528.11 15048.36
1994/05/31 20682.54 15295.16
1994/06/30 20100.44 14920.43
1994/07/31 20765.70 15409.82
1994/08/31 21704.19 16041.62
1994/09/30 21027.05 15648.60
1994/10/31 21490.36 16000.69
1994/11/30 20753.82 15417.95
1994/12/31 20854.29 15646.60
1995/01/31 21054.12 16052.31
1995/02/28 21767.82 16677.87
1995/03/31 22381.60 17170.03
1995/04/30 23223.77 17675.69
1995/05/31 24308.59 18382.19
1995/06/30 25136.48 18809.21
1995/07/31 26035.74 19432.92
1995/08/31 26264.13 19481.70
1995/09/30 26806.54 20303.82
1995/10/31 27020.65 20231.34
1995/11/30 27791.44 21119.50
1995/12/31 28559.99 21526.26
1996/01/31 29093.40 22259.01
1996/02/29 28986.72 22465.35
1996/03/31 28910.52 22681.69
1996/04/30 29459.16 23016.02
1996/05/31 30099.25 23609.60
1996/06/30 30312.61 23699.56
1996/07/31 29382.96 22652.51
1996/08/31 29626.80 23130.25
1996/09/30 31105.09 24432.02
1996/10/31 32293.82 25105.86
1996/11/30 34747.48 27003.61
1996/12/31 33856.63 26468.67
1997/01/31 35513.12 28122.43
1997/02/28 35834.28 28342.91
1997/03/31 33991.86 27178.30
1997/04/30 35699.05 28800.84
1997/05/31 37997.86 30554.24
1997/06/30 39214.87 31923.07
1997/07/31 42189.79 34463.19
1997/08/31 40668.52 32532.56
1997/09/30 42392.63 34314.37
1997/10/31 41530.58 33168.27
1997/11/30 43034.94 34703.63
1997/12/31 44326.62 35299.49
1998/01/31 44495.37 35689.90
1998/02/28 47364.23 38263.86
1998/03/31 48901.78 40223.35
1998/04/30 48808.03 40628.00
1998/05/31 48395.51 39929.60
1998/06/30 49633.06 41551.54
1998/07/31 49801.82 41109.02
1998/08/31 43332.83 35165.48
1998/09/30 46089.18 37418.18
1998/10/31 49614.31 40461.77
1998/11/30 52783.17 42914.16
1998/12/31 55687.90 45386.87
1999/01/31 56225.15 47284.95
1999/02/28 53621.56 45815.34
1999/03/31 55006.01 47648.41
1999/04/30 57361.64 49493.83
1999/05/31 57010.36 48325.28
1999/06/30 59531.30 51007.33
1999/07/31 58208.84 49414.89
1999/08/31 56762.40 49170.28
1999/09/30 54840.70 47822.52
1999/10/31 56989.70 50848.73
1999/11/30 57051.69 51882.49
1999/12/31 58449.42 54938.37
2000/01/31 54173.22 52178.26
2000/02/29 55398.43 51190.53
2000/03/31 56455.47 56198.50
IMATRL PRASUN SHR__CHT 20000331 20000410 163209 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Destiny I: Class O on March 31, 1990. As the chart shows,
by March 31, 2000, the value of the investment would have grown to
$56,455 - a 464.55% increase on the initial investment. For
comparison, look at how the S&P 500(registered trademark) did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $56,198 - a 461.98%
increase.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY I: CL O 2.94% 2.64% 152.24% 464.55%
S&P 500 17.51% 17.94% 227.31% 461.98%
Lipper Growth Funds Average 29.97% 32.16% 213.63% 423.04%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY I: CL O 2.64% 20.33% 18.90%
$50/month 15-Year Plan -50.94% 15.99% 17.34%
S&P 500 17.94% 26.76% 18.84%
Lipper Growth Funds Average 32.16% 24.90% 17.43%
The charts above show Destiny I: Class O total returns, which include
changes in share price and reinvestment of dividends and capital
gains. The fund's cumulative total returns and average annual total
returns do not include the effects of the separate sales charges and
custodian fees assessed through Destiny Plans I: O (the Plans); the
figures provided for a "$50/month 15-year plan" illustrate the fund's
performance adjusted to reflect fees and sales charges assessed by the
Plans. The illustrations assume an initial investment at the beginning
of each period shown. Because the illustrations assume yearly lump sum
investments, they do not reflect what investors would have earned had
they made regular monthly investments over the period. As shares of
the funds may be acquired only through the Plans, investors should
consult the Plans' prospectus for more complete information on the
impact of the separate charges and fees applicable to each Plan. The
rate (%) of deductions decreases proportionately as Plan sizes
increase. Figures for the S&P 500, a market capitalization-weighted
index of common stocks, include reinvestment of dividends.
All performance numbers are historical; the fund's share price and
return will vary and you may have a gain or loss when you sell your
shares. Lipper's new comparison categories are listed on page 4.*
FIDELITY DESTINY PORTFOLIOS: DESTINY II: CLASS O
PERFORMANCE: THE BOTTOM LINE
$10,000 OVER 10 YEARS
Destiny II - CL O S&P 500
00306 SP001
1990/03/31 10000.00 10000.00
1990/04/30 9692.47 9750.00
1990/05/31 10799.59 10700.63
1990/06/30 10820.09 10627.86
1990/07/31 10435.67 10593.85
1990/08/31 9306.57 9636.17
1990/09/30 8611.97 9166.89
1990/10/31 8549.30 9127.47
1990/11/30 9426.68 9717.10
1990/12/31 9987.57 9988.21
1991/01/31 11109.00 10423.70
1991/02/28 11977.72 11168.99
1991/03/31 12356.79 11439.28
1991/04/30 12598.98 11466.73
1991/05/31 13315.01 11962.10
1991/06/30 12372.59 11414.23
1991/07/31 13241.30 11946.14
1991/08/31 13761.61 12229.26
1991/09/30 13526.61 12025.03
1991/10/31 13469.30 12186.17
1991/11/30 12598.09 11695.06
1991/12/31 14124.85 13032.98
1992/01/31 14396.95 12790.57
1992/02/29 15001.61 12956.84
1992/03/31 14542.07 12704.18
1992/04/30 15031.84 13077.69
1992/05/31 15261.61 13141.77
1992/06/30 14923.00 12945.96
1992/07/31 15521.62 13475.45
1992/08/31 15071.30 13199.20
1992/09/30 15117.81 13354.95
1992/10/31 15111.17 13401.69
1992/11/30 15868.72 13858.69
1992/12/31 16311.87 14029.15
1993/01/31 16875.07 14147.00
1993/02/28 16916.79 14339.40
1993/03/31 17626.00 14641.96
1993/04/30 17626.00 14287.62
1993/05/31 18237.87 14670.53
1993/06/30 18397.79 14713.07
1993/07/31 18571.61 14654.22
1993/08/31 19253.62 15209.62
1993/09/30 19304.27 15092.50
1993/10/31 20027.81 15404.92
1993/11/30 19948.22 15258.57
1993/12/31 20684.46 15443.20
1994/01/31 21987.24 15968.27
1994/02/28 21720.59 15535.53
1994/03/31 20661.60 14858.18
1994/04/30 21278.71 15048.36
1994/05/31 21431.08 15295.16
1994/06/30 20798.74 14920.43
1994/07/31 21476.79 15409.82
1994/08/31 22459.59 16041.62
1994/09/30 21751.06 15648.60
1994/10/31 22223.41 16000.69
1994/11/30 21514.88 15417.95
1994/12/31 21610.66 15646.60
1995/01/31 21837.04 16052.31
1995/02/28 22551.01 16677.87
1995/03/31 23160.50 17170.03
1995/04/30 24005.07 17675.69
1995/05/31 25084.74 18382.19
1995/06/30 25929.31 18809.21
1995/07/31 26817.42 19432.92
1995/08/31 27052.51 19481.70
1995/09/30 27618.46 20303.82
1995/10/31 27844.84 20231.34
1995/11/30 28602.34 21119.50
1995/12/31 29381.94 21526.26
1996/01/31 29931.13 22259.01
1996/02/29 29802.99 22465.35
1996/03/31 29702.30 22681.69
1996/04/30 30251.50 23016.02
1996/05/31 30883.07 23609.60
1996/06/30 31084.44 23699.56
1996/07/31 30178.27 22652.51
1996/08/31 30425.41 23130.25
1996/09/30 31880.77 24432.02
1996/10/31 33034.08 25105.86
1996/11/30 35532.92 27003.61
1996/12/31 34629.12 26468.67
1997/01/31 36269.60 28122.43
1997/02/28 36657.35 28342.91
1997/03/31 34808.08 27178.30
1997/04/30 36448.56 28800.84
1997/05/31 38715.41 30554.24
1997/06/30 39878.67 31923.07
1997/07/31 42831.54 34463.19
1997/08/31 41250.71 32532.56
1997/09/30 42950.84 34314.37
1997/10/31 42085.86 33168.27
1997/11/30 43636.86 34703.63
1997/12/31 44893.04 35299.49
1998/01/31 45055.81 35689.90
1998/02/28 48050.85 38263.86
1998/03/31 49580.93 40223.35
1998/04/30 49320.49 40628.00
1998/05/31 48701.95 39929.60
1998/06/30 51404.00 41551.54
1998/07/31 51827.21 41109.02
1998/08/31 43818.73 35165.48
1998/09/30 45804.57 37418.18
1998/10/31 49385.60 40461.77
1998/11/30 52706.19 42914.16
1998/12/31 57513.03 45386.87
1999/01/31 59571.39 47284.95
1999/02/28 58078.07 45815.34
1999/03/31 60580.39 47648.41
1999/04/30 61952.63 49493.83
1999/05/31 60217.15 48325.28
1999/06/30 63688.11 51007.33
1999/07/31 61831.55 49414.89
1999/08/31 60983.99 49170.28
1999/09/30 59571.39 47822.52
1999/10/31 62235.15 50848.73
1999/11/30 64939.28 51882.49
1999/12/31 72120.49 54938.37
2000/01/31 68789.81 52178.26
2000/02/29 71276.72 51190.53
2000/03/31 74651.82 56198.50
IMATRL PRASUN SHR__CHT 20000331 20000501 090100 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Destiny II: Class O on March 31, 1990. As the chart shows,
by March 31, 2000, the value of the investment would have grown to
$74,652 - a 646.52% increase on the initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $56,198 - a 461.98% increase.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY II: CL O 25.31% 23.23% 222.32% 646.52%
S&P 500 17.51% 17.94% 227.31% 461.98%
Lipper Growth Funds Average 29.97% 32.16% 213.63% 423.04%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
DESTINY II: CL O 23.23% 26.37% 22.27%
$50/month 15-Year Plan -41.06% 21.83% 20.67%
S&P 500 17.94% 26.76% 18.84%
Lipper Growth Funds Average 32.16% 24.90% 17.43%
The charts above show Destiny II: Class O total returns, which include
changes in share price and reinvestment of dividends and capital
gains. The fund's cumulative total returns and average annual total
returns do not include the effects of the separate sales charges and
custodian fees assessed through Destiny Plans II: O (the Plans); the
figures provided for a "$50/month 15-year plan" illustrate the fund's
performance adjusted to reflect fees and sales charges assessed by the
Plans. The illustrations assume an initial investment at the beginning
of each period shown. Because the illustrations assume yearly lump sum
investments, they do not reflect what investors would have earned had
they made regular monthly investments over the period. As shares of
the funds may be acquired by the general public only through the
Plans, investors should consult the Plans' prospectus for more
complete information on the impact of the separate charges and fees
applicable to each Plan. The rate (%) of deductions decreases
proportionately as Plan sizes increase. Figures for the S&P 500, a
market capitalization-weighted index of common stocks, include
reinvestment of dividends.
