FILE NO. 2-34100
FIDELITY SYSTEMATIC INVESTMENT PLANS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 60
TO
FORM S-6
For registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. EXACT NAME OF TRUST:
FIDELITY SYSTEMATIC INVESTMENT PLANS:
Destiny Plans I and Destiny Plans II
B. NAME OF DEPOSITOR:
FIDELITY DISTRIBUTORS CORPORATION
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
82 Devonshire Street
Boston, Massachusetts 02109
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICES:
Kurt A. Lange
Fidelity Distributors Corporation
82 Devonshire Street
Boston, Massachusetts 02109
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] On (November 29, 1995) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on ( ) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on ( ) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective
amendment.
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 62
TO
REGISTRATION STATEMENT FILE NO. 2-34100
PAGE
Facing Sheet 1
Table of Contents 2
Cross-Reference Sheet 3
Prospectus 8
Signature Page 44
Exhibits 46
RECONCILIATION AND TIE OF INFORMATION SHOWN IN
INVESTMENT PLANS PROSPECTUS WITH THAT REQUIRED BY FORM N-8B-2
FORM N-8B-2 CAPTION
ITEM NUMBER REFERENCE
1(a) Front Cover
(b) Introductory Statement
2 Fidelity Systematic Investment Plans (First Page); The Custodian; The
Sponsor
3 The Custodian; The Sponsor; Back Cover
4 Back Cover
5 General
6(a) The Custodian; The Sponsor
(b) The Custodian; The Sponsor
7 Not applicable
8 The fiscal year end of the trust is September 30
9 Not applicable
10(a) How to Start a Destiny Plan
(b) Distributions
(c) Borrowing Against Your Plan Without Termination; Cancellation and
Refund
Rights; Terminating the Plan and Withdrawal of Shares
(d) Borrowing Against Your Plan Without Termination; Transferring or
Assigning
Rights in the Plan; Terminating the Plan and Withdrawal of Shares; Plan
Reinstatement
Privilege
(e) Not applicable
(f) Retaining Full Voting Rights in Fund Shares
(g)(1)(2) Substitution of the Underlying Investment
FORM N-8B-2 CAPTION
ITEM NUMBER REFERENCE
(3)(4) The Custodian; The Sponsor
(h)(1)(2) Substitution of the Underlying Investment
(3)(4) The Custodian; The Sponsor
(i) The Sponsor; Custodian Fees
11 Investment Objective
12(a) Investment Objective
(b)-(d) The Custodian; The Sponsor
(e) Not Applicable
13(a)(A)(B) How Fidelity Systematic Investment Plans Can Help Planholders
Meet Their
Objectives; A $50 Monthly Investment Plan; Allocation of Investments and
Deductions; Extended Investment Option; Sponsor and Custodian Fees;
The Custodian; The Sponsor
(C)(D) The Sponsor; Custodian Fees; The Custodian; General
(b) A $50 Monthly Investment Plan
(c) Fidelity Systematic Investment Plans (Page 1)
(d) Rights and Privileges of Planholders; The Custodian; The Sponsor;
Planholders May Qualify for Reduced Fees
(e),(f) Not Applicable
(g) Allocation of Investments and Deductions (10 Year Plans); Allocation
of Investments
and Deductions (15 Year Plans); Financial Statements
14 How to Start a Destiny Plan
15 The Custodian; The Sponsor
16 The Custodian; The Sponsor
17 Rights and Privileges of Planholders
18(a),(b) Distributions; The Custodian; The Sponsor
(c) Not Applicable
(d) Not Applicable
19 The Custodian; The Sponsor
FORM N-8B-2 CAPTION
ITEM NUMBER REFERENCE
20(a-d) The Custodian; The Sponsor; Rights and Privileges of Planholders;
Termination of a Plan
(e),(f) Not Applicable
21 Not Applicable
22 Reference is made to the statements in Exhibit 1.A.(1) filed herewith
under the caption "Indemnification."
23 The Sponsor
24 Not Applicable
25 The Sponsor
26(a) Financial Statements
(b) Not Applicable
27 The Sponsor
28 The Sponsor
29 The Sponsor
30 Not Applicable
31 The Sponsor
32 Not Applicable
33 Not Applicable
34 Not Applicable
35(A)(B) General
(C) Not Applicable
36 Not Applicable
37 Not Applicable
38 Fidelity Systematic Investment Plans (Page 1); General
39 The Sponsor
40 Financial Statements
41(a) The Sponsor
FORM N-8B-2 CAPTION
ITEM NUMBER REFERENCE
(b) (c) Not Applicable
42 The Sponsor
43 Not Applicable
44(a) Financial Statements
(b) Allocation of Investments and Deductions; Total Allocations and
Deductions When
Extended Investment Option of 120 Additional Investments Is Used; A $50
Monthly Investment Plan; Financial Statements
45 Not Applicable
46(a),(b) Fidelity Systematic Investment Plans (Page 1); Allocation of
Investments and
Deductions; Total Allocations and Deductions When Extended Investment
Option
of 120 Additional Investments Is Used; A $50 Monthly Investment Plan;
Statement
of Operations; Statement of Condition
47 Not Applicable
48 The Custodian; The Sponsor
49 Creation and Sales Charges; The Custodian; The Sponsor; Statement of
Operations
50 Notes C&D (pp. 5,6); Notes A&B (pp. 7); Note B (pp. 8); The Custodian;
The Sponsor
51 Not Applicable
52(a) Not Applicable
(b) Not Applicable
(c) Substitution of the Underlying Investment
(d) Not Applicable
53 Taxes
54 Not Applicable
55 Illustration of a Hypothetical $50 ($166.66) Monthly Destiny I Plan
56-59 Not Applicable
Fidelity
Systematic
Investment
Plans:
Destiny Plans I
Destiny Plans II
PROSPECTUS
NOVEMBER 29 , 1995
FIDELITY SYSTEMATIC INVESTMENT PLANS:
DESTINY PLANS I AND DESTINY PLANS II
Fidelity Systematic Investment Plans, a plan consisting of two series,
Destiny Plans I and Destiny Plans II (collectively referred to as the Plan
or Plans), for the accumulation of shares of Fidelity Destiny Portfolios, a
series fund consisting of Destiny I and Destiny II (collectively referred
to as the Fund or Funds), are offered by Fidelity Distributors Corporation
(Distributors or Sponsor), the Sponsor and Principal Underwriter.
Planholders of Destiny Plans I purchase shares of Destiny I and Planholders
of Destiny Plans II purchase shares of Destiny II. EXCHANGES BETWEEN THE
TWO PLANS ARE NOT PERMITTED.
Planholders make a fixed monthly investment for either 10 or 15 years. On
10-year Plans, the Creation and Sales Charges range from 8.24% on $6,000
Plans ($50 a month) to 0.64% on $1,200,000 Plans ($10,000 a month) and from
9.20% to 0.64% of the net amount invested, respectively. Total deductions
range from 11.66% to 0.66% of the net amount invested, respectively. On
15-year Plans, the Creation and Sales Charges range from 8.67% on $9,000
Plans ($50 a month) to 0.61% on $1,800,000 Plans ($10,000 a month) and from
9.73% to 0.61% of the net amount invested, respectively. Total deductions
range from 12.20% to 0.63% of the net amount invested.
Investments are applied, after authorized deductions, to the purchase of
Fund shares at net asset value (NAV). THESE SHARES ARE A LONG-TERM
INVESTMENT AND ARE NOT SUITABLE FOR INVESTORS SEEKING QUICK PROFITS OR WHO
MIGHT BE UNABLE TO COMPLETE A PLAN. Since a major portion of the entire
Creation and Sales Charges is deducted from the first year's investment,
withdrawal or termination of your investment in the early years of the Plan
will probably result in a loss. For example, on a $6,000 Plan - $50 a month
for 10 years - total charges amount to 10.44% of the investments made if
the Plan is completed. However, even after application of the refund
privilege described on page , total deductions would amount to 17.2% of
total investments if this Plan were terminated any time between 2 months
and 18 months. Moreover, if it were terminated after 18 months, total
deductions would amount to 35.11% of total investments; they would amount
to 29% if the Plan were terminated after two years. A detailed description
of all deductions appears on pages 5, 6, and 7.
The value of each Fund's shares is subject to fluctuations in the values
of its underlying securities. A Plan calls for monthly investments at
regular intervals regardless of the price level of the Fund's shares.
Planholders should therefore consider their financial ability to continue a
Plan. A Plan offers no assurance against loss in a declining market.
Terminating the Plan at a time when the value of the Fund shares the
Planholder has acquired is less than their cost will result in a loss.
Preinvestment of all or any part of the first year's investments on Plans
offered herein increases the possible loss in the event of early
termination.
Shares of the Funds are offered to the general public only through the
Fidelity Systematic Investment Plans. Shares of certain other mutual funds
managed by the Funds' adviser, which might be considered to have investment
objectives similar in many respects to those of the Funds, may be acquired
by direct purchase without any sales charges, payment of the Custodian Fee,
or penalties for early termination.
Planholders have the right to a 45-day refund or a limited refund of their
investment for certain periods of time and under the conditions described
in more detail under the heading "Cancellation and Refund Rights," page .
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY,
AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY
THE CURRENT PROSPECTUS FOR FIDELITY DESTINY PORTFOLIOS.
Planholders should read and retain this Prospectus for future reference.
I.BD-DESPRO-1195
[This Page Intentionally Left Blank]
TABLE OF CONTENTS
PAGE
HOW FIDELITY SYSTEMATIC INVESTMENT PLANS CAN HELP PLANHOLDERS MEET THEIR
OBJECTIVES
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
A $50 MONTHLY INVESTMENT PLAN
INVESTMENT OBJECTIVE
HOW TO START A DESTINY PLAN
TAX-SHELTERED RETIREMENT PLANS
PLANHOLDERS MAY QUALIFY FOR REDUCED FEES
1. Reduced Custodian Fees under an Automatic Investment Program
2. Purchasing Two or More Plans at the Same Time
3. Rights of Accumulation
RIGHTS AND PRIVILEGES OF PLANHOLDERS
1. Distributions
2. Federal Income Tax Withholding
3. Transferring or Assigning Rights in the Plan
4. Retaining Full Voting Rights in Fund Shares
5. Making Preinvestments to Complete the Plan Ahead of Schedule
6. Changing the Face Amount of the Plan
7 Extended Investment Option
8. Borrowing Against Your Plan Without Termination
9. Systematic Withdrawal Program
10. Cancellation and Refund Rights
11. Terminating the Plan and Withdrawal of Shares
12. Plan Reinstatement Privilege
SPONSOR AND CUSTODIAN CHARGES
1. Creation and Sales Charges
2. Custodian Fees
3. Incidental Service Fees
TAXES
SUBSTITUTION OF THE UNDERLYING INVESTMENT
TERMINATION OF A PLAN
THE CUSTODIAN AND SPONSOR
1. The Custodian
2. The Sponsor
GENERAL
FINANCIAL STATEMENTS 24
FIDELITY DESTINY PORTFOLIOS' PROSPECTUS F-1
No salesman, dealer, or other person, is authorized by the Sponsor,
Fidelity Systematic Investment Plans, or Fidelity Destiny Portfolios to
give any information or make any representation other than those contained
in the Plans' Prospectus or the Prospectus of Fidelity Destiny Portfolios,
or in any other printed or written material issued under the name of the
Sponsor, the Plans, or Fidelity Destiny Portfolios. No person should rely
upon any information not contained in these materials.
HOW FIDELITY SYSTEMATIC INVESTMENT PLANS CAN HELP PLANHOLDERS MEET THEIR
OBJECTIVES
Many people who want to build an investment portfolio find it difficult to
save the money necessary to make periodic stock purchases. The Destiny
Plans are designed to help such people. These Plans make it possible for
Planholders to build equity over a period of years by investing a modest
sum each month in mutual fund shares.
The value of each Fund's shares is subject to fluctuations in the values
of its underlying securities. A Plan calls for monthly investments at
regular intervals regardless of the value of the Fund's shares. A Plan
offers no assurance against loss in a declining market and does not
eliminate the risk inherent in the ownership of any security. Terminating
the Plan at a time when the value of the Fund shares acquired is less than
their cost will result in a loss. Planholders should therefore consider
their financial ability to continue a Plan.
Another feature of a Plan is the service rendered by the Custodian, State
Street Bank and Trust Company, or its affiliated bookkeeping and
administrative service agent, Boston Financial Data Services, Inc. (Boston
Financial). Acting as the Planholder's agent, the Custodian assumes the
responsibility for the many details of the Plan. A description of the
Custodian's services and charges appears on page .
Before opening a Plan you should consider the following:
1. Investments made through the Plans will not result in direct ownership
of either Fidelity Destiny Portfolios: Destiny I or Destiny II shares, but
rather will represent an interest in a unit investment trust, which will
have direct ownership of Fidelity Destiny Portfolios: Destiny I or Destiny
II shares. Planholders will have a beneficial interest in the underlying
Portfolios' shares.
2. Unlike most other plans of this type, the primary issuer - Fidelity
Destiny Portfolios - does not sell its shares directly to the public.
Initial investments in the Funds may be made only through the trust
arrangements provided by the Plans.
3. These Plans contain Creation and Sales Charges, sometimes called a
"front-end load" and are referred to on page 1. The effect of a "front-end
load" is that if a Planholder terminates the Plan between 2 months and 18
months, he may lose as much as 17.2% of his total investments made up to
that date and as much as 35.1% after 18 months. See the tables and
accompanying notes on pages 5, 6, 7 and 8.
4. In addition to the Creation and Sales Charges, Planholders must pay
additional fees to the Custodian. These fees relieve Planholders of the
administrative details associated with the holding of securities. Some
investors could perform these services for themselves if they were to
purchase and hold the securities directly. An investor should weigh the
value of the Custodian services against the cost of the Custodian Fees
before making an investment decision. See page .
5. The dealer firm of record has proprietary rights to all commissions
earned during the duration of your Plan. It is also under no obligation to
transfer your Plan to another dealer firm as long as its dealer agreement
with Fidelity Destiny Plans remains active. If the dealer firm of record
chooses to release your Plan and, therefore, subsequent commissions to a
new dealer firm, it must first complete and sign an Assignment of Amounts
Due form. This form must be returned to the Custodian, State Street Bank
and Trust Company.