All performance numbers are historical; the fund's share price and
return will vary and you may have a gain or loss when you sell your
shares. Lipper's new comparison categories are listed on page 4.*
FIDELITY DESTINY PORTFOLIOS: DESTINY I & II: CLASS O
PERFORMANCE: THE BOTTOM LINE
To measure how the funds' performance stacked up against its peers,
you can compare it to the growth funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past six month average represents a peer group of 1,333
mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges. Lipper
has created new comparison categories that group funds according to
portfolio characteristics and capitalization, as well as by
capitalization only. These averages are listed below.
Destiny I: Class O
*THE LIPPER LARGE CAP VALUE FUNDS AVERAGE REFLECTS 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. AS OF MARCH 31, 2000, THE SIX
MONTH, ONE YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR
THE LARGE CAP VALUE FUNDS AVERAGE WERE, 9.84%, 9.37%, 154.02%, AND
325.27%, RESPECTIVELY; AND THE ONE YEAR, FIVE YEAR, AND 10 YEAR
AVERAGE ANNUAL TOTAL RETURNS WERE 9.37%, 20.30%, AND 15.41%,
RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR
CUMULATIVE TOTAL RETURNS FOR THE LARGE CAP SUPERGROUP AVERAGE WERE,
24.36%, 24.31%, 214.69%, AND 427.31%, RESPECTIVELY; AND THE ONE YEAR,
FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 24.31%,
25.21%, AND 17.70%, RESPECTIVELY.
Destiny II: Class O
*THE LIPPER LARGE CAP CORE FUNDS AVERAGE REFLECTS 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. AS OF MARCH 31, 2000, THE SIX
MONTH, ONE YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR
THE LARGE CAP CORE FUNDS AVERAGE WERE, 21.66%, 21.70%, 199.85%, AND
393.33%, RESPECTIVELY; AND THE ONE YEAR, FIVE YEAR, AND 10 YEAR
AVERAGE ANNUAL TOTAL RETURNS WERE 21.70%, 24.42%, AND 17.13%,
RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR
CUMULATIVE TOTAL RETURNS FOR THE LARGE CAP SUPERGROUP AVERAGE WERE,
24.36%, 24.31%, 214.69%, AND 427.31%, RESPECTIVELY; AND THE ONE YEAR,
FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 24.31%,
25.21%, AND 17.70%, RESPECTIVELY.
FIDELITY DESTINY PORTFOLIOS: DESTINY I
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Euphoria over technology stocks, perceived to
be the driving forces behind the new economy,
continued unabated during the majority of the
six-month period ending March 31, 2000. Investors
poured record amounts of new money into tech-
nology sector mutual funds during the period,
hoping to capture a percentage of the staggering
growth seen in many Internet-related companies,
even if they had yet to show profits. The high-
octane boost provided by these technology issues
helped propel the tech-heavy NASDAQ Index to a
66.69% gain during the period. The rise in many
small- and mid-cap stocks engaged in building
out the Internet infrastructure, in addition to many
biotechnology companies trying to decode the
human genetic structure, fueled a strong advance
in the Russell 2000(Registered trademark) Index - a popular measure
of small-cap stock performance - which rose
26.84%. Meanwhile, investors continued to shun
industrial stocks and value-oriented stocks as the
period progressed, particularly those in the
financial and health care sectors. The increasing gulf
between new economy stocks - as evidenced by
the return of the NASDAQ index - and old economy
stocks was apparent as the blue chips'
benchmark - the Dow Jones Industrial Average -
rose a more modest 6.44%. The Standard & Poor's
500SM Index - a measure of 500 commonly held
large-cap stocks - gained 17.51% during the
period. However, the divergence in U.S. equity
markets reversed course late in the period, as many
investors began to question the soaring valuations in
the technology sector and retreated to the more
established, blue-chip stocks. This turn to quality
was illustrated by the S&P 500(Registered trademark) index's 9.78%
return and the Dow's 7.97% return in March,
compared to a -2.62% loss in the NASDAQ index
during the month.
(photograph of Karen Firestone)
NOTE TO SHAREHOLDERS: Karen Firestone became Portfolio Manager of
Destiny I on February 1, 2000.
Q. HOW DID THE FUND PERFORM, KAREN?
A. For the six months that ended March 31, 2000, the fund's Class O
shares returned 2.94%, trailing the Standard & Poor's 500 Index, which
returned 17.51%. Fund performance also fell short of the growth funds
average tracked by Lipper Inc., which delivered a 29.97% return during
this same time frame. For the 12-month period that ended March 31,
2000, the fund's Class O shares' 2.64% return lagged the S&P 500 index
and the Lipper peer group, which posted returns of 17.94% and 32.16%,
respectively.
Q. WHAT WAS BEHIND THE FUND'S GENERALLY WEAK SHOWING OVER THE PAST SIX
MONTHS?
A. The fund's underweighting in technology relative to the index
sealed its fate, as stocks in this sector jumped 50% or higher on
average during the period. Our underexposure to names such as Oracle,
Nortel and Intel proved particularly damaging to relative performance.
Having out-of-benchmark interest in tech players such as LAM Research
- - a maker of semiconductor processing equipment - and electronic
products manufacturer SCI Systems helped, but we didn't hold enough of
the winners in this space to allow us to keep pace with our tech-heavy
peers throughout the period. The fund no longer held Nortel or SCI
Systems at the close of the period. Our heavy stake in financial
stocks such as Fannie Mae and FleetBoston also hurt returns, as rising
short-term interest rates and declining investor interest in the
sector drove share prices markedly lower.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STYLE?
A. I'm very revenue-growth oriented. I'm certainly more product and
sales growth driven than I am guided by cost-control, turnaround and
restructuring stories. The fund's former manager, George Vanderheiden,
to his credit, had a keen eye for restructuring situations that would
emerge over the long term, calling it right countless times over his
career. In contrast, I'd say my success has been tied more to
short-term results over the next product cycle, or the next year for
that matter. I'm a big believer in certain sectors of the market, such
as health care and media and leisure, where I've seen growth work over
the years. So, my bias has been and will continue to be toward growth,
but I overlay some valuation parameters on it. I'm just not willing to
pay any price for growth; there are constraints. Comparatively, I'd
say that George's tolerance level was even lower than mine in that
regard, which is perfectly reasonable. But, even though we share a
similar aversion to inordinate risk, I'm willing to pay a little bit
more for a stock if I feel that the growth is coming with it.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND ON FEBRUARY
1, 2000?
A. I boosted the fund's weighting in technology and communications
stocks and scaled back on our exposure to financial and industrial
issues. In so doing, I increased the overall capitalization and
average price to earnings, or P/E ratio, of the portfolio, while
scaling back the total number of stocks by about 25%. I didn't add
tech stocks indiscriminately, however. Ever watchful of risk, I was
careful to consider only those companies that I knew well and whose
growth prospects I believed in. Cisco, Intel, Nokia and Lucent are
good examples of the firms I invested in for their extremely favorable
risk/return profiles. In an effort to further manage risk, I held on
to some of the more stable, attractively priced financials with solid
earnings growth, such as Fannie Mae, which I felt was underappreciated
by the market.
Q. WHAT WAS YOUR STRATEGY IN TERMS OF MEDIA AND HEALTH CARE STOCKS?
A. Having spent a lot of time tracking media stocks, I've grown quite
familiar with the industry and its cycles. We experienced a very
strong advertising environment over the past year thanks to the
Internet, something I expected to continue. So, I added the
traditional media companies I thought were reasonably priced and in
the best position to benefit from this trend, namely CBS, FOX and The
New York Times. I also raised the fund's exposure to the world of
cable and wireless, through firms such as Cox Communications and
EchoStar, as plays on "new media" and the Net. Like my exposure to the
media sector, I feel my years covering companies in the health care
arena offered me an advantage picking stocks in this space. By
establishing positions in the fastest-growing emerging markets within
health care, such as biotechnology and genomics, we were able to
effectively balance some of the industrial and value-type names that
are traditional components of the fund. I felt it important that the
fund have some exposure to the compelling growth stories found in
names such as Human Genome and Immunex. I also felt that many of the
large pharmaceutical stocks, many of which languished in 1999, still
offered very consistent growth opportunities. There seemed to be a
negative bias in the market last year toward the big drug companies,
partly due to the impending election year - a nemesis for drug stocks
- - and partly attributable to their association with the old economy
image. So, although I added some of these stocks during the period, I
don't intend to raise the fund's stake any further in this area until
I feel sentiment is beginning to turn.
Q. WHICH STOCKS WORKED OUT WELL FOR THE FUND? WHICH DIDN'T?
A. Methode Electronics, a maker of electronic components and devices,
jumped higher on strong earnings reports and the announcement of its
intention to spin out its fiber-optics division. Other tech stocks
that added meaningfully to performance included Texas Instruments,
Juniper Networks, Metromedia Fiber Network and Altera. Home Depot was
rewarded for beating the Street's earnings expectations by wide
margins. Columbia/HCA Healthcare got a lift from rising admissions at
the company's hospitals, although I sold it prior to period end.
Looking downward, Philip Morris suffered from more bad news on the
legal front in terms of tobacco litigation. Freddie Mac, Bank of
America and MGIC Investment - a leading provider of private mortgage
insurance - were caught in the downdraft that kept financial stocks
grounded during the period. We didn't own Bank of America or MGIC
Investment at the close of the period. The fund's stake in
pharmaceutical giant Merck also detracted from returns.
Q. WHAT'S YOUR OUTLOOK?
A. I believe we'll continue to see volatility over the coming months,
with a lot of rotation among the various segments of the market. To
me, that emphasizes the importance of maintaining a balanced approach
in the fund, which would allow us to be somewhat defensive and
aggressive at the same time. When one side isn't working, the other
side is and, in the core of the portfolio, you have what you feel
strongly about and have conviction in over the long term. I will
continue to think seriously about where I want to push the envelope on
the growth extreme in terms of tech stocks. But my feeling right now
is that in this unforgiving market environment that seems to be
favoring the well-established, larger-cap tech stocks, I don't want to
push too hard.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER 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.
(checkmark)FUND FACTS
GOAL: seeks capital growth
START DATE: July 10, 1970
SIZE: as of March 31, 2000, more than $6.7 billion
MANAGER: Karen Firestone, since February 2000;
manager, Fidelity Advisor Large Cap Stock Fund,
since 1998; Fidelity Large Cap Stock Fund, since
1998; several Fidelity Select Portfolios, 1986-1997;
joined Fidelity in 1983
KAREN FIRESTONE ON THE CHALLENGES OF
FUND MANAGEMENT IN A MOMENTUM-DRIVEN
MARKET:
"The biggest challenge of managing through a
heavily momentum-driven market is resisting the
urge to dive in with all of the other fish and follow
the trend. So, what I try to do is be early, to not
worry about whether or not I'm selling a stock at
the top, and to pay close attention to what
valuation a company is selling for based on the
earnings picture and the underlying
fundamentals. Admittedly, it takes a lot of
discipline and guts to sell when everything seems
to be riding in your favor. You've got to mentally
review whether you still want to be there when
a stock is selling for 50 times revenue, and that's
not an easy task.
"I'll avoid a stock for which I cannot create a
model that justifies its value. I have to be able to
show myself or have someone walk me through
the story to prove that it warrants consideration.
The rationale can't be based solely on the fact
that every other company in this space sells at
that level. That makes no sense to me
whatsoever. What does make some sense is if I
can create a scenario in which a company's
revenues and profits will grow over time so that
its stock more than justifies the price. Only then
will I be willing to buy it. But, until I hear a logical
and rational explanation for doing so, I won't be
willing to make the commitment."
FIDELITY DESTINY PORTFOLIOS: DESTINY II
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Euphoria over technology stocks, perceived to
be the driving forces behind the new economy,
continued unabated during the majority of the
six-month period ending March 31, 2000. Investors
poured record amounts of new money into tech-
nology sector mutual funds during the period,
hoping to capture a percentage of the staggering
growth seen in many Internet-related companies,
even if they had yet to show profits. The high-
octane boost provided by these technology issues
helped propel the tech-heavy NASDAQ Index to a
66.69% gain during the period. The rise in many
small- and mid-cap stocks engaged in building
out the Internet infrastructure, in addition to many
biotechnology companies trying to decode the
human genetic structure, fueled a strong advance
in the Russell 2000(Registered trademark) Index - a popular measure
of small-cap stock performance - which rose
26.84%. Meanwhile, investors continued to shun
industrial stocks and value-oriented stocks as the
period progressed, particularly those in the
financial and health care sectors. The increasing gulf
between new economy stocks - as evidenced by
the return of the NASDAQ index - and old economy
stocks was apparent as the blue chips'
benchmark - the Dow Jones Industrial Average -
rose a more modest 6.44%. The Standard & Poor's
500SM Index - a measure of 500 commonly held
large-cap stocks - gained 17.51% during the
period. However, the divergence in U.S. equity
markets reversed course late in the period, as many
investors began to question the soaring valuations in
the technology sector and retreated to the more
established, blue-chip stocks. This turn to quality
was illustrated by the S&P 500(Registered trademark) index's 9.78%
return and the Dow's 7.97% return in March,
compared to a -2.62% loss in the NASDAQ index
during the month.
(photograph of Beth Terrana)
An interview with Beth Terrana, Portfolio Manager of Destiny II
Q. HOW DID THE FUND PERFORM OVER THE PAST SIX MONTHS, BETH?
A. The fund performed extremely well relative to the Standard & Poor's
500 Index, but not quite as well as its growth fund peers. For the
six-month period ending March 31, 2000, the fund's Class O shares
returned 25.31%. This outdistanced the Standard & Poor's 500 Index,
which returned 17.51%, but, as I mentioned, fell short of the growth
funds average tracked by Lipper Inc., which gained 29.97% over the
past six months. For the 12-month period ending March 31, 2000, the
fund's Class O shares returned 23.23%, again outdistancing the S&P
500, which returned 17.94%, but trailing the growth funds average of
32.16%.
Q. WHAT WERE SOME OF THE FACTORS THAT CONTRIBUTED TO THE FUND'S
OUTPERFORMANCE OF THE S&P 500 INDEX DURING THE SIX-MONTH PERIOD?
A. Strong stock picking in utilities - more specifically, the wireless
segment - was the largest contributor relative to the index. As
mentioned in my report to shareholders six months ago, I felt the
prospects for the wireless sector were very positive. At that point,
the utilities category was only the sixth-largest sector weighting in
the fund; by the end of this period, however, utilities was the
second-largest sector weighting. Winners in that sector include Nokia,
Motorola and China Telecom, which were among the strongest-performing
stocks for the fund. Another significant contributor to performance
was underweighting the poorly performing nondurables sector.
Nondurables are extremely interest-rate sensitive and, by holding a
roughly one-third market weighting in this sector, the fund was able
to avoid most of the damage from the losses incurred by Procter &
Gamble and Coca-Cola. The fund no longer held Coca-Cola at the end of
the period. Some solid stock picks in the health care sector also
benefited the fund. While health care struggled throughout much of
1999, pharmaceuticals in particular, the sector exhibited renewed
signs of strength in the first quarter of 2000, primarily within the
realm of biotechnology. Genentech, a leading biotechnology company
that develops, manufactures and markets pharmaceuticals for a variety
of medical needs, saw its stock price increase more than 100% during
the course of the period and was one of the fund's best-performing
stocks.
Q. OF COURSE, ONE CAN'T TALK ABOUT THE PAST SIX MONTHS WITHOUT SOME
MENTION OF TECHNOLOGY. HOW DID THE FUND'S EXPOSURE TO THAT SECTOR
AFFECT PERFORMANCE?
A. Technology was a significant part of the fund, both in terms of
performance and positioning. I increased the fund's technology sector
dramatically during the past six months, beginning the period with
about 20% of net assets in the sector and ending with a tech exposure
of over 37%. This strategy was especially beneficial to the fund's
returns. While recognizing that valuations were high for many
technology stocks, I found a number of companies where I could make a
compelling case for continued high earnings growth as well as
improvements in profitability and return on assets. Cisco and Texas
Instruments were two of the fund's best performers during the period,
as was SCI Systems, an electronics manufacturer that provides products
and systems to a variety of aerospace, commercial and industrial
customers.
Q. WHAT CAUSED THE FUND TO UNDERPERFORM ITS GROWTH FUND PEERS?
A. While the fund had a higher weighting in technology than the S&P
500 index by the end of the period, its growth fund peers were even
more aggressive in their tech exposure. And, of course, technology is
what really drove the market for most of the past six months.
Q. WHAT OTHER STRATEGIES DID YOU USE TO BOOST THE FUND'S PERFORMANCE?
A. Underweighting the lagging finance sector relative to the S&P 500
enhanced Destiny II's performance. Rising interest rates took their
toll on most of this sector. But that was just one of its problems.
Overall, I felt the fundamentals of the finance sector deteriorated.
Revenue growth slowed, credit risk was on the rise and many banks
poorly executed the integration of recent mergers.
Q. WHAT STOCKS DID NOT PERFORM AS WELL AS YOU HAD HOPED?
A. Fortunately, the fund had no real blow-ups. But there were several
disappointments, including Schering-Plough and Lucent, two of the
fund's larger holdings. After 15 straight quarters of upside earnings
since going public in 1996, Lucent's earnings fell 30% in the fourth
quarter of 1999 when it underestimated demand for bandwidth.
Meanwhile, Schering-Plough fell on slower earnings growth rates.
Unisys was another disappointment. Early in the period, it
preannounced future weakness in revenues on Y2K concerns and saw its
stock price drop from $42 to $26 in a single day.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS, BETH?
A. I think the U.S. market is in for a very bumpy ride for the
remainder of 2000. Valuations are still extreme, and I expect the
volatility we saw toward the end of the period to continue. Even as we
determine how successfully traditional companies transform their
businesses to the world of e-commerce, there's still the problem of
excess global capacity, which raises questions about profitability in
many industries. Who the winners are will be difficult to gauge. The
Japanese market also has been struggling. And if the U.S. stock market
weakens, the Japanese market, which is very NASDAQ-sensitive, could
follow. Overall, this is one of the toughest periods I've ever been
through. But I still believe the best areas for growth are in
technology and telecommunications. That's where I plan on focusing the
majority of my attention in the months ahead.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER 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.
(checkmark)FUND FACTS
GOAL: seeks capital growth
START DATE: December 30, 1985
SIZE: as of March 31, 2000,
more than $6.5 billion
MANAGER: Beth Terrana, since 1998; manager,
Fidelity Fund, since 1993; Fidelity Advisor
Growth & Income Fund, since 1996; Fidelity
Equity Income Fund, 1990-1993; Fidelity Growth
& Income Fund, 1985-1990; joined Fidelity in
1983
NOTE TO SHAREHOLDERS:
Effective June 1, 2000, Adam Hetnarski will become portfolio manager
of Destiny II.
BETH TERRANA ON THE GROWING IMPORTANCE
OF TECHNOLOGY:
"Over the past five years new advances and
improvements in technology, as in the case of
the Internet, have changed the world
tremendously. These innovations have had an
extraordinary impact on how we work, how we
communicate, how we access information . . . the
list goes on. With that, it also has changed the
way in which I analyze companies and stocks.
Today, across all sectors, our assessment of how
well a particular company has harnessed the
power of technology - particularly the Internet -
is part of the analysis I use in every investment
decision I make. That was not the case five years
ago.
"Today, the Internet matters to every company,
not just the providers of key technologies or the
infrastructure suppliers. It's just as critical for the
more traditional businesses to evolve their
business models and practices to utilize the
Internet effectively. The ones that are successful
in this regard are the ones that will emerge as the
winners. And that's where I'm focusing more time
and energy than ever - analyzing and
researching who the eventual winners will be.
"Technology also has leveled the corporate playing
field to a greater extent than ever. Now every
company can reap the benefits of technology
without exorbitant capital expenditures, so small
companies can compete quite more effectively with
larger corporations. Also, thanks in large part to
technology, small companies can become big
companies very quickly. That forces me to be more
nimble than ever. But that's what it takes today.
And that's what I will continue to do to ensure that
my investment decisions are as informed as they
can possibly be."
INVESTMENT CHANGES
TOP TEN EQUITY HOLDINGS - DESTINY I
AS OF MARCH 31, 2000 AS OF SEPTEMBER 30, 1999
Cisco Systems, Inc. Fannie Mae
Microsoft Corp. Philip Morris Companies, Inc.
Intel Corp. Freddie Mac
General Electric Co. Fleet Financial Group, Inc.
Fannie Mae Solectron Corp.
Lucent Technologies, Inc. Home Depot, Inc.
Texas Instruments, Inc. Columbia/HCA Healthcare Corp.
Home Depot, Inc. Vodafone AirTouch PLC
sponsored ADR
Wal-Mart Stores, Inc. MCI WorldCom, Inc.
Bristol-Myers Squibb Co. General Motors Corp.
TOP TEN EQUITY HOLDINGS - DESTINY II
AS OF MARCH 31, 2000 AS OF SEPTEMBER 30, 1999
General Electric Co. General Electric Co.