1.ALLOCATION OF INVESTMENTS AND DEDUCTIONS
10-YEAR PLANS
(120 INVESTMENTS)
(ASSUMING THAT ALL INVESTMENTS ARE MADE IN ACCORDANCE WITH THE TERMS OF THE
PLAN)
CREATION AND SALES CHARGES CUSTODIAN FEES % OF TOTAL CHARGES
NET
MONTHLY TOTAL PER PER % OF TOTAL INVESTMENT TO TO NET
INVESTMENT INVESTMENTS INVESTMENT INVESTMENT TOTAL PER CHARGES IN FUND
TOTAL INVESTMENTS IN
UNIT (FACE AMOUNT) 1 THRU 12 13 THRU 120 TOTAL INVESTMENTS INVESTMENT
TOTAL(A) (A)(B) SHARES(C) INVESTMENTS FUND SHARES
$ 50.00 $ 6,000.00 $ 25.00 $ 1.80 $ 494.40 8.24% $ 1.10 $ 132.00 $ 626.40 $
5,373.60 10.44% 11.66%
75.00 9,000.00 37.50 2.70 741.60 8.24 1.25 150.00 891.60 8,108.40
9.91 11.00
93.75 11,250.00 46.88 3.38 927.60 8.24 1.50 180.00 1,107.60
10,142.40 9.85 10.92
100.00 12,000.00 50.00 3.60 988.80 8.24 1.50 180.00 1,168.80
10,831.20 9.74 10.79
125.00 15,000.00 62.50 4.50 1,236.00 8.24 1.50 180.00 1,416.00
13,584.00 9.44 10.42
150.00 18,000.00 75.00 5.40 1,483.20 8.24 1.50 180.00 1,663.20
16,336.80 9.24 10.18
166.66 19,999.20 83.33 5.00 1,539.96 7.70 1.50 180.00 1,719.96
18,279.24 8.60 9.41
200.00 24,000.00 100.00 4.02 1,634.16 6.81 1.50 180.00 1,814.16
22,185.84 7.56 8.18
250.00 30,000.00 125.00 5.00 2,040.00 6.80 1.50 180.00 2,220.00
27,780.00 7.40 7.99
300.00 36,000.00 150.00 5.00 2,340.00 6.50 1.50 180.00 2,520.00
33,480.00 7.00 7.53
350.00 42,000.00 175.00 4.50 2,586.00 6.16 1.50 180.00 2,766.00
39,234.00 6.59 7.05
400.00 48,000.00 200.00 4.00 2,832.00 5.90 1.50 180.00 3,012.00
44,988.00 6.28 6.70
500.00 (D) 60,000.00 225.00 2.78 3,000.24 5.00 1.50 180.00 3,180.24
56,819.76 5.30 5.60
750.00 90,000.00 300.00 2.50 3,870.00 4.30 1.50 180.00 4,050.00
85,950.00 4.50 4.71
1,000.00 120,000.00 300.00 5.00 4,140.00 3.45 1.50 180.00 4,320.00
115,680.00 3.60 3.73
1,500.00 180,000.00 315.00 6.00 4,428.00 2.46 1.50 180.00 4,608.00
175,392.00 2.56 2.63
2,000.00 240,000.00 325.00 7.00 4,656.00 1.94 1.50 180.00 4,836.00
235,164.00 2.02 2.06
2,500.00 300,000.00 350.00 8.00 5,064.00 1.69 1.50 180.00 5,244.00
294,756.00 1.75 1.78
5,000.00 600,000.00 400.00 11.00 5,988.00 1.00 1.50 180.00 6,168.00
593,832.00 1.03 1.04
10,000.00 1,200,000.00 500.00 15.56 7,680.48 0.64 1.50 180.00
7,860.48 1,192,139.52 0.66 0.66
NOTES:
(A) Does not include an annual $12 Custodian Fee (for completed or
incomplete inactive Plans only), payable to the Custodian first from
dividends and distributions and then, if necessary, from principal. Plans
established under an Automatic Investment Program will pay a reduced
Custodian Fee of $0.75 per investment. See "Reduced Custodian Fees under an
Automatic Investment Program" on page .
(B) Does not include a service charge, payable first from dividends and
distributions and then, if necessary, from principal, to cover certain
administrative expenses actually incurred. The amount of such charge will
be determined annually by pro rating each Plan's administrative costs over
the total number of Plan accounts. For fiscal year 1995 , the charge
was $6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. In addition, subsequent to January 1, 1986, this charge is subject
to increases by the Sponsor, in the aggregate not to exceed increases in
the Consumer Price Index. For Plans established prior to January 1, 1986
and after October 30, 1982, this service charge cannot exceed $10 per year.
For Plans established prior to October 31, 1982, this charge cannot exceed
$2 per year. (If a face amount change is made the Planholder is
subject to the current prospectus at the time of the face change.)
(C) Dividends and distributions received on each Fund's shares during the
periods shown above have not been included or reflected in any way in the
above figures.
(D) All $500 Monthly Plans established after August 29, 1984, including
face amount changes to existing Plans, will be subject to the charges
outlined herein.
2.ALLOCATION OF INVESTMENTS AND DEDUCTIONS
15-YEAR PLANS
(180 INVESTMENTS)
(ASSUMING THAT ALL INVESTMENTS ARE MADE IN ACCORDANCE WITH THE TERMS OF THE
PLAN)
CREATION AND SALES CHARGES CUSTODIAN FEES % OF TOTAL CHARGES
NET
MONTHLY TOTAL PER PER % OF TOTAL INVESTMENT TO TO NET
INVESTMENT INVESTMENTS INVESTMENT INVESTMENT TOTAL PER CHARGES IN FUND
TOTAL INVESTMENTS IN
UNIT (FACE AMOUNT) 1 THRU 12 13 THRU 180 TOTAL INVESTMENTS INVESTMENT
TOTAL(A) (A)(B) SHARES(C) INVESTMENTS FUND SHARES
$ 50.00 $ 9,000.00 $ 25.00 $ 2.86 $ 780.48 8.67% $ 1.10 $ 198.00 $ 978.48 $
8,021.52 10.87% 12.20%
75.00 13,500.00 37.50 4.06 1,132.08 8.39 1.25 225.00 1,357.08
12,142.92 10.05 11.18
93.75 16,875.00 46.88 5.07 1,414.32 8.38 1.50 270.00 1,684.32
15,190.68 9.98 11.09
100.00 18,000.00 50.00 5.41 1,508.88 8.38 1.50 270.00 1,778.88
16,221.12 9.88 10.97
125.00 22,500.00 62.50 6.76 1,885.68 8.38 1.50 270.00 2,155.68
20,334.32 9.58 10.60
150.00 27,000.00 75.00 5.70 1,857.60 6.88 1.50 270.00 2,127.60
24,872.40 7.88 8.55
166.66 29,998.80 83.33 6.33 2,063.40 6.88 1.50 270.00 2,333.40
27,665.40 7.78 8.43
200.00 36,000.00 100.00 7.43 2,448.24 6.80 1.50 270.00 2,718.24
33,281.76 7.55 8.17
250.00 45,000.00 125.00 9.29 3,060.72 6.80 1.50 270.00 3,330.72
41,669.28 7.40 7.99
300.00 54,000.00 150.00 5.04 2,646.72 4.90 1.50 270.00 2,916.72
51,083.28 5.40 5.71
350.00 63,000.00 175.00 5.31 2,992.08 4.75 1.50 270.00 3,262.08
59,737.92 5.18 5.46
400.00 72,000.00 200.00 3.80 3,038.40 4.22 1.50 270.00 3,308.40
68,691.60 4.60 4.82
500.00(D) 90,000.00 225.00 5.36 3,600.48 4.00 1.50 270.00 3,870.48
86,129.52 4.30 4.49
750.00 135,000.00 300.00 8.70 5,061.60 3.75 1.50 270.00 5,331.60
129,668.40 3.95 4.11
1,000.00 180,000.00 300.00 15.54 6,210.72 3.45 1.50 270.00 6,480.72
173,519.28 3.60 3.73
1,500.00 270,000.00 315.00 17.52 6,723.36 2.49 1.50 270.00 6,993.36
263,006.64 2.59 2.66
2,000.00 360,000.00 325.00 18.57 7,019.76 1.95 1.50 270.00 7,289.76
352,710.24 2.02 2.07
2,500.00 450,000.00 350.00 20.26 7,603.68 1.69 1.50 270.00 7,873.68
442,126.32 1.75 1.78
5,000.00 900,000.00 400.00 25.00 9,000.00 1.00 1.50 270.00 9,270.00
890,730.00 1.03 1.04
10,000.00 1,800,000.00 500.00 29.64 10,979.52 0.61 1.50 270.00
11,249.52 1,788,750.48 0.62 0.63
NOTES:
(A) Does not include an annual $12 Custodian Fee (for completed or
incomplete inactive Plans only), payable to the Custodian first from
dividends and distributions and then, if necessary, from principal. Plans
established under an Automatic Investment Program will pay a reduced
Custodian Fee of $0.75 per investment. See "Reduced Custodian Fees under an
Automatic Investment Program" on page .
(B) Does not include a service charge, payable first from dividends and
distributions and then, if necessary, from principal, to cover certain
administrative expenses actually incurred. The amount of such charge will
be determined annually by pro rating each Plan's administrative costs over
the total number of Plan accounts. For fiscal year 1995 , the charge
was $ 6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. In addition, subsequent to January 1, 1986, this charge is subject
to increases by the Sponsor, in the aggregate not to exceed increases in
the Consumer Price Index. For Plans established prior to January 1, 1986
and after October 30, 1982, this service charge cannot exceed $10 per year.
For Plans established prior to October 31, 1982, this charge cannot exceed
$2 per year. (If a face amount change is made the Planholder is
subject to the current prospectus at the time of the face change.)
(C) Dividends and distributions received on each Fund's shares during the
periods shown above have not been included or reflected in any way in the
above figures.
(D) All $500 Monthly Plans established after August 29, 1984, including
face amount changes to existing Plans, will be subject to the charges
outlined herein.
3.TOTAL ALLOCATIONS AND DEDUCTIONS WHEN
EXTENDED INVESTMENT OPTION OF 120 ADDITIONAL INVESTMENTS IS USED
(PLEASE SEE PAGE FOR A DESCRIPTION OF THE EXTENDED INVESTMENT OPTION.)
(ASSUMING THAT ALL INVESTMENTS ARE MADE IN ACCORDANCE WITH THE TERMS OF THE
EXTENDED INVESTMENT OPTION)
% OF TOTAL CHARGES
CREATION AND NET
MONTHLY TOTAL CREATION SALES CHARGES INVESTMENT TO TO NET
INVESTMENT INVESTMENTS AND SALES AS % OF TOTAL CUSTODIAN TOTAL IN FUND
TOTAL INVESTMENTS IN
UNIT (FACE AMOUNT) CHARGES INVESTMENTS FEES(A)(B) CHARGES(A)(B) SHARES(C)
INVESTMENTS FUND SHARES
$ 50.00 $ 15,000.00 $ 1,123.68 7.49% $ 330.00 $ 1,453.68 $ 13,546.32 9.69%
10.73%
75.00 22,500.00 1,619.28 7.20 375.00 1,994.28 20,505.72 8.86 9.73
93.75 28,125.00 2,022.72 7.19 450.00 2,472.72 25,652.28 8.79 9.64
100.00 30,000.00 2,158.08 7.19 450.00 2,608.08 27,391.92 8.69 9.52
125.00 37,500.00 2,696.88 7.19 450.00 3,146.88 34,353.12 8.39 9.16
150.00 45,000.00 2,541.60 5.65 450.00 2,991.60 42,008.40 6.65 7.12
166.66 49,998.00 2,823.00 5.65 450.00 3,273.00 46,725.00 6.55 7.00
200.00 60,000.00 3,339.84 5.57 450.00 3,789.84 56,210.16 6.32 6.74
250.00 75,000.00 4,175.52 5.57 450.00 4,625.52 70,374.48 6.17 6.57
300.00 90,000.00 3,251.52 3.61 450.00 3,701.52 86,298.48 4.11 4.29
350.00 105,000.00 3,629.28 3.46 450.00 4,079.28 100,920.72 3.89 4.04
400.00 120,000.00 3,494.40 2.91 450.00 3,944.40 116,055.60 3.29 3.40
500.00(D) 150,000.00 4,243.68 2.83 450.00 4,693.68 145,306.32 3.13
3.23
750.00 225,000.00 6,105.60 2.71 450.00 6,555.60 218,444.40 2.91 3.00
1,000.00 300,000.00 8,075.52 2.69 450.00 8,525.52 291,474.48 2.84 2.92
1,500.00 450,000.00 8,825.76 1.96 450.00 9,275.76 440,724.24 2.06 2.10
2,000.00 600,000.00 9,248.16 1.54 450.00 9,698.16 590,301.84 1.62 1.64
2,500.00 750,000.00 10,034.88 1.34 450.00 10,484.88 739,515.12 1.40
1.42
5,000.00 1,500,000.00 12,000.00 0.80 450.00 12,450.00 1,487,550.00
0.83 0.84
10,000.00 3,000,000.00 14,536.32 0.48 450.00 14,986.32 2,985,013.68
0.50 0.50
NOTES:
(A) Does not include an annual $12 Custodian Fee (for completed or
incomplete inactive Plans only), payable to the Custodian first from
dividends and distributions and then, if necessary, from principal. Plans
established under an Automatic Investment Program will pay a reduced
Custodian Fee of $0.75 per investment. See "Reduced Custodian Fees under an
Automatic Investment Program" on page .
(B) Does not include a service charge, payable first from dividends and
distributions and then, if necessary, from principal, to cover certain
administrative expenses actually incurred. The amount of such a charge will
be determined annually by pro rating each Plan's administrative costs over
the total number of Plan accounts. For fiscal year 1995 , the charge
was $ 6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. In addition, subsequent to January 1, 1986, this charge is subject
to increases by the Sponsor, in the aggregate not to exceed increases in
the Consumer Price Index. For Plans established prior to January 1, 1986
and after October 30, 1982, this service charge cannot exceed $10 per year.
For Plans established prior to October 31, 1982, this charge cannot exceed
$2 per year. (If a face amount change is made the Planholder is
subject to the current prospectus at the time of the face change.)
(C) Dividends and distributions received on each Fund's shares during the
periods shown above have not been included or reflected in any way in the
above figures.