Cisco Systems, Inc. Microsoft Corp.
Microsoft Corp. Chase Manhattan Corp.
Texas Instruments, Inc. International Business
Machines Corp.
Chase Manhattan Corp. Tyco International Ltd.
Nokia AB sponsored ADR American Express Co.
Home Depot, Inc. Citigroup, Inc.
Sun Microsystems, Inc. Cisco Systems, Inc.
American Express Co. Lucent Technologies, Inc.
Warner-Lambert Co. Exxon Corp.
<TABLE>
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TOP FIVE MARKET SECTORS - DESTINY I
AS OF MARCH 31, 2000 % OF FUND'S NET ASSETS AS OF SEPTEMBER 30, 1999 % OF FUND'S NET ASSETS
Technology 40.8% Finance 20.7%
Health 11.3% Technology 12.4%
Media & Leisure 10.1% Health 9.4%
Finance 10.0% Energy 8.1%
Industrial Machinery & 6.7% Retail & Wholesale 7.6%
Equipment
</TABLE>
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TOP FIVE MARKET SECTORS - DESTINY II
AS OF MARCH 31, 2000 % OF FUND'S NET ASSETS AS OF SEPTEMBER 30, 1999 % OF FUND'S NET ASSETS
Technology 37.1% Technology 20.1%
Utilities 12.2% Finance 10.8%
Finance 11.0% Industrial Machinery & 9.1%
Equipment
Media & Leisure 8.6% Media & Leisure 9.0%
Health 8.0% Health 8.7%
</TABLE>
FIDELITY DESTINY PORTFOLIOS: DESTINY I
INVESTMENTS MARCH 31, 2000 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 99.1%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
Boeing Co. 702,050 $ 26,634,022
United Technologies Corp. 688,400 43,498,275
70,132,297
BASIC INDUSTRIES - 1.1%
CHEMICALS & PLASTICS - 0.1%
Lyondell Chemical Co. 30,000 442,500
Union Carbide Corp. 140,400 8,187,075
8,629,575
PACKAGING & CONTAINERS - 1.0%
Corning, Inc. 263,100 51,041,400
Owens-Illinois, Inc. (a) 950,500 16,039,688
67,081,088
TOTAL BASIC INDUSTRIES 75,710,663
CONSTRUCTION & REAL ESTATE -
0.0%
CONSTRUCTION - 0.0%
Kaufman & Broad Home Corp. 48,100 1,031,144
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES -
0.1%
Barrett Resources Corp. (a) 324,600 9,677,138
CONSUMER DURABLES - 0.6%
Minnesota Mining & 436,400 38,648,675
Manufacturing Co.
CONSUMER ELECTRONICS - 0.6%
Sony Corp. sponsored ADR 74,400 20,841,300
The Swatch Group AG (Reg.) 77,200 18,207,000
39,048,300
TOTAL DURABLES 87,374,113
ENERGY - 2.1%
ENERGY SERVICES - 1.0%
Halliburton Co. 689,700 28,277,700
Schlumberger Ltd. 514,400 39,351,600
67,629,300
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - 1.1%
Chevron Corp. 351,100 $ 32,454,806
Exxon Mobil Corp. 557,700 43,396,031
75,850,837
TOTAL ENERGY 143,480,137
FINANCE - 10.0%
BANKS - 1.3%
FleetBoston Financial Corp. 1,850,069 67,527,519
State Street Corp. 214,800 20,808,750
88,336,269
CREDIT & OTHER FINANCE - 2.2%
American Express Co. 379,500 56,521,781
Associates First Capital 1,526,000 32,713,625
Corp. Class A
Citigroup, Inc. 1,072,100 63,588,931
152,824,337
FEDERAL SPONSORED CREDIT - 3.2%
Fannie Mae 3,125,000 176,367,188
Freddie Mac 897,500 39,658,281
216,025,469
INSURANCE - 1.8%
American International Group, 703,843 77,070,809
Inc.
Marsh & McLennan Companies, 250,500 27,633,281
Inc.
The Chubb Corp. 221,000 14,931,313
119,635,403
SECURITIES INDUSTRY - 1.5%
Charles Schwab Corp. 613,400 34,848,788
Goldman Sachs Group, Inc. 234,100 24,609,763
Morgan Stanley Dean Witter & 341,000 27,812,813
Co.
The Bear Stearns Companies, 316,000 14,417,500
Inc.
101,688,864
TOTAL FINANCE 678,510,342
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - 11.3%
DRUGS & PHARMACEUTICALS - 10.0%
Alkermes, Inc. (a) 164,400 $ 15,207,000
Amgen, Inc. (a) 607,100 37,260,763
Ariad Pharmaceuticals, Inc. 722,700 11,518,031
(a)
Arqule, Inc. (a) 482,600 6,515,100
Bristol-Myers Squibb Co. 1,901,100 109,788,525
Cell Therapeutics, Inc. (a) 658,000 15,421,875
Cephalon, Inc. (a) 501,400 18,802,500
Eli Lilly & Co. 458,000 28,854,000
Enzon, Inc. (a) 316,400 11,924,325
Gilead Sciences, Inc. (a) 82,700 5,241,113
Human Genome Sciences, Inc. 248,800 20,665,950
(a)
Immunex Corp. (a) 598,500 37,967,344
Merck & Co., Inc. 1,627,600 101,114,650
Millennium Pharmaceuticals, 298,500 38,767,688
Inc. (a)
Pfizer, Inc. 581,200 21,250,125
Protein Design Labs, Inc. (a) 159,750 12,700,125
QLT PhotoTherapeutics, Inc. 272,700 14,866,163
(a)
Roche Holding AG 1,800 19,533,123
participation certificates
Schering-Plough Corp. 1,610,100 59,171,175
Ventana Medical Systems, Inc. 236,200 10,200,888
(a)
Warner-Lambert Co. 833,000 81,217,500
677,987,963
MEDICAL EQUIPMENT & SUPPLIES
- - 1.3%
Arrow International, Inc. 78,700 2,469,213
Johnson & Johnson 737,300 51,657,081
Medtronic, Inc. 647,900 33,326,356
87,452,650
TOTAL HEALTH 765,440,613
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.7%
ELECTRICAL EQUIPMENT - 5.9%
Emerson Electric Co. 671,500 35,505,563
Furukawa Electric Co. Ltd. 1,341,000 22,507,663
General Electric Co. 1,990,000 308,823,125
NDS Group PLC sponsored ADR 129,400 9,122,700
Omron Corp. 670,000 19,035,758
394,994,809
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.8%
Illinois Tool Works, Inc. 400,400 $ 22,122,100
Ingersoll-Rand Co. 776,300 34,351,275
56,473,375
TOTAL INDUSTRIAL MACHINERY & 451,468,184
EQUIPMENT
MEDIA & LEISURE - 10.1%
BROADCASTING - 6.4%
AT&T Corp. - Liberty Media 945,592 56,026,326
Group Class A (a)
Audiofina 118,500 14,551,921
Cablevision Systems Corp. 392,300 23,832,225
Class A (a)
Carlton Communications PLC 1,770,200 21,446,230
CBS Corp. (a) 871,300 49,337,363
Chris-Craft Industries, Inc. 1,860 118,459
Comcast Corp. Class A 845,100 36,656,213
(special)
Cox Communications, Inc. 760,700 36,893,950
Class A (a)
EchoStar Communications Corp. 218,900 17,293,100
Class A (a)
Grupo Televisa SA de CV 494,700 33,639,600
sponsored ADR (a)
Infinity Broadcasting Corp. 783,700 25,372,288
Class A (a)
Societe Europeen Des 115,895 20,212,798
Satellite unit
Television Francaise 1 SA 27,622 20,325,663
Time Warner, Inc. 768,100 76,810,000
432,516,136
ENTERTAINMENT - 2.1%
Fox Entertainment Group, Inc. 925,200 27,698,175
Class A (a)
Ticketmaster Online 774,400 19,408,400
CitySearch, Inc. (a)
Walt Disney Co. 2,376,700 98,335,963
145,442,538
PUBLISHING - 0.8%
The New York Times Co. Class A 1,310,500 56,269,594
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.8%
McDonald's Corp. 1,368,600 $ 51,408,038
TOTAL MEDIA & LEISURE 685,636,306
NONDURABLES - 3.7%
BEVERAGES - 1.6%
Anheuser-Busch Companies, 684,000 42,579,000
Inc.
Seagram Co. Ltd. 288,500 17,140,979
The Coca-Cola Co. 1,058,300 49,673,956
109,393,935
FOODS - 0.6%
H.J. Heinz Co. 385,500 13,444,313
Quaker Oats Co. 436,800 26,481,000
39,925,313
HOUSEHOLD PRODUCTS - 1.2%
Gillette Co. 939,000 35,388,563
Procter & Gamble Co. 778,100 43,768,125
79,156,688
TOBACCO - 0.3%
Philip Morris Companies, Inc. 875,800 18,501,275
TOTAL NONDURABLES 246,977,211
PRECIOUS METALS - 0.2%
Newmont Mining Corp. 459,000 10,298,813
RETAIL & WHOLESALE - 3.4%
GENERAL MERCHANDISE STORES -
1.8%
Costco Wholesale Corp. (a) 156,400 8,220,775
Wal-Mart Stores, Inc. 1,997,200 110,844,600
119,065,375
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.6%
Home Depot, Inc. 1,728,000 111,456,000
TOTAL RETAIL & WHOLESALE 230,521,375
SERVICES - 1.9%
ADVERTISING - 1.9%
DoubleClick, Inc. (a) 170,300 15,944,338
Omnicom Group, Inc. 316,600 29,582,313
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
ADVERTISING - CONTINUED
TMP Worldwide, Inc. (a) 504,700 $ 39,240,425
WPP Group PLC sponsored ADR 465,800 40,408,150
125,175,226
TECHNOLOGY - 40.8%
COMMUNICATIONS EQUIPMENT - 7.9%
Cisco Systems, Inc. (a) 4,893,200 378,305,507
Lucent Technologies, Inc. 1,952,800 118,632,600
Nokia AB sponsored ADR 111,300 24,179,925
UTStarcom, Inc. 210,600 16,439,963
537,557,995
COMPUTER SERVICES & SOFTWARE
- - 12.1%
Aether Systems, Inc. 56,200 10,200,300
Affymetrix, Inc. (a) 81,000 12,023,438
America Online, Inc. (a) 1,009,600 67,895,600
Automatic Data Processing, 1,247,200 60,177,400
Inc.