(D) All $500 Monthly Plans established after August 29, 1984, including
face amount changes to existing Plans, will be subject to the charges
outlined herein.
4.A $50 MONTHLY INVESTMENT PLAN
(ASSUMING THAT ALL INVESTMENTS ARE MADE IN ACCORDANCE WITH THE TERMS OF THE
PLAN)
AT THE END OF AT THE END OF AT THE END OF
10 YEARS 6 MONTHS 1 YEAR 2 YEARS
(120 INVESTMENTS) (6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
% OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL
AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT
INVESTMENTS
10 YEARS (120 INVESTMENTS)
Total Investments $ 6,000.00 100.00% $ 300.00 100.00% $ 600.00 100.00% $
1,200.00 100.00%
Deduct:
Creation and Sales Charges 494.40 8.24 150.00 50.00 300.00 50.00 321.60
26.80
Custodian Fees 132.00 2.20 6.60 2.20 13.20 2.20 26.40 2.20
Total Deductions (A) 626.40 10.44 156.60 52.20 313.20 52.20 348.00 29.00
Net Amount Invested under Plans 5,373.60 89.56 143.40 47.80 286.80 47.80
852.00 71.00
15 YEARS (180 INVESTMENTS)
Total Investments $ 9,000.00 100.00% $ 300.00 100.00% $ 600.00 100.00% $
1,200.00 100.00%
Deduct:
Creation and Sales Charges 780.48 8.67 150.00 50.00 300.00 50.00 334.32
27.86
Custodian Fees 198.00 2.20 6.60 2.20 13.20 2.20 26.40 2.20
Total Deductions (A) 978.48 10.87 156.60 52.20 313.20 52.20 360.72 30.06
Net Amount Invested under Plans 8,021.52 89.13 143.40 47.80 286.80 47.80
839.28 69.94
25 YEARS (300 INVESTMENTS)
Total Investments (B) $ 15,000.00 100.00% $ 300.00 100.00% $ 600.00 100.00%
$ 1,200.00 100.00%
Deduct:
Creation and Sales Charges 1,123.68 7.49 150.00 50.00 300.00 50.00 334.32
27.86
Custodian Fees 330.00 2.20 6.60 2.20 13.20 2.20 26.40 2.20
Total Deductions (A) 1,453.68 9.69 156.60 52.20 313.20 52.20 360.72 30.06
Net Amount Invested under Plans 13,546.32 90.31 143.40 47.80 286.80 47.80
839.28 69.94
NOTES:
(A) Does not include a service charge, payable first from dividends and
distributions and then, if necessary, from principal, to cover certain
administrative expenses actually incurred. The amount of such a charge will
be determined annually by pro rating each Plan's administrative costs over
the total number of Plan accounts. For fiscal year 1995 , the charge
was $ 6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. In addition, subsequent to January 1, 1986, this charge is subject
to increases by the Sponsor, in the aggregate not to exceed increases in
the Consumer Price Index. For Plans established prior to January 1, 1986
and after October 30, 1982, this service charge cannot exceed $10 per year.
For Plans established prior to October 31, 1982, this charge cannot exceed
$2 per year. (If a face amount change is made the Planholder is
subject to the current prospectus at the time of the face change.)
(B) The 25-year (300 investments) schedule reflects the charges applicable
to a 15-year Plan which is continued under the Extended Investment Option.
It does not include the reduced Custodian Fee rate of $0.75 per investment
for Plans established under an Automatic Investment Program as described on
page . The Custodian Fee may be increased as set forth on pages and .
Dividends and distributions received on Fund shares during the periods
shown above have not been included or reflected in any way in the amounts
shown in the table.
After the first 12 investments, the Creation and Sales Charges deducted
from any investment will not exceed 3.73% of the net investment in Fund
shares in the case of a 10-year Plan and 6.07% of the net investment in
Fund shares in the case of a 15-year Plan (before deduction of Custodian
Fee).
The amounts shown are subject to an additional Custodian charge of $2.50
(plus transfer taxes, if any) if the Plan is terminated prior to completion
of all Plan investments.
INVESTMENT OBJECTIVE
Fidelity Destiny Portfolios, a series fund consisting of two separate
funds - Destiny I and Destiny II (collectively referred to as the Funds),
is an open-end, management investment company. Each Fund's objective is to
seek growth of capital (see the accompanying Prospectus beginning on page
F-1). A mutual fund is an investment that pools shareholders' money and
invests it toward a specified goal. Each Fund is a diversified fund.
Diversification, when successful, can mean higher returns with decreased
volatility.
Each Fund seeks capital growth primarily from equity securities. Each Fund
will tend to be fully invested in common stocks and securities convertible
into common stocks, but may also buy other types of securities such as
preferred stocks and bonds. The Funds have the flexibility to invest in
large or small, domestic or foreign issuers. The Funds' investments are
selected and supervised by Fidelity Management & Research Company (FMR).
Reference is made to the Fidelity Destiny Portfolios' Prospectus for a
description of the Funds' investment policies and the business experience
of FMR.
HOW TO START A DESTINY PLAN
Planholders may choose either a 10- or 15-year Plan and make regular
monthly investments in amounts of $50 or more as shown on pages 5 and 6. To
start a Plan, investors should complete a Plan Application and have their
investment professional mail it to the Sponsor, in care of Boston Financial
Data Services, Inc., P.O. Box 8300, Boston, Massachusetts 02266-8300,
together with a check in the amount of the initial monthly investment
unit , made payable to Destiny I or Destiny II. Plans can be funded
automatically through preauthorized check transactions or for military
employees, a government allotment. Planholders who elect to fund their
accounts under an Automatic Investment Program will receive a reduced
Custodian Fee of $0.75 per investment, as explained on page . The
appropriate forms for automatic monthly investments should be attached to
your Plan Application.
After the Plan Application is accepted by the Sponsor, Planholders will
receive a confirmation statement showing the number of whole and fractional
Fund shares purchased for their account. Plan Certificates, issued under
prior prospectuses , are no longer provided. All Plans established
under this Prospectus are governed strictly by the rules, rights,
privileges and benefits described herein. IT IS IMPORTANT, THEREFORE, THAT
YOU RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
A Planholder will then send regular monthly investments, made payable to
Destiny I or Destiny II, directly to Boston Financial. Investments, after
applicable deductions, will be applied toward the purchase of shares at the
then current NAV. A Planholder may terminate a Plan completely or partially
at any time as described on pages , and . All correspondence should be
directed to Boston Financial Data Services, Inc., P.O. Box 8300, Boston,
Massachusetts 02266-8300.
TAX-SHELTERED RETIREMENT PLANS
A Plan may be purchased by individuals who wish to establish tax-sheltered
retirement plans, including individual retirement accounts (IRAs) and
qualified pension and profit sharing plans. However, the only such plan
made available by Fidelity Destiny Portfolios is the Destiny IRA (which
includes SEP/IRAs) . IRA Plans can be established through contributions,
through the rollover of prior year qualified assets or through direct
transfer of qualified assets from other fiduciary agencies. Such rollovers
or transfers may contain either or both employer sponsored retirement
assets and owner contributions.
Detailed information concerning the Destiny IRA is available from the
Sponsor . This information should be read carefully and consultation
with an attorney or tax adviser may be advisable. The information sets
forth the additional service fees charged for IRAs and describes the
federal income tax consequences of establishing an IRA. Under the Destiny
IRA, dividends and distributions will be reinvested automatically in
additional Fund shares. A Destiny tax-sheltered retirement plan may not be
established by changing the registration of an existing Destiny account.
The annual maintenance fee charged by the Custodian for Destiny IRA Plans
offered by the Sponsor is $10.
PLANHOLDERS MAY QUALIFY FOR REDUCED FEES
1. REDUCED CUSTODIAN FEES UNDER AN AUTOMATIC INVESTMENT PROGRAM
The Destiny Plans were created to utilize the investing method of
dollar-cost averaging by investing a fixed amount on a regular monthly
basis. (It should be noted that dollar-cost averaging does not assure a
profit or guard against a loss. If shares are sold when their value is less
than their cost, a loss will occur.) To encourage Planholders to make
monthly investments and to eliminate the burden of writing a check every
month, all Plans established or face changed after November 29, 1993 under
an Automatic Investment Program, where monthly investments are
automatically debited from the Planholder's bank account or government
allotment (for military employees), will receive a reduced Custodian Fee
rate of $0.75 per investment. The Custodian Fee charged at any one time may
not exceed $5.
To initiate this program, Planholders should complete a Preauthorized
Check Transaction Form, attach a voided blank check (for military personnel
a government allotment form) and send it to Boston Financial along with
their Plan Application. Boston Financial will then draft the Planholder's
bank account in the amount of the monthly Plan investment unit. The
proceeds of the draft (less applicable Creation and Sales Charges, and
other applicable fees and charges) will be invested in the Planholder's
account. The Planholder may terminate this program at any time by written
notice to Boston Financial at least five business days prior to the date of
the next scheduled draft. The Planholder may begin or change this program
at any time by written notice to Boston Financial at least 15 days prior to
the date of the request.
Although it has no current intention of doing so, the Sponsor reserves the
right to reimpose the regular Custodian Fee rate as noted on pages 5 and 6
at some future date.
2. PURCHASING TWO OR MORE PLANS AT THE SAME TIME
The face amounts of two or more Plans purchased at one time by "any
person" may be combined, provided the combined monthly investment is at
least $150 on 15-year Plans and $200 on 10-year Plans, to take advantage of
the lower Creation and Sales Charges available on larger sized investments.
HOWEVER, 10-YEAR AND 15-YEAR PLANS MAY NOT BE COMBINED IN ORDER TO TAKE
ADVANTAGE OF THIS PRIVILEGE.
The term "any person" includes an individual, his or her spouse and
children under the age of 21, or a trustee or other fiduciary of a single
trust estate or single fiduciary account - including a pension,
profit-sharing or other employee benefit trust created pursuant to a plan
qualified under Section 401 of the Internal Revenue Code - even though more
than one beneficiary is involved. The term "any person" shall not include a
group of individuals whose funds are combined, directly or indirectly, for
the purchase of redeemable securities of a registered investment company
whether jointly or through a trustee, agent, custodian or other
representative for such a group of individuals.
To qualify for the lower Creation and Sales Charges, all of the
applications for the Plans involved must be submitted at the same time,
with a letter from the Planholder or his investment professional requesting
that the face amounts of such Plans be combined for the purpose of
determining the applicable Creation and Sales Charges as shown on pages 5
and 6. In the event investments under one or more of such Plans are
discontinued, the remaining Creation and Sales Charges will be changed to
reflect the charges applicable to that Plan that remains in effect.
3. RIGHTS OF ACCUMULATION
The face amount of Plans which have been completed (and not redeemed) or
on which the investments are current may be aggregated in ascertaining the
Creation and Sales Charges applicable to a new purchase of a Plan by "any
person," as defined above. A current Plan is defined as a Plan where there
are at least as many investments recorded as there are months elapsed since
establishment. To qualify for the reduced Creation and Sales Charges
available on large purchases, the combined monthly investment must be at
least $150 on 15-year Plans and $200 on 10-year Plans. Qualified retirement
plans shall be considered current for this purpose at all times. Further,
existing spousal IRA Plans at the $93.75 per month investment unit and
individual IRA Plans at the $166.66 per month investment unit may be
combined with other newly purchased Plans or Plan size increases to qualify
for possible lower sales charges on future investments. This privilege is
optional and can only be exercised with the purchase of a new Plan or a
Plan size increase on another existing Plan. The Sponsor must be notified
in writing, if the Planholder wishes to exercise this privilege. However,
10-year and 15-year Plans may not be combined in order to take advantage of
this privilege.
RIGHTS AND PRIVILEGES OF PLANHOLDERS
1. DISTRIBUTIONS
Unless otherwise directed, all dividends and other distributions, after
applicable deductions, are automatically used to purchase additional Fund
shares at NAV as of the record date for the distribution. NO SALES
CHARGE IS MADE ON ANY SUCH REINVESTMENT.
If a Planholder wishes to receive the dividends and other distributions in
cash - rather than additional shares - the Planholder must instruct Boston
Financial in writing. Such instructions must be received at least seven
days prior to the record date of a dividend or distribution. A Planholder
may change these instructions at any time. A charge of $2.50 is assessed
for each change. However, distributions on Individual Retirement
Accounts will be automatically reinvested unless the Planholder is age 59
1/2 or older.
Dividends and other distributions are made on a per-share basis. After
every distribution, the value of a share drops by the amount of the
distribution. If an investment is made shortly before the ex-dividend date
of the dividend or distribution, the Planholder will pay the full price for
the shares (buying a dividend). Dividends and distributions, if declared,
normally are paid by each Fund annually and are reportable by Planholders
for income tax purposes (see "Taxes" on page ).
2. FEDERAL INCOME TAX WITHHOLDING
As an additional service, Boston Financial can withhold 28% of any
dividend or other distribution paid by the Funds and send that amount to
the Internal Revenue Service (IRS) as a credit against the Planholder's tax
liability, if any. The amount withheld may or may not be equal to the
additional taxes the Planholder may owe, due to the dividend or
distribution. If the Planholder elects to authorize this withholding, the
number of Fund shares purchased with the remainder of the dividend or
distribution will be less than would have otherwise been the case.
This service is available only to Plans that reinvest their dividends and
other distributions but is not available for tax-sheltered retirement
plans, including IRAs. This option can be initiated by completing the Tax
Withholding Form and submitting that to Boston Financial at least 30 days
in advance. Once initiated, this will remain in effect until Boston
Financial is notified in writing to terminate the withholding.
3. TRANSFERRING OR ASSIGNING RIGHTS IN THE PLAN
To secure a loan, Planholders (excluding Planholders of Destiny IRAs) may
assign their right, title and interest in the entire Plan to a bank or
other lending institution. Partial assignment is not permitted. The bank or
other lending institution, however, will not be entitled to exercise the
right of partial withdrawal or partial redemption. In addition, a
Planholder may:
1. transfer his right, title and interest to another person whose only
right shall be the privilege of complete withdrawal from the Plan; or
2. transfer his right, title and interest to another person, trustee or
custodian acceptable to the Sponsor, who has made application to the
Sponsor for a similar Plan. Additional documentation may be required.
Boston Financial will provide Planholders with the appropriate assignment
forms. A charge of $2.50 is made for each transaction plus transfer taxes,
if any.