Be Free, Inc. 405,500 8,921,000
BEA Systems, Inc. (a) 224,500 16,472,688
Citrix Systems, Inc. (a) 381,700 25,287,625
CNET Networks, Inc. (a) 372,900 18,901,369
Commerce One, Inc. 100,600 15,014,550
Exodus Communications, Inc. 152,600 21,440,300
(a)
First Data Corp. 526,400 23,293,200
GoTo.com, Inc. 295,900 12,150,394
Intuit, Inc. (a) 142,600 7,753,875
Juno Online Services, Inc. 362,100 5,703,075
Lycos, Inc. (a) 270,300 18,988,575
Microsoft Corp. (a) 3,105,700 329,980,625
Oracle Corp. (a) 409,900 31,997,819
Priceline.com, Inc. 190,500 15,240,000
Puma Technology, Inc. (a) 140,800 7,128,000
Trans Cosmos, Inc. 44,900 12,669,424
Verio, Inc. (a) 160,600 7,237,038
VERITAS Software Corp. (a) 87,800 11,501,800
Vignette Corp. 110,700 17,739,675
Yahoo!, Inc. (a) 335,900 57,564,863
815,282,633
COMPUTERS & OFFICE EQUIPMENT
- - 7.8%
Brocade Communications 81,300 14,578,106
Systems, Inc.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Comdisco, Inc. 350,800 $ 15,479,050
Dell Computer Corp. (a) 1,949,000 105,124,188
EMC Corp. (a) 778,300 97,287,500
Hewlett-Packard Co. 476,400 63,152,775
International Business 732,400 86,423,200
Machines Corp.
Juniper Networks, Inc. 69,600 18,343,950
Lexmark International Group, 131,200 13,874,400
Inc. Class A (a)
Network Appliance, Inc. (a) 109,700 9,077,675
RSA Security, Inc. (a) 229,500 11,890,969
Sun Microsystems, Inc. (a) 996,400 93,365,794
528,597,607
ELECTRONIC INSTRUMENTS - 1.3%
Agilent Technologies, Inc. 339,900 35,349,600
Applied Materials, Inc. (a) 176,600 16,644,550
LAM Research Corp. (a) 859,700 38,740,231
90,734,381
ELECTRONICS - 11.7%
Altera Corp. (a) 503,700 44,955,225
Chartered Semiconduct 273,300 25,758,525
Manufacturing Ltd. ADR
GlobeSpan, Inc. 125,200 12,762,575
Infineon Technologies AG (a) 13,000 706,273
Inktomi Corp. (a) 25,300 4,933,500
Intel Corp. 2,384,900 314,657,744
Linear Technology Corp. 549,200 30,206,000
LSI Logic Corp. (a) 350,900 25,484,113
Methode Electronics, Inc. 390,000 19,695,000
Class A
Micron Technology, Inc. (a) 131,220 16,533,720
Motorola, Inc. 745,600 106,154,800
PMC-Sierra, Inc. (a) 79,500 16,193,156
Samsung Electronics Co. Ltd. 73,800 22,368,703
Solectron Corp. (a) 132,600 5,312,288
Texas Instruments, Inc. 728,800 116,608,000
Vitesse Semiconductor Corp. 187,200 18,018,000
(a)
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
World Access, Inc. (a) 636,800 $ 12,178,800
792,526,422
TOTAL TECHNOLOGY 2,764,699,038
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.1%
Travelocity.com, Inc. (a) 196,500 5,772,188
TRUCKING & FREIGHT - 0.5%
United Parcel Service, Inc. 567,300 35,739,900
Class B
TOTAL TRANSPORTATION 41,512,088
UTILITIES - 4.9%
CELLULAR - 1.9%
Nextel Communications, Inc. 218,600 32,407,450
Class A (a)
Powertel, Inc. (a) 245,000 16,950,938
QUALCOMM, Inc. (a) 70,800 10,571,325
Sprint Corp. - PCS Group 404,400 26,412,375
Series 1 (a)
Vodafone AirTouch PLC 5,961,321 33,122,624
Western Wireless Corp. Class A 193,600 8,869,300
128,334,012
ELECTRIC UTILITY - 0.8%
AES Corp. (a) 352,300 27,743,625
Calpine Corp. (a) 292,600 27,504,400
55,248,025
TELEPHONE SERVICES - 2.2%
Allegiance Telecom, Inc. (a) 217,550 17,539,969
AT&T Corp. 481,478 27,083,138
DDI Corp. 1,059 8,645,109
Focal Communications Corp. 182,000 10,192,000
MCI WorldCom, Inc. (a) 291,117 13,191,239
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Metromedia Fiber Network, 473,500 $ 45,811,125
Inc. Class A (a)
SBC Communications, Inc. 597,800 25,107,600
147,570,180
TOTAL UTILITIES 331,152,217
TOTAL COMMON STOCKS 6,709,119,767
(Cost $5,602,485,596)
CASH EQUIVALENTS - 1.1%
Taxable Central Cash Fund, 75,964,420 75,964,420
5.85% (b) (Cost $75,964,420)
TOTAL INVESTMENT PORTFOLIO - 6,785,084,187
100.2%
(Cost $5,678,450,016)
NET OTHER ASSETS - (0.2)% (14,670,640)
NET ASSETS - 100% $ 6,770,413,547
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
INCOME TAX INFORMATION
At March 31, 2000, the aggregate cost of investment securities for
income tax purposes was $5,716,523,636. Net unrealized appreciation
aggregated $1,068,560,551, of which $1,477,903,011 related to
appreciated investment securities and $409,342,460 related to
depreciated investment securities.
FIDELITY DESTINY PORTFOLIOS: DESTINY I
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 6,785,084,187
value (cost $5,678,450,016)
- - See accompanying schedule
Receivable for investments 165,911,635
sold
Receivable for fund shares 420,010
sold
Dividends receivable 4,373,332
Interest receivable 535,982
Other receivables 1,058,327
TOTAL ASSETS 6,957,383,473
LIABILITIES
Payable for investments $ 148,648,482
purchased
Payable for fund shares 5,145,828
redeemed
Accrued management fee 1,418,922
Distribution fees payable 204
Other payables and accrued 303,690
expenses
Collateral on securities 31,452,800
loaned, at value
TOTAL LIABILITIES 186,969,926
NET ASSETS $ 6,770,413,547
Net Assets consist of:
Paid in capital $ 4,450,870,777
Undistributed net investment 9,929,754
income
Accumulated undistributed net 1,203,006,451
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,106,606,565
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 6,770,413,547
CLASS O: NET ASSET VALUE, $23.50
offering price and
redemption price per share
($6,769,310,698 (divided by)
288,104,788 shares)
CLASS N: NET ASSET VALUE, $23.38
offering price and
redemption price per share
($1,102,849 (divided by)
47,171 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31,
2000 (UNAUDITED)
INVESTMENT INCOME $ 30,951,819
Dividends
Interest 17,639,324
Security lending 76,554
TOTAL INCOME 48,667,697
EXPENSES
Management fee Basic fee $ 15,586,213
Performance adjustment (6,520,628)
Transfer agent fees 230,263
Distribution fees 706
Accounting and security 422,047
lending fees
Non-interested trustees' 9,085
compensation
Custodian fees and expenses 117,173
Registration fees 18,901
Audit 20,151
Legal 38,879
Interest 3,396
Miscellaneous 37,726
Total expenses before 9,963,912
reductions
Expense reductions (807,209) 9,156,703
NET INVESTMENT INCOME 39,510,994
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,231,779,813
Foreign currency transactions (74,806) 1,231,705,007
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,065,692,608)
Assets and liabilities in (19,813) (1,065,712,421)
foreign currencies
NET GAIN (LOSS) 165,992,586
NET INCREASE (DECREASE) IN $ 205,503,580
NET ASSETS RESULTING FROM
OPERATIONS
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STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1999
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 39,510,994 $ 111,568,555
income
Net realized gain (loss) 1,231,705,007 979,781,946
Change in net unrealized (1,065,712,421) 90,347,540
appreciation (depreciation)
NET INCREASE (DECREASE) IN 205,503,580 1,181,698,041
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (114,849,977) (105,484,207)
From net investment income
From net realized gain (897,917,070) (544,915,685)
TOTAL DISTRIBUTIONS (1,012,767,047) (650,399,892)
Share transactions - net 600,266,460 240,053,910
increase (decrease)
TOTAL INCREASE (DECREASE) (206,997,007) 771,352,059
IN NET ASSETS
NET ASSETS
Beginning of period 6,977,410,554 6,206,058,495
End of period (including $ 6,770,413,547 $ 6,977,410,554
undistributed net investment
income of $9,929,754 and
$88,705,313, respectively)
</TABLE>
<TABLE>
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FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
SIX MONTHS ENDED MARCH 31, 1999 1998 1997 1996
2000 (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.54 $ 24.58 $ 25.08 $ 20.41 $ 18.78
period
Income from Investment
Operations
Net investment income .14 D .42 D .44 D .49 D .45
Net realized and unrealized .70 4.13 1.56 6.36 2.42
gain (loss)
Total from investment .84 4.55 2.00 6.85 2.87
operations
Less Distributions
From net investment income (.44) (.42) (.47) (.45) (.43)
From net realized gain (3.44) (2.17) (2.03) (1.73) (.81)
Total distributions (3.88) (2.59) (2.50) (2.18) (1.24)
Net asset value, end of period $ 23.50 $ 26.54 $ 24.58 $ 25.08 $ 20.41
TOTAL RETURN B, C 2.94% 18.99% 8.72% 36.29% 16.04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 6,769,311 $ 6,977,155 $ 6,206,058 $ 5,960,742 $ 4,565,482
(000 omitted)
Ratio of expenses to average .28% A .32% .33% .39% .65%
net assets
Ratio of expenses to average .26% A, E .31% E .33% .38% E .65%
net assets after expense
reductions
Ratio of net investment 1.13% A 1.55% 1.71% 2.20% 2.40%
income to average net assets
Portfolio turnover 206% A 36% 27% 32% 42%
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<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 17.70
period
Income from Investment
Operations
Net investment income .41
Net realized and unrealized 3.54
gain (loss)
Total from investment 3.95
operations
Less Distributions
From net investment income (.34)
From net realized gain (2.53)
Total distributions (2.87)
Net asset value, end of period $ 18.78
TOTAL RETURN B, C 27.49%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,053,389
(000 omitted)
Ratio of expenses to average .68%
net assets
Ratio of expenses to average .68%
net assets after expense
reductions
Ratio of net investment 2.35%
income to average net assets
Portfolio turnover 55%
</TABLE>
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 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>
FINANCIAL HIGHLIGHTS - CLASS N
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, 1999 E
2000 (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.45 $ 27.76
period
Income from Investment
Operations
Net investment income D .03 .08
Net realized and unrealized .70 (1.39) G
gain (loss)
Total from investment .73 (1.31)
operations
Less Distributions
From net investment income (.36) -
From net realized gain (3.44) -
Total distributions (3.80) -
Net asset value, end of period $ 23.38 $ 26.45
TOTAL RETURN B, C 2.51% (4.72)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,103 $ 256
(000 omitted)
Ratio of expenses to average 1.14% A 1.18% A
net assets
Ratio of expenses to average 1.11% A, F 1.17% A, F
net assets after expense
reductions
Ratio of net investment .27% A .68% A
income to average net assets
Portfolio turnover 206% A 36%
</TABLE>
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.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
INVESTMENTS MARCH 31, 2000 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. 590,600 $ 22,405,888
British Aerospace PLC 309,974 1,748,066
Textron, Inc. 171,400 10,433,975
34,587,929
SHIP BUILDING & REPAIR - 0.3%
General Dynamics Corp. 367,600 18,288,100
TOTAL AEROSPACE & DEFENSE 52,876,029
BASIC INDUSTRIES - 0.5%
CHEMICALS & PLASTICS - 0.2%
Praxair, Inc. 370,200 15,409,575
METALS & MINING - 0.3%
Alcoa, Inc. 252,000 17,703,000
PACKAGING & CONTAINERS - 0.0%
Owens-Illinois, Inc. (a) 85,020 1,434,713
TOTAL BASIC INDUSTRIES 34,547,288
CONSTRUCTION & REAL ESTATE -
0.2%
BUILDING MATERIALS - 0.1%
Masco Corp. 217,000 4,448,500
ENGINEERING - 0.1%
Fluor Corp. 191,500 5,936,500
TOTAL CONSTRUCTION & REAL 10,385,000
ESTATE
DURABLES - 1.6%
AUTOS, TIRES, & ACCESSORIES -
0.9%
Danaher Corp. 395,400 20,165,400
Delphi Automotive Systems 1,527,500 24,440,000
Corp.