4. RETAINING FULL VOTING RIGHTS IN FUND SHARES
The Planholder will receive a notice at least 15 days before any matter is
submitted for a vote of the shareholders of Fidelity Destiny Portfolios:
Destiny I and Destiny II. The Custodian will vote the shares held in the
Planholder's account in accordance with the instructions. In the absence of
such instructions, the Custodian will vote these shares in the same
proportion as it votes the shares for which it has received instructions
from other Planholders.
A Planholder wishing to attend any meetings at which shares may be voted
may request Boston Financial to furnish a proxy or otherwise make
arrangements for exercising voting rights.
5. MAKING PREINVESTMENTS TO COMPLETE THE PLAN AHEAD OF SCHEDULE
A Plan may be completed ahead of schedule by making investments in advance
of their due dates but not more than 24 investments in one calendar year
including any monthly investments made. In addition to these advance
investments, a Planholder may make an additional 24 investments which may
be exercised initially or at any time during the life of the Plan.
Investments may be accrued and paid in a lump sum. The 48
preinvestment s provision described herein may be waived ONLY
to make a Plan that is in arrears current, as defined on page 10, for a
transfer of assets from a tax-sheltered retirement plan to a Destiny
tax-sheltered retirement plan or in the event of the death of the
Planholder, to allow the Plan to be completed at one time by the estate or
beneficiary. There is no reduction in the Creation and Sales Charges for
advanced investments. However, on multiple investments, the Custodian's Fee
cannot exceed $5. This is described more fully under the heading "Custodian
Fees" on page .
6. CHANGING THE FACE AMOUNT OF THE PLAN
A Planholder may increase the face amount of a Plan at any time. The new
Plan must be one of the denominations listed on pages 5 and 6. For the
period of six months following establishment of a new Plan, a Planholder
may decrease the amount of his Plan by as much as 50%. For the period of
six months following a face change increase, a Planholder may decrease the
amount of his Plan back to its previous Plan size. Request for changes in
the face amount of a Plan should be sent to Boston Financial along with a
completed Plan Application for the new face amount. If Planholders wish to
take advantage of the $0.75 reduced Custodian Fee as described on page 10,
the appropriate forms should be attached. An increase or decrease in a Plan
amount does not create new cancellation and refund rights. The Creation and
Sales Charges already paid on the existing Plan will be recomputed and
applied as a credit to the Creation and Sales Charges due on the new Plan
at the time that it is established. Any additional Creation and Sales
Charges due on the new Plan will be obtained from a liquidation of Fund
shares. A charge of $2.50 will be made for any change in Plan size.
7. EXTENDED INVESTMENT OPTION
Under a 15-year Plan, a Planholder may continue making monthly investments
after completing all scheduled investments, thereby automatically
activating the Extended Investment Option. (10-year Plans cannot be
extended unless they are face changed to 15-year Plans, thereby enabling
the Planholder to benefit from the Extended Investment Option.) Investments
under this option are subject to the same deductions (with the exception of
the Custodian Fee) as applied to the Planholder's last scheduled
investment. The Custodian reserves the right to increase the Custodian Fee
applicable to this period to the rate then being charged for new Plans of
the same denomination. In no case, however, will this new rate be more than
75% higher than the Custodian Fees detailed in this Prospectus.
If, under this option, the Planholder fails to make regularly scheduled
investments for six consecutive months, after being credited for any
advance investments made under the option, the Plan may be terminated by
the Sponsor or the Custodian.
When the Extended Investment Option expires either through failure to make
required monthly investments or upon written notice of termination to
Boston Financial or for any other reason, the Custodian has the right to
increase the fee to the rate currently being charged for new Plans of the
same denomination. In no case, however, will this new rate be more than 75%
higher than the current annual rate of the Custodian Fees.
All Extended Investment Options will terminate after the completion of the
300th investment made under the Plan.
8. BORROWING AGAINST YOUR PLAN WITHOUT TERMINATION
While a redemption of all of the Plan shares normally will terminate the
Plan, a Planholder may sell (redeem) less than all of the shares without
terminating the Plan. If the Planholder has owned the Plan for at least 45
days, the Planholder may direct the Custodian, as agent, to sell up to 90%
of the Planholder's shares and to pay the proceeds to the Planholder. Any
partial sale of shares and cash withdrawal must involve at least $100 and
may be exercised as often as desired.
If the cash withdrawal is over $100,000, or if the proceeds are to be sent
to an address other than the address of record, a signature guarantee will
be required. A signature guarantee is a widely accepted way to protect you
and Fidelity by guaranteeing the signature on your request; it may not be
provided by a notary public. Signature guarantees will be accepted from
banks, brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities dealers, government securities brokers,
credit unions (if authorized under state law), national securities
exchanges, registered securities associations, clearing agencies and
savings associations. All documents must be in proper order before any
withdrawals or liquidations can be executed. The redemption price will be
at the next determined NAV. The request should be sent to Boston Financial
Data Services, Inc., P.O. Box 8300, Boston, Massachusetts 02266-8300.
Ordinarily, Planholders will be sent the proceeds as a result of
liquidating shares within seven calendar days from the time Boston
Financial is notified. However, Boston Financial will not mail redemption
proceeds until checks received for the shares purchased have cleared (which
may take up to 7 calendar days).
Following the sale of Destiny shares, a Planholder may - although there is
no obligation to do so - repurchase Destiny shares in an amount not to
exceed the dollar amount of the original sale. This Replacement Privilege
extends for an unlimited amount of time, provided a "waiting period" of 90
days passes between the sale and subsequent repurchase of those Destiny
shares. For Planholders of the Destiny IRA, the waiting period is 45 days.
For example, if shares of a Destiny IRA were withdrawn, the Planholder
could reinvest in Destiny at an amount equal to the amount of the original
withdrawal at any future time, provided 45 days had elapsed. In the event
assets are distributed directly to the Planholder from a Destiny IRA, the
Planholder will be responsible for the income taxes on the distribution
and, if under age 59 1/2, an early distribution penalty, if those assets
are not reinvested into another IRA within 60 days of receipt of the
distribution. The privilege to replace those Destiny shares at any time in
the future would, however, still apply, and the replacement need not be
made in one transaction. Regardless of the Plan type, all replacements must
be at least 25% of the amount withdrawn or $2,000, whichever is less and
are reinstated at the next determined NAV. All withdrawal requests
must be made in writing and signed by the Planholder(s). The Custodian or
Boston Financial may require additional documentation. The partial
liquidation and restoration privilege is intended to facilitate the
temporary use for emergency purposes of funds invested in a Plan. The
Sponsor reserves the right to limit the number of transactions in which a
partial withdrawal can be replaced. The Sponsor further reserves the right
to impose such additional restrictions as, in its judgment, are necessary
to conform with the requirements of Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers (NASD).
Cash replacements will be applied to the purchase of Fund shares at the
next determined NAV. No partial withdrawal or liquidation shall affect the
total number of monthly Plan investments to be made or the unpaid balance
of monthly Plan investments.
A charge of $2.50 will be made for each partial withdrawal, redemption or
restoration, and the Planholder will be liable for any transfer taxes that
may be incurred. Replacements of partial withdrawals should be identified
clearly as such, in order to distinguish them from additional investments.
A capital gain or loss for federal tax purposes may be realized by the
Planholder upon a cash withdrawal.
9. SYSTEMATIC WITHDRAWAL PROGRAM
When all regularly scheduled investments are completed, a Planholder may
elect to establish a Systematic Withdrawal Program. Under this program, the
Custodian, as the Planholder's agent, withdraws sufficient shares from the
Plan account to provide regular cash withdrawals of $50 or more each month
or quarter, as elected. Except for the $50 minimum, there is no limitation
on the size of the Planholder's withdrawals. The $50 amount is, however,
only a minimum established for administrative convenience and should not be
considered a recommendation for all Planholders. A Planholder has the right
to change the dollar amount of the withdrawal or discontinue the Systematic
Withdrawal Program at any time. Systematic withdrawals occur on the
first day of the month, quarter, or selected period.
The Plan will remain in full force and effect with all rights and
privileges until all shares have been withdrawn from the account. While the
Systematic Withdrawal Program is in force, the Planholder may not elect to
receive dividends and distributions in cash. Planholders should realize
that withdrawals in excess of dividends and distributions will be made from
principal and eventually may exhaust the Plan account. For this reason,
these withdrawals cannot be considered as income on the Planholder's
investment. Also, a capital gain or loss for federal tax purposes may be
realized by the Planholder upon each withdrawal payment. If a Planholder
purchases two or more Plans, it is ordinarily disadvantageous to
participate in the Systematic Withdrawal Program on a completed Plan while
still making regular investments on the uncompleted Plan.
A charge of $1 per check will be made for each withdrawal under a
Systematic Withdrawal Program. This charge is collected by redeeming the
necessary fractional shares. For any withdrawal made 10 years after the
issuance of a Plan, the charge may then be increased to the amount
specified in the then current Prospectus. However, this charge may not
exceed $1.75.
While the Sponsor does not contemplate doing so, it reserves the right to
discontinue offering the Systematic Withdrawal Program at any time after
90-days notification to all Planholders who have not elected to participate
in the program. Those who are already participating will be allowed to
continue.
Completed or terminated Plans may be exchanged at NAV (subject to minimum
initial investment requirements) for shares of any of the funds offered by
Fidelity Investments , including the Fidelity Advisor Funds. (For
more information, see "Exchange Privilege" on page .)
10. CANCELLATION AND REFUND RIGHTS
Planholders have certain rights of cancellation. Within 60 days after the
initial investment in a new Plan, the Sponsor will send the Planholder
notice regarding cancellation rights. If a Planholder elects to cancel his
Plan within 45 days of the mailing date of that notice, a cash refund will
be received which is equal to the sum of (1) the total net asset value of
the Fund shares credited to the Plan account on the date that the
cancellation request is received by Boston Financial, and (2) an amount
equal to the difference between the total investments made under the Plan
and the net amount invested in Fund shares (including all Custodian Fees
paid to date).
In addition, Planholders may provide to Boston Financial written
instructions to cancel their Plan at any time within an 18-month period of
Plan establishment and receive from Boston Financial a cash payment equal
to the sum of (1) the total net asset value of the Fund shares credited to
the Plan account upon receipt of those instructions, and (2) an amount by
which the Creation and Sales Charges deducted from the Planholder's total
investments exceed 15% of the investments made up to the date of
redemption. Custodian Fees, which may amount to 2.2% of the total
investments, are not subject to refund.
In order to receive the above refunds, the Planholder's request should be
sent in writing to Boston Financial Data Services, Inc., P.O. Box 8300,
Boston, Massachusetts 02266-8300. For your protection, if the Planholder's
cancellation request involves over $100,000, or if the proceeds are to be
sent to an address other than the address of record, you must send a letter
of instruction signed by all registered owners with signature(s) guaranteed
to Boston Financial.
A Planholder who has redeemed shares under this Cancellation and Refund
Rights may not reinstate the proceeds at NAV from such a cancellation or
refund, except as mentioned under the "Plan Reinstatement Privilege"
discussed below. Under the so-called "wash sale rule," federal tax laws
presently do not permit the recognition of a loss when an individual sells
and re-acquires the same securities within a 30-day time period. Gains,
however, are recognized at the time of redemption.
The Sponsor will send the Planholder a written notice of the 18-month
right of cancellation if either of the following occurs: (A) during the
first 15 months after the date of issuance of Plan establishment, the
Planholder has missed three investments or more; or (B) if following the
first 15 months after the date of Plan establishment (but prior to 18
months after such date), the Planholder has missed one investment or more.
In the event the Sponsor has previously sent a notice in connection with
event (a) above, a second notice will not be sent even if additional
investments are missed. These notices will inform Planholders of their Plan
cancellation as described on page , and also will include the value of the
account and the amount the Planholder would be entitled to receive upon
cancellation, as of the date of the notice.
11. TERMINATING THE PLAN AND WITHDRAWAL OF SHARES
A Planholder may terminate his Plan at any time by sending written
instructions to Boston Financial. In this way, a Planholder avoids paying
the commission that a security dealer can charge for terminating a Plan. A
charge of $2.50 is made for terminating a Plan on which investments have
not been completed.
In terminating the Plan, the Planholder may: (1) request the Custodian of
the Plan to deliver to Fidelity Service Co. (Service), the transfer agent
of the Funds, the Fund shares accumulated, properly registered in the
Planholder's name; (2) direct the Custodian, as agent, to withdraw the
shares, redeem them and send the proceeds to the Planholder; or (3)
reinvest the proceeds in any of the Fidelity Advisor Funds by
requesting the Custodian of the Plan to deliver to Boston Financial, as
agent for the Fidelity Advisor Funds, the proceeds of the Plan for
investment at NAV into a similarly registered account. (A Fidelity Advisor
Funds application is required.) For your protection, if the cash withdrawal
is over $100,000, or if the proceeds are to be sent to an address other
than the address of record listed on the account, you must send a letter of
instruction signed by all registered owners with signature(s) guaranteed to
Boston Financial. All documents must be in proper order before any
withdrawals or liquidations can be executed. The redemption price will be
the NAV next determined after such documents have been received. Requests
should be sent to Boston Financial Data Services, Inc., P.O. Box 8300,
Boston, Massachusetts 02266-8300.
Shares held by investors as a result of this action may be exchanged for
shares of certain other funds for which FMR is the investment adviser as
more fully described in the attached Fidelity Destiny Portfolios'
Prospectus under the caption "Exchange Privilege" on page . When
held in conjunction with the Plan, SHARES OF DESTINY I FUND MAY NOT BE
EXCHANGED FOR SHARES OF DESTINY II FUND, NOR MAY SHARES OF DESTINY II FUND
BE EXCHANGED FOR SHARES OF DESTINY I FUND.
The right of redemption of shares of Destiny Funds may be suspended at
times when the New York Stock Exchange (NYSE) is closed or in the event
certain other emergencies have been determined to exist by the Securities
and Exchange Commission (SEC). As long as the right of redemption of shares
of each Fund is suspended, no shares may be redeemed, and, therefore no
cash withdrawal may be made.
12. PLAN REINSTATEMENT PRIVILEGE
A Planholder who has terminated his Plan may reinstate his Plan, which
allows for the reinvestment of an amount equal to or at least 10% of the
gross proceeds received upon termination of the former Plan without any
sales charge under identical registration in the original Plan.