General Motors Corp. 165,000 13,664,063
58,269,463
CONSUMER ELECTRONICS - 0.6%
Sony Corp. 258,800 36,248,176
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
HOME FURNISHINGS - 0.1%
Leggett & Platt, Inc. 368,400 $ 7,920,600
TOTAL DURABLES 102,438,239
ENERGY - 1.9%
OIL & GAS - 1.9%
BP Amoco PLC sponsored ADR 307,812 16,333,274
Exxon Mobil Corp. 849,466 66,099,073
Royal Dutch Petroleum Co. 742,800 42,757,425
(NY Shares)
125,189,772
FINANCE - 10.8%
BANKS - 2.9%
Bank of New York Co., Inc. 1,038,640 43,168,475
Chase Manhattan Corp. 1,583,300 138,043,969
U.S. Bancorp 421,600 9,222,500
190,434,944
CREDIT & OTHER FINANCE - 2.9%
American Express Co. 612,400 91,209,325
Associates First Capital 425,700 9,125,944
Corp. Class A
Citigroup, Inc. 1,501,950 89,084,409
189,419,678
FEDERAL SPONSORED CREDIT - 0.7%
Fannie Mae 435,400 24,572,888
Freddie Mac 512,600 22,650,513
47,223,401
INSURANCE - 1.6%
AFLAC, Inc. 320,200 14,589,113
American International Group, 805,221 88,171,700
Inc.
102,760,813
SECURITIES INDUSTRY - 2.7%
Daiwa Securities Group, Inc. 2,377,000 44,637,413
Merrill Lynch & Co., Inc. 192,000 20,160,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Morgan Stanley Dean Witter & 813,600 $ 66,359,250
Co.
Nikko Securities Co. Ltd. 3,114,000 47,084,954
178,241,617
TOTAL FINANCE 708,080,453
HEALTH - 8.0%
DRUGS & PHARMACEUTICALS - 7.2%
Allergan, Inc. 39,300 1,965,000
American Home Products Corp. 509,300 27,311,213
Amgen, Inc. (a) 527,800 32,393,725
Biogen, Inc. (a) 50,700 3,542,663
Bristol-Myers Squibb Co. 1,353,500 78,164,625
Elan Corp. PLC sponsored ADR 18,400 874,000
(a)
Eli Lilly & Co. 1,254,200 79,014,600
Genentech, Inc. 341,600 51,923,200
Merck & Co., Inc. 337,900 20,992,038
Millennium Pharmaceuticals, 42,600 5,532,675
Inc. (a)
PE Corp. - Celera Genomics 46,900 4,294,281
Group (a)
Pfizer, Inc. 31,100 1,137,094
Schering-Plough Corp. 1,927,400 70,831,950
Warner-Lambert Co. 931,700 90,840,750
468,817,814
MEDICAL EQUIPMENT & SUPPLIES
- - 0.8%
Biomet, Inc. 433,550 15,770,381
Cardinal Health, Inc. 511,054 23,444,602
Johnson & Johnson 170,200 11,924,638
51,139,621
TOTAL HEALTH 519,957,435
INDUSTRIAL MACHINERY &
EQUIPMENT - 7.3%
ELECTRICAL EQUIPMENT - 7.2%
ABB Ltd. (Sweden) 178,287 20,969,852
Furukawa Electric Co. Ltd. 1,884,000 31,621,504
General Electric Co. 1,787,900 277,459,717
Hutchison Whampoa Ltd. 2,220,000 40,057,021
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT -
CONTINUED
Koninklijke Philips 156,000 $ 26,724,750
Electronics NV (NY Shares)
Mitsubishi Electric Corp. 3,744,000 35,263,363
Murata Manufacturing Co. Ltd. 96,000 23,305,279
Research in Motion Ltd. (a) 122,400 12,838,423
468,239,909
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Ingersoll-Rand Co. 228,100 10,093,425
TOTAL INDUSTRIAL MACHINERY & 478,333,334
EQUIPMENT
MEDIA & LEISURE - 7.8%
BROADCASTING - 4.8%
AT&T Corp. - Liberty Media 858,892 50,889,351
Group Class A (a)
CBS Corp. (a) 993,300 56,245,613
Clear Channel Communications, 692,900 47,853,406
Inc. (a)
Comcast Corp. Class A 811,200 35,185,800
(special)
Infinity Broadcasting Corp. 917,900 29,717,013
Class A (a)
Time Warner, Inc. 588,262 58,826,200
USA Networks, Inc. (a) 1,630,000 36,776,875
315,494,258
ENTERTAINMENT - 1.1%
News Corp. Ltd. sponsored ADR 271,700 12,973,675
(preferred ltd. vtg.)
Viacom, Inc. Class B 1,123,300 59,254,075
(non-vtg.) (a)
72,227,750
PUBLISHING - 1.1%
McGraw-Hill Companies, Inc. 1,497,600 68,140,800
Reader's Digest Association, 99,200 3,509,200
Inc. Class A (non-vtg.)
71,650,000
RESTAURANTS - 0.8%
McDonald's Corp. 1,310,000 49,206,875
TOTAL MEDIA & LEISURE 508,578,883
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - 1.3%
BEVERAGES - 0.4%
Anheuser-Busch Companies, 402,100 $ 25,030,725
Inc.
HOUSEHOLD PRODUCTS - 0.6%
Avon Products, Inc. 196,700 5,716,594
Clorox Co. 463,366 15,059,395
Colgate-Palmolive Co. 223,400 12,594,175
Estee Lauder Companies, Inc. 91,300 4,570,706
Procter & Gamble Co. 102,300 5,754,375
43,695,245
TOBACCO - 0.3%
Philip Morris Companies, Inc. 856,800 18,099,900
TOTAL NONDURABLES 86,825,870
RETAIL & WHOLESALE - 5.2%
APPAREL STORES - 0.7%
Abercrombie & Fitch Co. 949,900 15,198,400
Class A (a)
Gap, Inc. 290,100 14,450,606
The Limited, Inc. 323,400 13,623,225
43,272,231
DRUG STORES - 0.1%
CVS Corp. 150,300 5,645,644
GENERAL MERCHANDISE STORES -
2.7%
Costco Wholesale Corp. (a) 755,200 39,695,200
Kohls Corp. (a) 167,000 17,117,500
Nordstrom, Inc. 323,300 9,537,350
Target Corp. 579,000 43,280,250
Wal Mart de Mexico SA de CV 4,883,000 11,846,050
Series V (a)
Wal-Mart Stores, Inc. 950,800 52,769,400
174,245,750
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.7%
Home Depot, Inc. 1,530,850 98,739,825
Staples, Inc. (a) 616,600 12,332,000
Webvan Group, Inc. 244,100 1,876,519
112,948,344
TOTAL RETAIL & WHOLESALE 336,111,969
SHARES VALUE (NOTE 1)
SERVICES - 1.8%
ADVERTISING - 1.3%
DoubleClick, Inc. (a) 95,800 $ 8,969,275
Omnicom Group, Inc. 824,300 77,020,531
85,989,806
LEASING & RENTAL - 0.1%
Marubeni Corp. 2,147,000 8,084,544
SERVICES - 0.4%
Ecolab, Inc. 633,239 23,231,956
Gartner Group, Inc. Class B 38,966 518,735
(a)
23,750,691
TOTAL SERVICES 117,825,041
TECHNOLOGY - 37.0%
COMMUNICATIONS EQUIPMENT -
10.1%
ADC Telecommunications, Inc. 667,600 35,966,950
(a)
Cabletron Systems, Inc. (a) 472,600 13,853,088
Ciena Corp. (a) 38,500 4,855,813
Cisco Systems, Inc. (a) 3,247,400 251,064,613
Comverse Technology, Inc. (a) 67,700 12,795,300
Jabil Circuit, Inc. (a) 272,400 11,781,300
Lucent Technologies, Inc. 1,361,595 82,716,896
Marconi PLC 326 3,890
NEC Corp. 581,000 17,128,972
Nokia AB sponsored ADR 590,300 128,242,675
Nortel Networks Corp. 238,000 29,907,049
Telefonaktiebolaget LM 716,400 67,207,275
Ericsson sponsored ADR
Tellabs, Inc. (a) 91,400 5,756,772
661,280,593
COMPUTER SERVICES & SOFTWARE
- - 10.2%
America Online, Inc. (a) 1,117,900 75,178,775
Automatic Data Processing, 40,900 1,973,425
Inc.
BEA Systems, Inc. (a) 208,200 15,276,675
CMGI, Inc. (a) 137,100 15,535,144
Computer Sciences Corp. (a) 211,000 16,695,375
Covad Communications Group, 120,700 8,750,750
Inc. (a)
Electronic Data Systems Corp. 117,800 7,561,288
Exodus Communications, Inc. 241,300 33,902,650
(a)
Fujitsu Ltd. 903,000 27,676,479
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
Healtheon/Web Maryland Corp. 565,870 $ 13,015,010
(a)
IMS Health, Inc. 60,600 1,026,413
Intuit, Inc. (a) 771,800 41,966,625
Microsoft Corp. (a) 1,575,700 167,418,125
Novell, Inc. (a) 313,400 8,971,075
Oracle Corp. (a) 1,140,000 88,991,250
Phone.com, Inc. 19,400 3,164,625
Software.com, Inc. 121,100 15,606,763
Trans Cosmos, Inc. 30,000 8,465,094
Unisys Corp. (a) 1,486,545 37,906,898
VERITAS Software Corp. (a) 35,700 4,676,700
Vignette Corp. 47,100 7,547,775
Yahoo Japan Corp. 36 21,822,428
Yahoo!, Inc. (a) 254,500 43,614,938
666,744,280
COMPUTERS & OFFICE EQUIPMENT
- - 6.8%
Apple Computer, Inc. (a) 235,300 31,956,681
Dell Computer Corp. (a) 668,200 36,041,038
EMC Corp. (a) 721,100 90,137,500
International Business 252,000 29,736,000
Machines Corp.