Reinstatement is at the NAV of the Plan or Fund into which reinvestment is
made, next determined following timely receipt by Boston Financial of a
reinstatement order and investment. Reinstatement must be made within 60
days following the date of termination of the Plan. A reinstating
Planholder will realize a gain or loss for federal tax purposes as a result
of a termination of the Plan; however, the Planholder may not recognize a
loss for federal tax purposes to the extent the Planholder reinvests the
proceeds within 30 days in a Destiny Plan pursuant to the Plan
Reinstatement Privilege.
The Plan Reinstatement Privilege is available once during the life of the
Plan. The Plan Reinstatement Privilege does not preclude the partial
withdrawal without the Plan termination privilege described on page . A
Planholder who has redeemed his shares under the Cancellation and Refund
Rights described on page 14, may not reinstate the proceeds at NAV from
such a cancellation or refund until all refunded Sales and Creation charges
included in the cancellation have first been deducted in full from the
amount being replaced.
A reinstatement into the Plan will not affect the total number of monthly
investments to be made or the unpaid balance of the monthly Plan
investments under the Plan.
In addition, the Sponsor may, from time to time, extend the Plan
Reinstatement Privilege beyond the 60-day period on the following terms:
1. The Planholder must establish the new Plan with an investment equal to
or at least 10% of the gross proceeds received upon termination of the
former Plan.
2. The number of the next investment due on the new Plan will be the number
of the next investment due on the former Plan at the time it was
terminated.
The ability to establish such new Plans generally will not be available,
except during such limited time periods as may be specified by the Sponsor
from time to time.
SPONSOR AND CUSTODIAN CHARGES
1. CREATION AND SALES CHARGES
The Sponsor receives Creation and Sales Charges to compensate it for
creating the Plan and for selling expenses and commissions paid to
broker-dealer firms. This charge is deducted from each investment. For
example, on a $50 a month Plan, $25 is deducted from each of the first 12
investments. After the first 12 investments, the charge drops to $1.80 on
each subsequent investment in the case of a 10-year Plan and $2.86 in the
case of a 15-year Plan. The rate (percent) of deductions decreases
proportionately as Plan sizes increase. See pages 5 and 6.
2. CUSTODIAN FEES
On minimum sized Plans - 10 or 15 years - the Custodian Fee is $1.10 per
investment. Charges on larger Plans are proportionately less, relative to
their monthly investment, than Custodian Fees charged on smaller Plans.
Accounts established under an Automatic Investment Program after November
29, 1993 will receive a reduced Custodian Fee of $0.75 (see page ). The
Custodian Fee charged per account at any one time may not - regardless of
the number of investments made - exceed $5 per investment. Thus, if the
Planholder submits multiple investments into one account, such that the
aggregate amount would result in a Custodian Fee of more than $5, the fee
will instead be deducted at the maximum rate of $5.
In addition to this fee, the Custodian deducts an annual service charge
from dividends and distributions, and if necessary, from principal, as
reimbursement for administrative costs. The amount of such charge will be
determined by prorating the Plan's annual administrative costs over the
total number of Plan accounts. For fiscal year 1995 , the charge was
$ 6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. Subsequent to January 1, 1986, this charge is subject to increases
by the Sponsor, in the aggregate not to exceed increases in the Consumer
Price Index. For Plans established prior to January 1, 1986 and after
October 30, 1982, this service charge cannot exceed $10 per year. For Plans
established prior to October 31, 1982, this charge cannot exceed $2 per
year.
After the completion of the Plan or, if a Planholder has made investments
in advance of the time period specified in the Plan, the Custodian's annual
fee, after completion of the specified time period, is of 1% of the
face amount of the Plan or $12, whichever is less. As an investor, the
Planholder may, of course, terminate the Plan and receive shares of the
Fund and thus avoid the Custodian Fees; however, the Planholder then will
no longer be eligible for the privilege of partial withdrawal and
reinstatement at NAV. The Custodian also deducts a $12 fee for Plans on
which no investment has been made for a 12-month period after giving credit
for advance investments (inactive account fee). This fee is deducted from
dividends and distributions or, if these are not sufficient, the Custodian
has the right to obtain the amount needed to pay its fee by selling shares.
3. INCIDENTAL SERVICE FEES
The Custodian deducts the fees described below and such other charges as
may be provided for in the Agreement or in the Plans. The Custodian has
certain rights to charge the accounts of the Planholders on a pro rata
basis or to retain shares on a pro rata basis in order to pay fees, taxes
or expenses in connection with the Plans or to set up reserves; therefore,
to such extent it has a lien upon the shares of the Planholder.
The Custodian causes periodic audits to be taken of the records maintained
by it relating to the Plans, unless such audits are arranged for by the
Sponsor, and prepares certain other reports required by law.
The Custodian has delegated certain administrative functions to Boston
Financial, an affiliate of the Custodian. Under the delegation arrangement,
the Custodian pays to Boston Financial a portion or all of the Custodian
Fees and other charges based on the functions which it performs. Boston
Financial mails to each Planholder a receipt for each investment, a
statement of the number of shares held in the Plan, notices (including
distribution notices and tax statements), reports to shareholders,
prospectuses and proxy material.
The Custodian makes charges for certain special services not covered by
the regular Custodian charge. These include a charge of $1 for each
withdrawal under the Systematic Withdrawal Program; a charge of $3 per
account per year for the preparation of a complete transcript and a charge
of $12 for each year on which no investment has been made for a 12-month
period (inactive account fee). A charge of $2.50 will be made for each of
the following: any check or preauthorized check which is not honored by the
bank on which it is drawn; changing instructions as to whether dividends
and distributions are to be received in cash or reinvested in Fund shares;
changing a Plan denomination; a partial withdrawal, liquidation or
restoration of shares or money; a transfer or assignment of title; a
complete withdrawal or termination of a Plan prior to completion; and the
issuance of any Plan denomination in exchange for a different Plan
denomination. EXCEPT FOR THE $12 INACTIVE ACCOUNT FEE (TO INCLUDE COMPLETED
PLANS), THE $2.50 PLAN TERMINATION FEE, AND THE ANNUAL $10 IRA MAINTENANCE
FEE, THE INCIDENTAL FEES DESCRIBED ABOVE WILL BE PAID BY THE SPONSOR
VOLUNTARILY . Although it has no current intention of doing so, the
Sponsor reserves the right to reimpose these fees at some future date.
TAXES
For tax purposes, Planholders are treated as directly owning the Fund
shares. As more fully described in the Fidelity Destiny Portfolios'
Prospectus, dividends and distributions paid to Planholders, or reinvested
for them, are taxable to them individually. An appropriate notice regarding
taxable distributions will be sent to Planholders. Planholders may elect to
instruct Boston Financial to withhold 28% of dividends or distributions and
have that amount sent directly to the IRS. See page 11 for program details.
If Planholders itemize their deductions, they may be able to deduct
Custodian Fees that have been charged against the Plans to the extent such
fees along with the Planholder's other miscellaneous itemized deductions
exceed 2% of the Planholder's adjusted gross income (2% floor). The cost
basis of shares acquired by each Planholder is the amount paid for those
shares, including the Creation and Sales Charges and the cost of reinvested
distributions but not including the Custodian Fees. In addition,
Planholders with IRAs who itemize their deductions may claim as a
miscellaneous itemized deduction (subject to the 2% floor discussed above),
Administrative or Trustee fees incurred in connection with the IRA if such
fees are separately billed or paid.
Any taxes payable with respect to any of the profits realized on sales or
transfers by the Custodian or Sponsor of each Fund's shares or other
property credited to an investor's account in accordance with the
provisions of his Plan and any taxes levied or assessed with respect to the
Funds' shares or the income therefrom shall be borne by the Planholder
individually, and not by the Custodian or Sponsor.
For a more complete and detailed discussion on taxes, see page of
Fidelity Destiny Portfolios' Prospectus.
SUBSTITUTION OF THE UNDERLYING INVESTMENT
The Sponsor may substitute the shares of another investment medium as the
underlying investment if it deems such action to be in the best interest of
the Planholders. Such substituted shares shall be generally comparable in
character and quality to the present Fund shares, and shall be registered
with the SEC under the Securities Act of 1933. Before any substitution can
be effected, the Sponsor must:
(A) obtain an order from the SEC approving such substitution;
(B) give written notice of the proposed substitution to the Custodian;
(C) give written notice of the proposed substitution to each Planholder;
giving a reasonable description of the new Fund shares, with the advice
that, unless the Plan is surrendered within 30 days of the date of the
mailing of such notice, the Planholder will be considered to have consented
to the substitution and to have agreed to bear the pro rata share of
expenses and taxes in connection with it; and
(D) provide the Custodian with a signed certificate stating that such
notice has been given to the Planholder.
If the certificate is not surrendered within 30 days from the date of this
notice, the Custodian shall purchase the new shares for your account with
any dividends or distributions which may be reinvested for your account. If
the new shares are also to be substituted for the shares already held, the
Sponsor must arrange to have the Custodian furnished, without payment of a
sales charge or fees of any kind, with new shares having an aggregate value
equal to the value of the shares for which they are to be exchanged.
If Fund shares are not available for purchase for a period of 120 days or
longer, and the Sponsor fails to substitute other shares, the Custodian
may, but is not required to, either select another underlying investment or
terminate the Plan. If the Custodian selects a substitute investment, it
shall first obtain an order from the SEC approving such substitution as
specified above and then shall notify the Planholder, and if, within 30
days after mailing such notice, the Planholder gives his written approval
of the substitution and agrees to bear the prorata share of actual
expenses, including tax liability sustained by the Custodian, the Custodian
may thereafter purchase such substituted shares. The Planholder's failure
to give such written approval within the 30-day period shall give the
Custodian the authority to terminate the Plan.
TERMINATION OF A PLAN
Although a Plan may call for regular investments over a 10- or 15-year
period, neither the Sponsor nor the Custodian can terminate your Plan until
300 investments have been made unless the Plan has been in default for more
than six consecutive months or unless shares of the Fund are not obtainable
and a substitution is not made. The year of default will not start until
the Planholder has been given full credit for the amount of any
preinvestments made. Under current policies, ONE INVESTMENT IS REQUIRED
DURING EACH 6-MONTH PERIOD OF THE CALENDAR YEAR TO PREVENT THE PLAN FROM
BEING IN DEFAULT.
After 300 investments, or if other events justify termination, the Sponsor
or the Custodian has the right to terminate a Plan 60 days after mailing
the Planholder written notice. Such notice will request that the Planholder
elect to have the Plan either distributed in cash or in Fund shares
(together with the cash value of any fractional shares) after deduction for
all authorized charges, fees and expenses. On termination, the Custodian,
acting as the Planholder's agent, may surrender for liquidation all of the
Fund shares credited to the Plan, or sufficient shares to pay all
authorized deductions and leave no fractional shares. The shares and/or
cash, after paying all authorized deductions, will be held by the Custodian
for delivery to the Planholder.
No interest will be paid by the Custodian on any cash balances. If the
Planholder does not respond within 60 days after the notice of termination,
the Custodian, at its discretion, may at any time thereafter fully
discharge its obligations by mailing the check for the liquidated value of
the shares to the Planholder. The Planholder will then have no further
rights under the Plan except that if the check is returned to the Custodian
undelivered, the Custodian will continue to hold these assets for the
benefit of the Planholder, subject only to escheat laws and without
obligation to pay interest or to reinvest the same.
THE CUSTODIAN AND SPONSOR
1. THE CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, is the Custodian for the Plans under a Custodian Agreement
(the Agreement) with the Sponsor and maintains custody of the Plans.
Investments under the Plans are sent to Boston Financial who, after making
authorized deductions, applies the money to the purchase of Fund shares.
Investments in Destiny Plans I purchase shares of Destiny I; investments in
Destiny Plans II purchase shares of Destiny II. The Custodian holds these
shares in its custody, receiving dividends and distributions that, at the
Planholder's option, may be remitted either to the Planholder or reinvested
in additional Fund shares.
The Custodian has assumed only those obligations specifically imposed on
it under its Agreement with the Sponsor. These obligations do not include
the duties of investment ordinarily imposed upon a trustee. The Custodian
has no responsibility for the choice of the underlying investment, for the
investment policies and practices of the manager of the Fund or for the
acts or omissions of the Sponsor.
The Agreement cannot be amended to affect the rights and privileges of any
investor without written consent of the Planholder, nor may the Custodian
resign unless a successor has been designated and has accepted the
Custodianship. Such successor must be a bank or trust company having
capital, surplus and undivided profits totaling at least $2,000,000. The
Custodian may be changed without notice to, or approval of, Planholders.
The Custodian may terminate its obligation to accept new Plans for
custodianship if the Sponsor fails to perform certain activities it is
required to perform under the Agreement or if the Custodian terminates
after the third year of the life of the Agreement on 90 days' notice, or
after the expiration of any further two-year period on 30 days' notice.
2. THE SPONSOR
Fidelity Distributors Corporation, 82 Devonshire Street, Boston,
Massachusetts 02109, is a Massachusetts corporation organized on July 18,
1960. It is a broker-dealer registered under the Securities Exchange Act of
1934 and a member of the NASD. The Sponsor's Directors and Executive
Officers are listed below.
Edward C. Johnson 3d, Director, is Chairman, Chief Executive Officer and a
Director of FMR Corp.; a Director and Chairman of the Board and of
the Executive Committee of FMR; Chairman and a Director of FMR Texas Inc.,
Fidelity Management & Research (U.K.) Inc., (1986), and Fidelity Management
& Research (Far East) Inc. He is Trustee and President of the mutual funds
for which FMR is investment adviser.
W. Humphrey Bogart, Director, is the Chief Executive Officer, President
and a member of the Executive Committee of Fidelity Investments Southwest
Company, a division of Distributors, and Senior Vice President, Regional
Centers, FMR Corp.
Kurt Lange, President, is C hief Financial Officer of Fidelity
Investments Premium Assets Group.
Arthur S. Loring, Vice President and Clerk, is Senior Vice President
(1993) and General Counsel of FMR, and Vice President-Legal of FMR Corp.
Caron Ketchum, Treasurer, is an employee of FMR Corp.
Other Vice Presidents of FDC include: William L. Adair and
Thomas Littauer .
During the twelve months ended September 30, 1995 , officers of the
Sponsor received no compensation from the Sponsor for their services to the
Sponsor. All officers and employees of the Sponsor are currently covered by
a broker's blanket bond in the amount of $ 220, 000,000.
Plans may be purchased and investments made thereunder at NAV by any of
the following: Trustees of the Fund s , directors, officers and
full-time employees of FMR Corp. (or its direct or indirect subsidiaries)
or by employee benefit plans covering employees of FMR Corp. or its
affiliates, provided such purchases are made for investment purposes and
that the shares will not be resold except to the Custodian or to the
Fund s .
The Sponsor is an affiliate of FMR, which is a wholly owned subsidiary of
FMR Corp. The Sponsor is principal underwriter for other Fidelity funds
whose shares are offered for sale to the public and is sponsor for other
unit investment trusts for accumulation of shares of certain other Fidelity
funds. FMR is adviser to the funds in the Fidelity family of funds.
GENERAL
The terms of the Plans are set out in a Custodian Agreement which is
governed by the laws of The Commonwealth of Massachusetts. The Plans are
considered to be a unit investment trust under the Investment Company Act
of 1940, and are so registered with the SEC. Such registration does not
imply supervision of management or investment practices or policies by the
SEC.
The organization, management and investment policies of Fidelity Destiny
Portfolios are fully described in the Funds' Prospectus beginning on page
F-1. Generally, shares of the Funds are purchased at NAV within two
business days of the date the Custodian receives Plan investments.
Dividends and distributions received on Fund shares will be reinvested by
the Custodian, after making authorized deductions, in additional shares of
the Fund at the then current NAV unless otherwise directed by the Sponsor
or unless the Planholder directs Boston Financial to remit them to the
Planholder in cash.
Commissions and Servicing Charges ranging from 40% to 93% of the total
Creation and Sales Charges will be paid to authorized investment
broker-dealer firms and mutual fund dealers that are members of the NASD
and have executed a Destiny Dealer's Agreement with the Sponsor. From time
to time the Sponsor may increase the commissions paid to broker-dealer
firms to 100%. Also, the Sponsor will, at its expense, provide promotional
incentives such as sales contests and luxury trips to investment
professionals who support the sale and service of the Destiny Plans without
reimbursement from the Destiny Funds. In some instances, these incentives
may be offered only to certain investment professionals whose
representatives provide services in connection with the sale or expected
sale of significant amounts of Plans. These broker-dealer firms are
independent contractors. Nothing herein or in other literature and
confirmations issued by the Sponsor, the Custodian or Boston Financial
including the words "representative" or "commission," shall constitute any
broker-dealer, a partner, employee or agent of the Sponsor, the Custodian
or Boston Financial. Neither the Sponsor, the Custodian nor Boston
Financial shall be liable for any acts or obligations of any such dealer or
investment broker.
Fidelity Systematic Investment Plans are currently offered in all states
except Maine. The Sponsor is seeking to register the Plans in this
state. Ohio salesmen must be registered under the Ohio Bond Debenture Act.
5.ILLUSTRATION OF A HYPOTHETICAL $50 MONTHLY
DESTINY I PLAN
IN TERMS OF AN ASSUMED INITIAL INVESTMENT OF $50 AND SUBSEQUENT INVESTMENTS
OF $50 PER MONTH
WITH INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS REINVESTED IN
ADDITIONAL SHARES
The table below covers the period from October, 19 80 to September,
1995 and investments are made at the end of each month.
This period was one of widely fluctuating common stock prices. The results
shown should not be considered a representation of the dividend income or
capital gain or loss in the Plans today. Such Plans cannot assure a profit
or protect against depreciation in declining markets.
DEDUCTIONS (A) CUMULATIVE TOTAL VALUE OF SHARES
ANNUAL ANNUAL
INVEST- FISCAL ANNUAL ANNUAL DIVIDEND CAPITAL GAIN
MENT YEAR CUMULATIVE SALES CUSTODIAN TOTAL INCOME DISTRIBUTIONS FROM
FROM FROM TOTAL VALUE
NO. ENDED INVESTMENTS CHARGES FEES (B) SHARES REINVESTED REINVESTED
INVESTMENT DIVIDENDS CAPITAL GAINS OF PLAN (C)
1-12 Sept-8 1 $ 6 00.00 $ 300.00 $ 13.20 32.259 $
8.86 $ 28.60 $ 235.21 $ 7.85 $
25.33 $ 268.39
13-24 Sept-8 2 1, 2 00.00 34.32 13.20 101.546
28.36 25.21 811.71 39.39 54.69
905.79
25-36 Sept-8 3 1,8 00.00 34.32 13.20 170.849
46.93 301.70 1,747.79 102.92 372.03
2,222.75
37-48 Sept-8 4 2,4 00.00 34.32 13.20 259.014
69.29 348.47 1,986.07 164.46 703.80
2,854.33
49-60 Sept-8 5 3 , 0 00.00 34.32 13.20 348.008
136.72 338.83 2,449.41 292.90
1,016.18 3,758.49
61-72 Sept-8 6 3,6 00.00 34.32 13.20 476.885
121.86 967.28 3,175.26 440.36
2,054.54 5,670.16
73-84 Sept-8 7 4, 2 00.00 34.32 13.20 601.284
137.41 1,175.65 4,532.75 683.98
3,712.34 8,929.07
85-96 Sept-8 8 4,8 00.00 34.32 13.20 717.708
156.05 552.87 4,218.86 722.19
3,614.04 8,555.08
97-108 Sept-8 9 5,4 00.00 34.32 13.20 804.966
216.34 418.48 5,872.67 1,143.21
4,937.86 11,953.75
109-120 Sept- 90 6 , 0 00.00 34.32 13.20
935.808 275.26 888.75 4,840.91
1,083.49 4,435.00 10,359.39
121-132 Sept-9 1 6,6 00.00 34.32 13.20 1021.708
319.66 416.52 7,491.44 1,863.51
6,726.74 16,081.68
133-144 Sept-9 2 7, 2 00.00 34.32 13.20 1251.562
341.54 2,551.31 7,679.41 2,130.57
9,013.52 18,823.49
145-156 Sept-9 3 7,8 00.00 34.32 13.20 1452.809
365.43 2,271.60 9,180.74 2,782.05
12,531.57 24,494.36
157-168 Sept-9 4 8,4 00.00 34.32 13.20 1586.175
160.39 1,516.42 10,199.96 3,092.72
14,782.62 28,075.30
169-180 Sept-9 5 9, 0 00.00 34.32 13.20 1939.937
541.06 4,026.13 11,442.67 3,994.99
20,994.35 36,432.02
$ 9, 0 00.00 $ 780.48 $ 198.00 $ 2,925.17 $
15,827.82 TOTAL $ 36,432.02
NOTES:
(A) Under the terms of this Plan, out of the initial investment of $50, $25
is deducted as a sales charge from the initial investment and from each of
the next 11 investments for an annual charge of $300. Additional deductions
are $1.10 for Custodian Fees from each investment for an annual charge of
$13.20. Deductions from the first 12 investments therefore total $313.20 or
52.20% of the first 12 monthly investments. If all of the 15 years'
investments are made, total sales charges and Custodian Fees amount to
10.87% of the total agreed investments.
(B) Exclusive of a Service Charge, payable first against dividends and
distributions and then, if necessary, against principal, to cover certain
administrative expenses actually incurred. The amount of such a charge will
be determined annually by pro rating each Plan's administrative costs over
the total number of Plan accounts. For fiscal year 1995 , the charge
was $ 6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. In addition, subsequent to January 1, 1986, this charge is subject
to increases by the Sponsor, in the aggregate not to exceed increases in
the Consumer Price Index. For Plans established prior to January 1, 1986
and after October 30, 1982, this service charge cannot exceed $10 per year.
For Plans established prior to October 31, 1982, this charge cannot exceed
$2 per year.
(C) Total is determined by Destiny I's fiscal year-end NAV.
No adjustments have been made for any income taxes payable by investors on
capital gain distributions and dividends reinvested.
6.ILLUSTRATION OF A HYPOTHETICAL $166.66 MONTHLY
DESTINY I PLAN
IN TERMS OF AN ASSUMED INITIAL INVESTMENT OF $166.66 AND SUBSEQUENT
INVESTMENTS OF $166.66 PER
MONTH WITH INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS REINVESTED IN
ADDITIONAL SHARES
The table below covers the period from October, 19 80 to September,
199 5 and investments are made at the end of each month.
This period was one of widely fluctuating common stock prices. The results
shown should not be considered a representation of the dividend income or
capital gain or loss in the Plans today. Such Plans cannot assure a profit
or protect against depreciation in declining markets.
DEDUCTIONS (A) CUMULATIVE TOTAL VALUE OF SHARES
ANNUAL ANNUAL
INVEST- FISCAL ANNUAL ANNUAL DIVIDEND CAPITAL GAIN
MENT YEAR CUMULATIVE SALES CUSTODIAN TOTAL INCOME DISTRIBUTIONS FROM
FROM FROM TOTAL VALUE
NO. ENDED INVESTMENTS CHARGES FEES (B) SHARES REINVESTED REINVESTED
INVESTMENT DIVIDENDS CAPITAL GAINS OF PLAN (C)
1-12 Sept-81 $ 1,999.92 $ 999.96 $ 18.00 110.450 $
30.34 $ 97.91 $ 805.31 $ 26.88 $ 86.75 $
918.94
13-24 Sept-82 3,999.84 75.96 18.00 349.412 97.55
86.71 2,793.75 135.33 187.68
3,116.76
25-36 Sept-83 5,999.76 75.96 18.00 588.320 161.59
1,038.80 6,020.09 353.91 1,280.04
7,654.04
37-48 Sept-84 7,999.68 75.96 18.00 892.255 238.66
1,200.32 6,843.61 565.98 2,423.07
9.832.65
49-60 Sept-85 9,999.60 75.96 18.00 1199.089
471.06 1,167.42 8,442.23 1,008.51
3,499.42 12,950.16
61-72 Sept-86 11,999.52 75.96 18.00 1643.349
419.93 3,333.21 10,945.53 1,516.57
7,077.32 19,539.42
73-84 Sept-87 1 3,999.44 75.96 18.00 2072.196
473.56 4,051.59 15,626.54 2,355.86
12,789.71 30,772.11
85-96 Sept-88 1 5,999.36 75.96 18.00 2473.615
537.81 1,905.41 14,545.82 2,487.86
12,451.81 29,485.49
97-108 Sept-89 1 7,999.28 75.96 18.00 2774.501
745.65 1,442.38 20,249.16 3,938.68
17,013.50 41,201.34
109-120 Sept-90 19,999.20 75.96 18.00 3225.612
948.77 3,063.33 16,692.42 3,733.27
15,281.84 35,707.52
121-132 Sept-91 2 1,999.12 75.96 18.00 3521.822
1,101.85 1,435.74 25,832.99 6,421.35
23,179.13 55,433.48
133-144 Sept-92 2 3,999.04 75.96 18.00 4314.224
1,177.31 8,794.48 26,481.85 7,341.99
31,062.10 64,885.93
145-156 Sept-93 2 5,998.96 75.96 18.00 5008.034
1,259.67 7,830.45 31,659.86 9,587.44
43,188.15 84,435.45
157-168 Sept-94 2 7,998.88 75.96 18.00 5467.849
552.89 5,227.31 35,175.37 10,658.20
50,947.36 96,780.93
169-180 Sept-95 29,998.80 75.96 18.00 6687.427
1,865.15 13,878.87 39,461.81 13,768.31
72,359.75 125,589.88
$ 29,998.80 $ 2,063.40 $ 270.00 $ 10,081.79 $
54,553.94 TOTAL $ 125,589.88
NOTES:
(A) Under the terms of this Plan, out of the initial investment of
$166.6 6 , $83.33 is deducted as a sales charge from the initial
investment and from each of the next 11 investments for an annual charge
of $999.96. Additional deductions are $1.50 for Custodian Fees from
each investment for an annual charge of $18. Deductions from the first 12
investments therefore total $1,017.96 or 50.90% of the first 12 monthly
investments. If all of the 15 years' investments are made, total sales
charges and Custodian Fees amount to 7.78% of the total agreed investments.
(B) Exclusive of a Service Charge, payable first against dividends and
distributions and then, if necessary, against principal, to cover certain
administrative expenses actually incurred. The amount of such a charge will
be determined annually by pro rating each Plan's administrative costs over
the total number of Plan accounts. For fiscal year 1995 , the charge
was $ 6.88 for Destiny I and $ 7.08 for Destiny II per Plan
account. In addition, subsequent to January 1, 1986, this charge is subject
to increases by the Sponsor, in the aggregate not to exceed increases in
the Consumer Price Index. For Plans established prior to January 1, 1986
and after October 30, 1982, this service charge cannot exceed $10 per year.
For Plans established prior to October 31, 1982, this charge cannot exceed
$2 per year.
(C) Total is determined by Destiny I's fiscal year-end NAV.
No adjustments have been made for any income taxes payable by investors on
capital gain distributions and dividends reinvested.
APPENDIX: GLOSSARY OF TERMS
COMPLETED PLAN: A Destiny Plan is considered completed once the face amount
(defined below) of the Plan has been invested.
CONTRACTUAL PLAN: A type of capital accumulation plan in which the investor
makes a firm commitment to invest a specific amount of money in a fund
during a specified time period.
CURRENT PLAN: A plan in which there are at least as many investments
recorded as there are months elapsed since establishment of the plan.
DOLLAR-COST AVERAGING: A system of buying fixed dollar amounts of
securities at regular intervals, regardless of the price of the shares.
This method may result in an average cost that is generally lower than the
average price at which the securities were purchased.
FACE AMOUNT: The total dollar amount of investments needed to complete a
particular plan. For example, a $300 per month, 15 year plan would have a
face amount of $54,000.
FACE CHANGE: Increasing or decreasing the amount of investments needed to
complete a particular plan is known as a Face Change. (See page 12 of the
Plans' Prospectus for instructions on completing a Face Change).
MUTUAL FUND: An investment company that pools capital from shareholders and
invests in stocks, bonds, options, or other securities. They offer
investors the advantages of diversification and professional management.
PERSISTENCY: To maintain a Current Plan (See CURRENT PLAN above).
PERSISTENCY RATE: The percentage of plans sold that remain current (See
CURRENT PLAN above).
RIGHTS OF ACCUMULATION: The right to apply reduced creation and sales
charges based on the face amount of the Plan. (See pages 5 and 6 for a
schedule of creation and sales charges.)