Juniper Networks, Inc. 13,300 3,505,381
Lexmark International Group, 312,200 33,015,150
Inc. Class A (a)
Pitney Bowes, Inc. 544,700 24,341,281
SCI Systems, Inc. (a) 1,546,200 83,204,888
Softbank Corp. 22,500 20,031,623
Sun Microsystems, Inc. (a) 974,000 91,266,844
443,236,386
ELECTRONIC INSTRUMENTS - 0.8%
Applied Materials, Inc. (a) 240,200 22,638,850
KLA-Tencor Corp. (a) 201,400 16,967,950
PE Corp. - Biosystems Group 85,000 8,202,500
47,809,300
ELECTRONICS - 9.1%
Altera Corp. (a) 171,800 15,333,150
Analog Devices, Inc. (a) 752,600 60,631,338
Broadcom Corp. Class A (a) 70,400 17,098,400
Conexant Systems, Inc. (a) 231,600 16,443,600
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
DII Group, Inc. (a) 278,100 $ 31,442,681
Flextronics International 133,200 9,382,275
Ltd. (a)
Inktomi Corp. (a) 143,600 28,002,000
Intel Corp. 63,500 8,378,031
Micron Technology, Inc. (a) 99,500 12,537,000
Motorola, Inc. 350,900 49,959,388
Samsung Electronics Co. Ltd. 172,330 52,233,043
Sanmina Corp. (a) 728,600 49,226,038
Solectron Corp. (a) 857,784 34,364,972
Texas Instruments, Inc. 909,700 145,552,000
Tyco International Ltd. 1,000,600 49,904,925
Xilinx, Inc. (a) 170,500 14,119,531
594,608,372
TOTAL TECHNOLOGY 2,413,678,931
UTILITIES - 11.8%
CELLULAR - 8.0%
ALLTEL Corp. 50,800 3,203,575
China Telecom (Hong Kong) 6,053,300 53,647,374
Ltd. (a)
Hikari Tsushin, Inc. 7,900 4,904,111
Nextel Communications, Inc. 421,100 62,428,075
Class A (a)
NTT Mobile Communication 686 28,100,804
Network, Inc.
QUALCOMM, Inc. (a) 348,200 51,990,613
Sprint Corp. - PCS Group 1,137,100 74,266,844
Series 1 (a)
Vodafone AirTouch PLC 15,260,038 84,788,673
Vodafone AirTouch PLC 1,436,800 79,832,200
sponsored ADR
VoiceStream Wireless Corp. (a) 604,400 77,854,275
521,016,544
ELECTRIC UTILITY - 0.5%
AES Corp. (a) 444,100 34,972,875
GAS - 0.4%
Dynegy, Inc. Class A 423,702 26,587,301
TELEPHONE SERVICES - 2.9%
Allegiance Telecom, Inc. (a) 384,450 30,996,281
Level 3 Communications, Inc. 192,100 20,314,575
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
McLeodUSA, Inc. Class A (a) 406,000 $ 34,433,875
Metromedia Fiber Network, 132,300 12,800,025
Inc. Class A (a)
NEXTLINK Communications, Inc. 305,600 37,798,900
Class A (a)
Telefonica SA sponsored ADR 264,300 19,723,388
Telefonos de Mexico SA de CV 502,800 33,687,600
Series L sponsored ADR
189,754,644
TOTAL UTILITIES 772,331,364
TOTAL COMMON STOCKS 6,267,159,608
(Cost $4,081,586,709)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
Cox Communications, Inc. 59,800 7,131,150
$6.858 PRIZES
UnitedGlobalCom, Inc. $3.50 96,800 6,461,400
13,592,550
UTILITIES - 0.1%
ELECTRIC UTILITY - 0.1%
Alliant Energy Resources, 92,200 7,813,950
Inc. $4.91 (c)
TOTAL CONVERTIBLE PREFERRED 21,406,500
STOCKS
(Cost $16,794,852)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 1.2%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
CONVERTIBLE BONDS - 1.2%
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.2%
Elan Finance Corp. Ltd. Baa3 $ 19,620,000 $ 14,126,400
liquid yield option notes 0%
12/14/18 (c)
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.6%
Liberty Media Corp.:
3.75% 2/15/30 (c) Baa3 16,020,000 18,663,300
4% 11/15/29 (c) Baa3 4,330,000 6,727,738
4% 11/15/29 Baa3 6,100,000 9,462,625
34,853,663
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Digital Island, Inc. 6% - 5,890,000 4,126,681
2/15/05
UTILITIES - 0.3%
CELLULAR - 0.2%
Nextel Communications, Inc. B1 11,780,000 14,018,200
5.25% 1/15/10 (c)
TELEPHONE SERVICES - 0.1%
Level 3 Communications, Inc. Caa1 7,070,000 7,061,163
6% 3/15/10
TOTAL UTILITIES 21,079,363
TOTAL CONVERTIBLE BONDS 74,186,107
NONCONVERTIBLE BONDS - 0.0%
AEROSPACE & DEFENSE - 0.0%
British Aerospace PLC 7.45% - GBP 97,901 152,842
11/30/03
TOTAL CORPORATE BONDS 74,338,949
(Cost $62,816,001)
</TABLE>
CASH EQUIVALENTS - 2.9%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 190,281,672 $ 190,281,672
5.85% (b) (Cost $190,281,672)
TOTAL INVESTMENT PORTFOLIO - 6,553,186,729
100.4%
(Cost $4,351,479,234)
NET OTHER ASSETS - (0.4)% (25,575,381)
NET ASSETS - 100% $ 6,527,611,348
CURRENCY ABBREVIATIONS
GBP - British pound
SECURITY TYPE ABBREVIATIONS
PRIZES - Participating Redeemable
Indexed Zero-Premium
Exchangeable Securities
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $61,349,588 or 0.9% of net assets.
Distribution of investments by country of issue, as a percentage of
total net assets, is as follows:
United States of America 83.2%
Japan 5.4
United Kingdom 2.7
Finland 2.0
Hong Kong 1.4
Sweden 1.3
Netherlands 1.1
Others (individually less 2.9
than 1%)
100.0%
INCOME TAX INFORMATION
At March 31, 2000, the aggregate cost of investment securities for
income tax purposes was $4,366,076,341. Net unrealized appreciation
aggregated $2,187,110,388, of which $2,364,771,749 related to
appreciated investment securities and $177,661,361 related to
depreciated investment securities.
FIDELITY DESTINY PORTFOLIOS: DESTINY II
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 6,553,186,729
value (cost $4,351,479,234)
- - See accompanying schedule
Cash 158,851
Receivable for investments 59,854,703
sold
Receivable for fund shares 594,235
sold
Dividends receivable 3,632,906
Interest receivable 2,161,579
Other receivables 157,420
TOTAL ASSETS 6,619,746,423
LIABILITIES
Payable for investments $ 28,575,784
purchased
Payable for fund shares 3,241,487
redeemed
Accrued management fee 3,073,837
Distribution fees payable 1,620
Other payables and accrued 971,747
expenses
Collateral on securities 56,270,600
loaned, at value
TOTAL LIABILITIES 92,135,075
NET ASSETS $ 6,527,611,348
Net Assets consist of:
Paid in capital $ 4,165,514,207
Undistributed net investment 9,378,238
income
Accumulated undistributed net 150,959,606
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 2,201,759,297
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 6,527,611,348
CLASS O: NET ASSET VALUE, $16.81
offering price and
redemption price per share
($6,518,950,819 (divided by)
387,687,030 shares)
CLASS N: NET ASSET VALUE, $16.69
offering price and
redemption price per share
($8,660,529 (divided by)
519,002 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31,
2000 (UNAUDITED)
INVESTMENT INCOME $ 18,717,242
Dividends
Interest 6,924,743
Security lending 616,999
TOTAL INCOME 26,258,984
EXPENSES
Management fee Basic fee $ 17,133,900
Performance adjustment (1,329,807)
Transfer agent fees 145,109
Distribution fees 5,529
Accounting and security 423,879
lending fees
Non-interested trustees' 13,325
compensation
Custodian fees and expenses 178,642
Registration fees 18,259
Audit 22,940
Legal 28,865
Miscellaneous 70,835
Total expenses before 16,711,476
reductions
Expense reductions (517,510) 16,193,966
NET INVESTMENT INCOME 10,065,018
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 175,533,555
Foreign currency transactions 85,641 175,619,196
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,142,169,831
Assets and liabilities in 55,848 1,142,225,679
foreign currencies
NET GAIN (LOSS) 1,317,844,875
NET INCREASE (DECREASE) IN $ 1,327,909,893
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, 1999
2000 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 10,065,018 $ 40,217,501
income
Net realized gain (loss) 175,619,196 514,603,714
Change in net unrealized 1,142,225,679 644,423,653
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,327,909,893 1,199,244,868
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (39,209,992) (34,149,944)
From net investment income
From net realized gain (509,476,717) (864,396,346)
TOTAL DISTRIBUTIONS (548,686,709) (898,546,290)
Share transactions - net 520,560,963 957,719,512
increase (decrease)
TOTAL INCREASE (DECREASE) 1,299,784,147 1,258,418,090
IN NET ASSETS
NET ASSETS
Beginning of period 5,227,827,201 3,969,409,111
End of period (including $ 6,527,611,348 $ 5,227,827,201
undistributed net investment
income of $9,378,238 and
$39,810,345, respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
SIX MONTHS ENDED MARCH 31, 1999 1998 1997 1996 F
2000 (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 14.76 $ 14.07 $ 14.40 $ 11.61 $ 10.57
period
Income from Investment
Operations
Net investment income .03 D .12 D .18 D .27 D .24
Net realized and unrealized 3.56 3.73 .71 3.52 1.34
gain (loss)
Total from investment 3.59 3.85 .89 3.79 1.58
operations
Less Distributions
From net investment income (.11) (.12) (.25) (.25) (.22)
From net realized gain (1.43) (3.04) (.97) (.75) (.32)
Total distributions (1.54) (3.16) (1.22) (1.00) (.54)
Net asset value, end of period $ 16.81 $ 14.76 $ 14.07 $ 14.40 $ 11.61
TOTAL RETURN B, C 25.31% 30.06% 6.64% 34.72% 15.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 6,518,951 $ 5,226,303 $ 3,969,409 $ 3,609,144 $ 2,538,407
(000 omitted)
Ratio of expenses to average .56% A .48% .48% .54% .78%
net assets
Ratio of expenses to average .54% A, E .47% E .48% .53% E .78%
net assets after expense
reductions
Ratio of net investment .34% A .79% 1.23% 2.11% 2.38%
income to average net assets
Portfolio turnover 92% A 77% 106% 35% 37%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS O
YEARS ENDED SEPTEMBER 30,
1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.52
period
Income from Investment
Operations
Net investment income .22
Net realized and unrealized 1.99
gain (loss)
Total from investment 2.21
operations
Less Distributions
From net investment income (.17)
From net realized gain (.99)
Total distributions (1.16)
Net asset value, end of period $ 10.57
TOTAL RETURN B, C 26.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,031,762
(000 omitted)
Ratio of expenses to average .80%
net assets
Ratio of expenses to average .80%
net assets after expense
reductions
Ratio of net investment 2.33%
income to average net assets
Portfolio turnover 52%
</TABLE>
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 FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F PER-SHARE DATA HAVE BEEN ADJUSTED FOR A 3 FOR 1 SHARE SPLIT PAID
JUNE 21, 1996.