SYSTEMATIC INVESTMENT PLAN: An investment program in which an investor
invests a specified amount of money in a fund at regular intervals. A
contractual plan is a special type of systematic investment plan (see
Contractual Plan above).
UNIT INVESTMENT TRUST (UIT): An investment company that has its own
portfolio of securities in which it invests. It sells interests in this
portfolio in the form of redeemable securities. Unit investment trusts are
organized under a trust indenture, not a corporate charter.
FIDELITY SYSTEMATIC INVESTMENT PLANS: DESTINY PLANS I
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 1995
ASSETS:
Securities of investment company:
208,146,062 shares of Destiny I held for investors, valued at net asset
value of $18.78 per share (Note 1)
(average cost $2,902,642, 677) $ 3,908,983,050
Cash 129,800
Receivable for Destiny I shares sold 13,882
Total assets 3,909,126,732
LIABILITIES:
Payable for Destiny I shares purchased $ 76,314
Payable to custodian, sponsor and broker/dealer (Note 3) 1,018,847
Total liabilities 1,095,161
NET ASSETS (Note 2) $ 3,908,031,571
Statements of Operations
Year Ended Year Ended July 1 to Year Ended
September 30, September 30, September 30, June 30,
1995 1994 1993 1993
INVESTMENT INCOME:
Distributions received on shares of Destiny I from:
Net investment income $ 60,916,170 $ 18,829,578 $ 22,642,908 $
44,107,484
Realized gains 453,287,974 178,025,098 163,352,407 351,909,825
514,204,144 196,854,676 185,995,315 396,017,309
EXPENSES (Note 3):
Custodian Fees 370,441 356,400 411,804 321,048
Administrative expenses 572,532 568,939 692,140 584,332
Expenses before waiver 942,973 925,339 1,103,944 905,380
Expenses waived (Note 3) -- -- (229,232) --
Net expenses 942,973 925,339 874,712 905,380
Investment income - net 513,261,171 195,929,337 185,120,603
395,111,929
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Complete and partial liquidations, including Destiny I shares delivered
to investors at market value:
Proceeds received 201,989,707 185,297,323 48,447,207 171,856,954
Cost of Destiny I shares ( 170,341,528 )
( 146,535,481 ) ( 38,484,389 ) (142,216,216)
Net realized gain on Plan liquidations 31,648,179 38,761,842
9,962,818 29,640,738
Net increase (decrease) in unrealized appreciation 306,455,241
119,439,135 (63,352,715) 120,009,349
Net realized and unrealized gain (loss) on Plan shares
338,103,420 158,200,977 (53,389,897) 149,650,087
Net increase in net assets resulting from operations $ 851,364,591 $
354,130,314 $ 131,730,706 $ 544,762,016
DESTINY PLANS I - FINANCIAL STATEMENTS - CONTINUED
Statements of Changes in Net Assets Invested in Shares of Destiny I
Year Ended Year Ended July 1 to Year Ended
September 30, 1995 September 30, 1994 September 30, 1993 June 30, 1993
Amount Shares Amount Shares Amount Shares Amount Shares
Net assets at
beginning of
period $ 3,167,159,095 178,987,821 $ 2,889,144,421 171,360,879 $
2,786,359,814 161,809,511 $ 2,307,987,564 139,539,756
Additions during period:
From investor
payments 123,584,347 123,225,240 28,995,242 122,931,137
Less: creation and
sales charges
(Note 3) (4,266,731) (3,880,657) (915,085) (3,922,321)
Custodian Fees
and insurance
premiums
( Note 3) (918,278) (969,567) (249,188) (1,054,926)
Balance invested in
Destiny I shares 118,399,338 7,248,988 118,375,016 6,929,240
27,830,969 1,652,789 117,953,890 7,524,411
Investment income
- net 513,261,171 195,929,337 185,120,603 395,111,929
Less: Cash
distributions
to investors (26,901,746) (9,193,333) (8,329,861) (12,486,702)
Balance reinvested in
Destiny I shares 486,359,425 34,156,291 186,736,004 11,373,415
176,790,742 10,766,795 382,625,227 25,543,925
Net realized gain on
Plan liquidations 31,648,179 38,761,842 9,962,818 29,640,738
Net increase (decrease)
in unrealized
appreciation 306,455,241 119,439,135 (63,352,715) 120,009,349
Total 4,110,021,278 220,393,100 3,352,456,418 189,663,534
2,937,591,628 174,229,095 2,958,216,768 172,608,092
Deductions during period:
Redemptions and
cancellations of
Destiny I shares 201,989,707 12,247,03 8 185,297,323 10,675,713
48,447,207 2,868,216 171,856,954 10,798,581
Net assets at end
of period $ 3,908,031,571 208,146,06 2 $ 3,167,159,095 178,987,821
$ 2,889,144,421 171,360,879 $ 2,786,359,814 161,809,511
FIDELITY SYSTEMATIC INVESTMENT PLANS: DESTINY PLANS II
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 1995
ASSETS:
Securities of investment company:
62,414,598 shares of Destiny II held for investors, valued at net asset
value of $31.72 per share (Note 1)
(average cost $1,507,215,0 34 ) $ 1,979,791,058
Cash 664,710
Receivable for Destiny II shares sold 52,016
Total assets 1,980,507,784
LIABILITIES:
Payable for Destiny II shares purchased $ 297,764
Payable to custodian, sponsor and broker/dealer (Note 3) 1,729,203
Total liabilities 2,026,967
NET ASSETS (Note 2) $ 1,978,480,817
Statements of Operations
Year Ended Year Ended July 1 to Year Ended
September 30, September 30, September 30, June 30,
1995 1994 1993 1993
INVESTMENT INCOME:
Distributions received on shares of Destiny II from:
Net investment income $ 25,297,415 $ 3,475,304 $ 3,678,240 $ 7,449,551
Realized gains 149,760,699 37,359,518 23,908,561 59,854,351
175,058,114 40,834,822 27,586,801 67,303,902
EXPENSES (Note 3):
Custodian Fees 316,099 255,100 173,046 108,848
Administrative expenses 1,053,084 785,991 724,933 471,360
Expenses before waiver 1,369,183 1,041,091 897,979 580,208
Expenses waived (Note 3) -- -- (195,205) --
Net expenses 1,369,183 1,041,091 702,774 580,208
Investment income - net 173,688,931 39,793,731 26,884,027
66,723,694
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Complete and partial liquidations, including Destiny II shares delivered
to investors at market value:
Proceeds received 82,247,858 48,053,822 9,899,743 32,672,050
Cost of Destiny II shares ( 70,179,662 )
( 39,586,649 ) (8,251,292) (28,879,009)
Net realized gain on Plan liquidations 12,068,196 8,467,173 1,648,451
3,793,041
Net increase in unrealized appreciation 221,801,939 40,473,941
5,111,869 48,487,275
Net realized and unrealized gain on Plan shares 233,870,135 48,941,114
6,760,320 52,280,316
Net increase in net assets resulting from operations $ 407,559,066 $
88,734,845 $ 33,644,347 $ 119,004,010
DESTINY PLANS II - FINANCIAL STATEMENTS - CONTINUED
Statements of Changes in Net Assets Invested in Shares of Destiny II
Year Ended Year Ended July 1 to Year Ended
September 30, 1995 September 30, 1994 September 30, 1993 June 30, 1993
Amount Shares Amount Shares Amount Shares Amount Shares
Net assets
at beginning
of period $ 1,404,707,380 49,238,125 $ 743,929,106 27,883,400 $
678,083,911 25,626,754 $ 463,277,140 18,771,359
Additions during period:
From investor
payments 275,033,552 219,138,314 46,613,324 144,149,559
Less: creation and
sales charges
(Note 3) (24,297,468) (19,860,278) (4,117,651) (14,409,507)
Custodian Fees
(Note 3) (1,692,890) (1,389,617) (321,181) (1,158,809)
Balance invested
in Destiny II shares 249,043,194 8,949,800 197,888,419 7,101,003
42,174,492 1,594,740 128,581,243 5,297,117
Investment income
- - net 173,688,931 39,793,731 26,884,027 66,723,694
Less: Cash
distributions
to investors (580,964) (123,770) (73,901) (106,432)
Balance reinvested
in Destiny II
shares 173,107,967 7,158,428 39,669,961 1,528,767 26,810,126
1,037,143 66,617,262 2,907,499
Plan combination (Note 4) 422,332,602 14,443,659
Net realized gain on
Plan liquidations 12,068,196 8,467,173 1,648,451 3,793,041
Net increase in
unrealized
appreciation 221,801,939 40,473,941 5,111,869 48,487,275
Total 2,060,728,676 65,346,353 1,452,761,202 50,956,829 753,828,849
28,258,637 710,755,961 26,975,975
Deductions during period:
Redemptions and
cancellations of
Destiny II shares 82,247,859 2,931,75 5 48,053,822 1,718,704
9,899,743 375,237 32,672,050 1,349,221
Net assets at end
of period $ 1,978,480,817 62,414,59 8 $ 1,404,707,380 49,238,125 $
743,929,106 27,883,400 $ 678,083,911 25,626,754
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES: The Plans are a unit investment trust
registered under the Investment Company Act of 1940 with the Securities and
Exchange Commission, investing only in shares of Fidelity Destiny
Portfolios : Destiny I and Destiny II (the "Fund s "). The
following significant accounting policies, which are in conformity with
generally accepted accounting principles for unit investment trusts, are
used consistently in the preparation of the financial statements.
Destiny Plans I is for the accumulation of shares of Fidelity Destiny
Portfolios : Destiny I; Destiny Plans II is for the accumulation of
shares of Fidelity Destiny Portfolios : Destiny II.
SECURITY VALUATION. The investment s in shares of Fidelity Destiny
Portfolios : Destiny I and Destiny II are valued at each of
the Fund Portfolio's respective bid market price which is equal to the
net asset value per share of each of the Fund
Portfolios at period end .
FEDERAL INCOME TAXES. No provisions are made for federal income taxes. All
income dividends and capital gain distributions received by investors are
treated as if received directly from the underlying Fund. A Planholder will
not realize any gain or loss upon withdrawal from the Plans when
transferring to an account for direct ownership of the underlying Fund
shares. Any liquidation by a Planholder of a Fund will be treated as if the
underlying Fund shares were sold.
TRANSACTION DATES. Share transactions are recorded on the trade date.
Dividend income and capital gain distributions are recorded on the
ex-dividend date.
COST METHOD. The investment in shares of each Fund at cost is based on
average cost, which represents the amount available for investment
(including reinvested distributions of net investment income and realized
gains) in such shares after deduction of sales charges, custodian fees, and
insurance fees, if applicable.
CHANGE IN FISCAL YEAR END. On November 19, 1992, the Trustees of the
Funds approved a change in the fiscal year end of the Funds to September
30. Accordingly, the Plans changed to a fiscal year ending September 30, in
order to conform financial reporting to the underlying Funds' fiscal year
end.
2. PLAN ASSETS
Destiny Plans I assets consisted of the following at September 30,
199 5 :
Systematic
Systematic Investment
Investment Plans with Total of
Plans Insurance All Plans
Payments received from investors on outstanding Plans $ 1,120,136,858 $
674,260 $ 1,120,811,118
Deduct:
Sponsor fees 73,823,558 57,840 73,881,398
Custodian Fees 10,356,931 11,573 10,368,504
Insurance premiums 0 32,842 32,842
Total deductions 84,180,489 102,255 84,282,744
Net payments invested in shares of Destiny I 1,035,956,369 572,005
1,036,528,374
Add:
Distributions from investment income reinvested 283,251,399
866,756 284,118,155
Distributions from realized gains reinvested 1,577,556,140
4,440,038 1,581,996,178
Unrealized appreciation in Destiny I shares held at September 30,
199 5 901,815,441 104,524,932 1,006,340,373
Deduct:
Fees payable (950,368) (1,141) (951,509)
Net assets $ 3,797,628,981 $ 110,402,590 $ 3,908,031,571
NOTES TO FINANCIAL STATEMENTS - CONTINUED
2. PLAN ASSETS - CONTINUED
Destiny Plans II assets consisted of the following at September 30,
199 5 :
Payments received from investors on outstanding Plans $ 1,203,729,565
Deduct:
Sponsor fees 148,346,358
Custodian Fees 11,212,296
Total deductions 159,558,654
Net payments invested in shares of Destiny II 1,044,170,911
Add:
Distributions from investment income reinvested 57,477,213
Distributions from realized gains reinvested 405,566,921
Unrealized appreciation in Destiny II shares held at
September 30, 199 5 472,576,024
Deduct:
Fees payable (1,310,252)
Net assets $ 1,978,480,817
3. EXPENSES AND DEDUCTIONS: For information regarding Creation and Sales
Charges, Custodian Fees, and A dministrative expenses see pages
1 6 and 1 7 of this Prospectus. The Custodian and the
Sponsor voluntarily agreed to waive certain of those custodian fees and
administrative expenses charged annually from dividends and distributions
for the period July 1, 1993 to September 30, 1993. For the period from July
1, 1993 through September 30, 1993, the custodian fees and administrative
expenses waived were $82,361 and $146,871 for Plans I, respectively; and
$34,609 and $160,596 for Plans II, respectively.
Fidelity Distributors Corporation, a wholly owned subsidiary of FMR Corp.
and sponsor of Fidelity Systematic Investment Plans, received $907,000,
$789,000, $280,000, and $778,000 as its portion of the Creation
and Sales Charges on sales of Plans I during the years ended September
30, 1995 and 1994, the period from July 1 through September, 30
1993, and the year ended June 30, 1993, respectively; $2,927,000,
$2,271,000, $670,000, and $1,830,000 on s ales of Plans II during
the year ended September 30, 1995 and 1994, the period from
July 1 through September 30 , 1993, and the year ended June 30,
1993 , respectively.