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS N
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30,
2000 (UNAUDITED) 1999 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 14.72 $ 15.35
period
Income from Investment
Operations
Net investment income (loss) D (.02) (.00)
Net realized and unrealized 3.52 (.63) G
gain (loss)
Total from investment 3.50 (.63)
operations
Less Distributions
From net investment income (.10) -
From net realized gain (1.43) -
Total distributions (1.53) -
Net asset value, end of period $ 16.69 $ 14.72
TOTAL RETURN B, C 24.74% (4.10)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 8,661 $ 1,524
(000 omitted)
Ratio of expenses to average 1.43% A 1.35% A
net assets
Ratio of expenses to average 1.42% A, F 1.33% A,F
net assets after expense
reductions
Ratio of net investment (.54)% A (.07)% A
income to average net assets
Portfolio turnover 92% A 77%
</TABLE>
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Destiny I and Destiny II (the funds) are funds of Fidelity Destiny
Portfolios (the trust). The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 act), as an open-end
management investment company organized as a Massachusetts business
trust. Each fund is authorized to issue an unlimited number of shares.
Each fund offers two classes of shares, Class O and Class N, each of
which has equal rights as to assets and voting privileges. Effective
the close of business on December 15, 1999, Class O of each fund was
closed to new accounts. Each class has exclusive voting rights with
respect to matters that affect that class. Investment income, realized
and unrealized capital gains and losses, the common expenses of the
funds, and certain fund-level expense reductions, if any, are
allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of each fund. Each class
of shares differs in its respective distribution and transfer agent
expenses, and expense reductions. Shares of each fund are offered to
the general public through Fidelity Systematic Investment Plans:
Destiny Plans I and Destiny Plans II (the Plans), a unit investment
trust with four series.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the funds:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities (including
restricted securities) for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange) are valued primarily using dealer-supplied valuations or at
their fair value. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the funds
are informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan
non-interested Trustees must defer receipt of a portion of, and may
elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Deferred Compensation
Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
partnerships, non-taxable dividends and losses deferred due to wash
sales. Each fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The funds generally use foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency or
other obligations found to be satisfactory by FMR are transferred to
an account of the funds, or to the Joint Trading Account, at a bank
custodian. The securities are marked-to-market daily and maintained at
a value at least equal to the principal amount of the repurchase
agreement (including accrued interest). FMR, the funds' investment
adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the funds may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income. Income distributions from the Cash Fund
are declared daily and paid monthly from net interest income. Income
distributions earned by the funds are recorded as interest income in
the accompanying financial statements.
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES. The funds are permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the funds had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Destiny I: Purchases and sales of securities, other than short-term
securities, aggregated $6,937,537,408 and $6,944,072,146,
respectively, of which U.S. government and government agency
obligations aggregated $0 and $513,842,688, respectively.
Destiny II: Purchases and sales of securities, other than short-term
securities, aggregated $2,815,542,734 and $2,637,442,807,
respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of each fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2167% to
.5200% for the period. The annual individual fund fee rates are .17%
and .30 % for Destiny I and Destiny II, respectively. In the event
that these rates were lower than the contractual rates in effect
during the period, FMR voluntarily implemented the above rates, as
they resulted in the same or a lower management fee. The basic fee is
subject to a performance adjustment (up to a maximum of -.24% of each
fund's average net assets up to and including $100,000,000 and -.20%
of each fund's average net assets in excess of $100,000,000 over the
performance period) based on each fund's investment performance as
compared to the appropriate index over a specified period of time. For
the period, the management fees were equivalent to annualized rates of
.26% and .53%, respectively of average net assets after the
performance adjustment for the Destiny I and Destiny II funds,
respectively. Effective July 1, 1999 each fund's performance
adjustment will be phased out over an 18 month period. During the
phase out period the performance adjustment can decrease, but not
increase, the management fee owed by the funds.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has adopted a Distribution and Service
Plan for Class N of each fund. During the period, Class N of each fund
paid Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
service fee based on an annualized rate of .25% of its average net
assets pursuant to the Distribution and Service Plan. For the period,
the following amounts were paid to FDC:
PAID TO FDC
Destiny I $ 706
Destiny II $ 5,529
TRANSFER AGENT FEES. Fidelity Service Company, Inc., (FSC), an
affiliate of FMR, is the transfer, dividend disbursing and shareholder
servicing agent for each class of the funds. For Class O non-Destiny
Plan accounts, FSC receives account fees and asset-based fees that
vary according to account size and type of account. FSC does not
receive a fee for Class O Destiny Plan accounts. For Class N, FSC
receives a fee based on monthly Plan payment amounts or per
transaction that may not exceed an annualized rate of .63% of the
Class N shares' average net assets. In addition, FSC pays for
typesetting, printing, and mailing of all shareholder reports, except
proxy statements. For the period, the following amounts were paid to
FSC:
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
Destiny I
AMOUNT % OF AVERAGE NET ASSETS
CLASS O $ 228,521 .01*
CLASS N 1,742 .61 *
$ 230,263
Destiny II
AMOUNT % OF AVERAGE NET ASSETS
CLASS O $ 130,947 .00*
CLASS N 14,162 .63 *
$ 145,109
* ANNUALIZED
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. Each fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms for Destiny I and Destiny
II were $246,673 and $85,000, respectively for the period.
5. SECURITY LENDING.
The funds lend portfolio securities from time to time in order to earn
additional income. Each fund receives collateral (in the form of U.S.
Treasury obligations, letters of credit and/or cash) against the
loaned securities and maintains collateral in an amount not less than
100% of the market value of the loaned securities during the period of
the loan. The market value of the loaned securities is determined at
the close of business of the funds and any additional required
collateral is delivered to the funds on the next business day. 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. At period end, the value of the securities loaned
amounted to $29,978,338 and $54,123,006 for Destiny I and Destiny II,
respectively. Destiny I and Destiny II received cash collateral of
$31,452,800 and $56,270,600, respectively, which was invested in the
Taxable Central Cash Fund.
6. BANK BORROWINGS.
The funds are permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The funds have
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. For Destiny I, the average daily loan balance during the
period for which the loan was outstanding amounted to $6,895,000. The
weighted average interest rate was 5.9%. For Destiny II, there were no
loans during the period.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, each fund's expenses
were reduced by $795,799 and $508,440 under this arrangement for
Destiny I and Destiny II, respectively.
In addition, each fund has entered into arrangements with its
custodian and each class' transfer agent whereby credits realized as a
result of uninvested cash balances were used to reduce a portion of
expenses. During the period, each fund's custodian fees were reduced
by $2,009 and $725 for Destiny I and Destiny II, respectively under
the custodian arrangement. Each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
Destiny I
TRANSFER AGENT CREDITS
CLASS O $ 9,401
Destiny II
TRANSFER AGENT CREDITS
CLASS O $ 8,345
8. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Destiny I
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30, 1999 A
FROM NET INVESTMENT INCOME
Class O $ 114,843,907 $ 105,484,207
Class N 6,070 -
Total $ 114,849,977 $ 150,484,207
FROM NET REALIZED GAIN
Class O $ 897,861,180 $ 544,915,685
Class N 55,890 -
Total $ 897,917,070 $ 544,915,685
$ 1,012,767,047 $ 650,399,892
Destiny II
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30, 1999 A
FROM NET INVESTMENT INCOME
Class O $ 39,182,723 $ 34,149,944
Class N 27,269 -
Total $ 39,209,992 $ 34,149,944
FROM NET REALIZED GAIN
Class O $ 509,166,630 $ 864,396,346
Class N 310,087 -
Total $ 509,476,717 $ 864,396,346
$ 548,686,709 $ 898,546,290
</TABLE>
A DISTRIBUTIONS FOR DESTINY I: CLASS N AND DESTINY II: CLASS N ARE FOR
THE PERIOD APRIL 30, 1999 (COMMENCEMENT OF SALE OF SHARES) TO
SEPTEMBER 30, 1999.
9. SHARE TRANSACTIONS.
Transactions for each fund's class of shares for the periods are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Destiny I
SHARES DOLLARS
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
2000 1999 A 2000
CLASS O Shares sold 5,978,542 9,223,182 $ 153,976,837
Reinvestment of distributions 36,918,568 22,671,053 880,877,026
Shares redeemed (17,661,156) (21,478,357) (435,488,098)
Net increase (decrease) 25,235,954 10,415,878 $ 599,365,765
CLASS N Shares sold 35,282 9,786 $ 847,844
Reinvestment of distributions 2,601 - 61,912
Shares redeemed (384) (114) (9,061)
Net increase (decrease) 37,499 9,672 $ 900,695
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Destiny I
DOLLARS
YEAR ENDED SEPTEMBER 30,
1999 A
CLASS O Shares sold $ 248,764,091
Reinvestment of distributions 575,618,075
Shares redeemed (584,597,461)
Net increase (decrease) $ 239,784,705
CLASS N Shares sold $ 272,403
Reinvestment of distributions -
Shares redeemed (3,198)
Net increase (decrease) $ 269,205
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Destiny II
SHARES DOLLARS
SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
2000 1999 A 2000
CLASS O Shares sold 32,200,326 42,363,720 $ 505,121,825
Reinvestment of distributions 34,358,830 66,407,354 527,406,144
Shares redeemed (32,851,697) (36,859,021) (518,506,094)
Net increase (decrease) 33,707,459 71,912,053 $ 514,021,875
CLASS N Shares sold 411,930 105,039 $ 6,496,352
Reinvestment of distributions 22,043 - 336,824
Shares redeemed (18,549) (1,461) (294,088)
Net increase (decrease) 415,424 103,578 $ 6,539,088
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Destiny II
DOLLARS
YEAR ENDED SEPTEMBER 30,
1999 A
CLASS O Shares sold $ 629,670,010
Reinvestment of distributions 875,248,918
Shares redeemed (548,780,811)
Net increase (decrease) $ 956,138,117
CLASS N Shares sold $ 1,603,569
Reinvestment of distributions -
Shares redeemed (22,174)
Net increase (decrease) $ 1,581,395
</TABLE>
A SHARE TRANSACTIONS FOR DESTINY I: CLASS N AND DESTINY II: CLASS N
ARE FOR THE PERIOD APRIL 30, 1999 (COMMENCEMENT OF SALE OF SHARES) TO
SEPTEMBER 30, 1999.