4. PLAN COMBINATION : At a meeting on March 15, 1993, Security Action
Fund shareholders approved an Agreement and Plan of Reorganization (the
Reorganization) pursuant to which, on March 26, 1993, Fidelity Destiny
Portfolios : Destiny II acquired substantially all of the assets of
Security Action Fund. Fidelity Distributors Corporation, the sponsor and
principal underwriter of the Plans, filed an exemptive
application with the Securities and Exchange Commission (SEC) to
permit the Destiny Plans II shares maintained under the Destiny
Custodian Agreement and the Destiny Plans IIA (formerly Security Action
Plans) shares maintained under the Security Action Plans Custodian
Agreement to be combined into one pool maintained under the Destiny
Custodian Agreement. The SEC subsequently approved the combination
request filed in the exemptive application. On September 16, 1994,
combination of Destiny Plans II and Destiny Plans IIA was completed and,
upon an opinion of counsel, treated as non-taxable to the Plans. Destiny
Plans IIA net assets at that date (valued at $422,332,602), including
$80,570,490 of unrealized appreciation were combined with those of Destiny
Plans II. The aggregate net assets of Destiny Plans II and Destiny Plans
IIA immediately before the combination were $1,017,390,186 and
$422,332,602, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors of Fidelity Distributors Corporation and Investors under
Fidelity Systematic Investment Plans: Destiny Plans I and Destiny Plans
II:
We have audited the accompanying statements of assets and liabilities of
Fidelity Systematic Investment Plans: Destiny Plans I and Destiny Plans II
(the "Plans") as of September 30, 199 5 , and the related statements
of operations and changes in net assets invested in shares of Destiny I and
Destiny II for the years ended September 30, 1995 and 1994, for the
period from July 1, 1993 to September 30, 1993, and for the year
ended June 30, 1993 . These financial statements are the
responsibility of the Plans' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as
of September 30, 1995 by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Fidelity Systematic
Investment Plans: Destiny Plans I and Destiny Plans II as of September 30,
199 5 , the results of their operations and the changes in their net
assets invested in shares of Destiny I and Destiny II for the years
ended September 30, 1995 and 1994, for the period from July 1, 1993 to
September 30, 1993, and for the year ended June 30, 1993 ,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 14 , 199 5
FIDELITY DISTRIBUTORS CORPORATION AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
as of December 31, 1994
(in thousands except for share amounts)
ASSETS
Cash $ 35
Receivables:
Brokers, dealers, and customers 46,997
Other 8,471
Investments, at market (cost $14,997) 14,824
Property and equipment, net 9,793
Other assets 6,261
Total Assets $ 86,381
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Payable to mutual funds $ 46,997
Other liabilities 1,552
Total Liabilities 48,549
Stockholder's equity:
Preferred stock, 5% noncumulative, $100 par value; authorized 5,000 shares;
issued and outstanding 4,750 shares 475
Common stock, $1 par value; authorized 1,000,000 shares;
issued and outstanding 1,061 shares 1
Additional paid-in capital 12,779
Retained earnings 41,368
54,623
Less: Receivable from parent company (16,791)
Total Stockholder's Equity 37,832
Total Liabilities and Stockholder's Equity $ 86,381
The accompanying notes are an integral part of this consolidated financial
statement.
FIDELITY DISTRIBUTORS CORPORATION AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
A. PRINCIPAL BUSINESS ACTIVITIES:
Fidelity Distributors Corporation and Subsidiary ("FDC" or the "Company")
is a registered broker/dealer under the Securities and Exchange Act of
1934. The Company is the principal underwriter and distributor of mutual
funds under agreements with certain funds managed by an affiliate, Fidelity
Management & Research Company and is the sponsor of Fidelity Destiny Plans.
A division of Fidelity Distributors Corporation provides pricing and
bookkeeping services, mutual fund transfer agent services and other
processing functions on behalf of affiliated companies.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statement includes the accounts of Fidelity
Distributors Corporation and its wholly-owned subsidiary. All significant
intercompany transactions and balances are eliminated in consolidation.
REVENUE RECOGNITION
Commission income, arising from the sale of mutual fund and contractual
plan shares, is recorded on the trade date of the purchased fund or plan
shares. Under certain arrangements, a portion of this income is paid to
outside broker/dealers. Mutual fund redemption fees are recognized on the
trade date. Account and service fees are recognized as earned.
CHARGE EQUIVALENT TO TAXES ON INCOME
The Company is included in the consolidated federal and certain state
income tax returns filed by FMR Corp. The company is allocated a charge
equivalent to taxes on income as if it were filing returns on an individual
company basis.
The Company's deferred tax assets at December 31, 1994 approximated
$1,998,000. The principal sources of temporary differences relate to
deferred compensation and pension expense, unrealized depreciation of
investments and reserves for employee relocation.
INVESTMENTS
Investments, comprised principally of shares held in Fidelity mutual funds,
are stated at market value. Gross unrealized depreciation on investments
held at December 31, 1994 amounted to approximately $172,000.
FIDELITY DISTRIBUTORS CORPORATION AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (continued)
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated depreciation and
amortization. Depreciation is computed over the estimated useful lives of
the related assets, which vary from three to five years, using primarily
the straight line method. Leasehold improvements are amortized over the
lesser of their economic useful life or the term of the lease. Maintenance
and repairs are charged to operations when incurred. Renewals and
betterments of a nature considered to materially extend the useful lives of
the assets are capitalized.
C. TRANSACTIONS WITH AFFILIATED COMPANIES:
FDC is party to several arrangements with affiliated companies. Under these
arrangements, FDC charged these affiliates for fulfillment, direct mail
processing, marketing, and other shared services and was charged for
commission expenses, promotional expenses, equipment processing services,
and occupancy expenses. In addition, certain direct and indirect expenses
incurred in connection with the underwriting and distribution of Fidelity
mutual fund shares are borne by affiliated companies.
FDC participates in FMR Corp.'s noncontributory defined benefit pension
plan covering all of its eligible employees. There are no statistics
available for the actuarial data of this separate company. There are no
unfunded vested benefits relating to employees of FDC.
FDC also participates in FMR Corp.'s defined contribution profit sharing
and retirement plans covering substantially all employees. Annual
contributions to the plans are based on either stated percentages of
eligible employee compensation or employee contributions.
All intercompany transactions are charged or credited through an
intercompany account with FMR Corp. and may not be the same as those which
would otherwise exist or result from agreements and transactions among
unrelated parties. The Company receives credit for the collection of its
receivables and is charged for the settlement of its liabilities through
its intercompany account with FMR Corp. Under an agreement with FMR Corp.,
the Company offsets liabilities which will ultimately be settled by FMR
Corp. on behalf of the Company against its receivable from FMR Corp. In
accordance with this agreement, certain liabilities have been offset
against the receivable from FMR Corp. As the net receivable was not settled
in the ordinary course of business, it has been reported as a reduction in
shareholder's equity.
FIDELITY DISTRIBUTORS CORPORATION AND SUBSIDIARY
(A WHOLLY OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (continued)
D. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following (in thousands):
Equipment $ 15,914
Leasehold improvements 5,252
Furniture and fixtures 1,320
22,486
Less: Accumulated depreciation and amortization 12,693
$ 9,793
E. NET CAPITAL REQUIREMENT:
FDC is subject to the Securities and Exchange Commission's Uniform Net
Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net
capital and requires that the ratio of aggregate indebtedness to net
capital, both as defined, shall not exceed 15 to 1. At December 31, 1994,
FDC had net capital of $12,298,000 which was $12,173,000 in excess of its
required net capital of $125,000. Additionally, the ratio of aggregate
indebtedness to net capital at December 31, 1994 was 0.15 to 1.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of Fidelity Distributors
Corporation
(A Wholly-Owned Subsidiary of FMR Corp.):
We have audited the accompanying consolidated statement of financial
condition of Fidelity Distributors Corporation and Subsidiary as of
December 31, 1994. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the consolidated financial position of Fidelity
Distributors Corporation and Subsidiary as of December 31, 1994, in
conformity with generally accepted accounting principles.
Boston, Massachusetts
January 27, 1995
[This Page Intentionally Left Blank]
FIDELITY DESTINY
PORTFOLIOS:
DESTINY I AND
DESTINY II
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS
PROSPECTUS
November 29, 1995
Fidelity Destiny Portfolios is an open-end management investment company
made up of two separate diversified portfolios: Destiny I and Destiny II
(the funds). Each fund seeks capital growth. Although many of the
securities in each fund's portfolio at any given time may be
income-producing, income generally will not be a consideration in the
selection of securities.
Please read this Prospectus before investing and keep it on file for
future reference . It contains important information, including how
each fund invests and the services available to shareholders.
Shares of each fund may be purchased only through Fidelity Systematic
Investment Plans: Destiny Plans I and Destiny Plans II (the Plans or a
Plan), a unit investment trust. Details of the Plans, including the
Creation and Sales Charges, as well as Custodian Fees, are discussed in the
Prospectus for the Plans. The charges for the first year of a Plan may
amount to as much as 50% of the amounts paid under a Plan. Prospective
investors should read this Prospectus in conjunction with the Plans'
Prospectus.
To learn more about each fund and its investments, you can obtain a copy
of the funds' most recent financial report and portfolio listing or a copy
of the Statement of Additional Information (SAI) dated November 29, 1995.
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, call Fidelity Distributors
Corporation (FDC) at the appropriate number listed below.
FIDELITY DISTRIBUTORS CORPORATION
FIDELITY INVESTMENTS INSTITUTIONAL SERVICES COMPANY, INC., BROKER/DEALER
SERVICES DIVISION
NATIONWIDE (TOLL FREE) 1-800-433-0734
IN ALASKA OR OVERSEAS (CALL COLLECT) 1-617- 328-5000
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD
OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE PAGE
The Funds' Expenses The Funds' Financial Histories
The Funds' Investment Objective
The Funds' Investment Principles and Risks
Securities and Investment Practices
A Few Words About Distributions and Taxes
Destiny Funds and the Fidelity Organization
Management and Service Fees
The Funds' Performance
How to Buy Shares
Shareholder Services
How to Redeem Shares
THE FUNDS' EXPENSES
The expense summary format below was developed for use by all mutual funds
to help you make your investment decisions. Of course, you should consider
this expense information along with other important information, including
the funds' investment objectives and their past performance and the fees
and expenses associated with investment through the Plans.
A. SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on Purchases See Note A
Sales Load on Reinvested Distributions See Note A
Deferred Sales Load Imposed on Redemptions None
Redemption Fees None
Exchange Fees None
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
DESTINY I DESTINY II
Management Fees .65 % .75 %
Other Expenses .03 % .05 %
Total Operating Expenses .68 % .80 %
C. EXAMPLE
You would pay the following expenses on a $1,000 investment assuming
a 5% annual return and full redemption at the end of each time period:
1 YR 3 YRS 5 YRS 10 YRS
Destiny I $ 7 $ 22 $ 38 $ 85
Destiny II $ 8 $ 26 $ 44 $ 99
EXPLANATION OF TABLE
A. SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell,
or exchange shares of a fund. Neither fund will offer its shares publicly
except through the Destiny Plans, which impose separate Creation and
Sales Charges. Creation and Sales Charges vary according to the
monthly investment size and duration of each Plan. Please refer to the
Destiny Plans' Prospectus for details. If you exchange shares of the funds,
other charges may apply. (See "Exchange Privilege" on page for
information.)
B. ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company
(FMR) that varies based on its performance. Each fund also incurs
other expenses for services such as maintaining shareholder records and
furnishing shareholder statements and financial reports. Management fees
and other expenses are reflected in each fund's share price and are not
charged directly to individual shareholder accounts. For accounts
maintained within the Plans, separate custodian fees and an annual service
fee are charged directly to Planholders. Please refer to the section
"Management and Service Fees," beginning on page and the Destiny
Plans' Prospectus for further information.
C. The hypothetical EXAMPLE illustrates the expenses associated with a
$1,000 investment over periods of 1, 3, 5 and 10 years, based on the
expenses in the table above and an assumed annual return of 5%. THESE
EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO SUGGEST
ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY. Please
refer to page for the funds' past performance. As stated above,
Creation and Sales Charges vary for each Plan. Generally, however, these
charges are structured to decrease as a percentage of the monthly
investment as the Plan progresses. Consequently, the major portion of the
total Creation and Sales Charges incurred during the life of a Plan are
assessed within its first year. For a detailed explanation of applicable
rate structure, please refer to the Destiny Plans' Prospectus.
THE FUNDS' FINANCIAL HISTORIES
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in the funds' Annual Report and have been audited
by Coopers & Lybrand L.L.P. , independent accountants. Their report
on the financial statements and financial highlights is included in the
Annual Report. The financial statements, the financial highlights and the
report are incorporated by reference into the funds' SAI, which may be
obtained free of charge from FDC.
A LOOK AT DESTINY I'S HISTORY
DESTINY I
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and Ratios
Years ended September
1995 1994D 1993E 1993F 1992F 1991F 1990F 1989F 1988F 1987F 1986F
30
Net asset value,
17.70 16.86 17.22 16.54 15.23 14.24 14.03 12.44 15.93 16.04 12.81
beginning of period
Income from Investment
Operations
Net investment income
.41 .30 .04 .26 .31 .33 .46C .30 .24 .28 .33
Net realized and
3.54 1.69 .75 3.16 2.55 1.25 1.18 1.81 (.35) 2.47 4.50
unrealized gain
(loss) on investments
Total from investment
3.95 1.99 .79 3.42 2.86 1.58 1.64 2.11 (.11) 2.75 4.83
operations
Less Distributions
From net investment
(.34) (.11) (.14) (.30) (.49) (.10) (.38) (.26) (.39) (.32) (.46)
income
From net realized gain
(2.53) (1.04) (1.01) (2.44) (1.06) (.49) (1.05) (.26) (2.99) (2.54) (1.14)
Total distributions
(2.87) (1.15) (1.15) (2.74) (1.55) (.59) (1.43) (.52) (3.38) (2.86) (1.60)
Net asset value, end of
$ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24 $ 14.03 $ 12.44 $ 15.93 $ 16.04
period
Total returnB
27.49% 12.30% 4.77% 23.90% 20.18% 11.93% 12.17% 17.90% (1.45)% 22.43% 43.09%
Net assets, end of
$ 4,053 $ 3,273 $ 2,973 $ 2,869 $ 2,373 $ 2,023 $ 1,832 $ 1,662 $ 1,440 $ 1,461 $ 1,165
period (in millions)
Ratio of expenses to
.68% .70% .65%A .66% .61% .50% .53% .60% .60% .60% .60%
average net
assets
Ratio of net investment
2.35% 1.69% 1.11%A 1.83% 2.00% 2.45% 3.37% 2.35% 2.10% 2.20% 2.70%
income to average net
assets
Portfolio turnover rate
55% 77% 82%A 75% 75% 84% 75% 72% 80% 91% 108%
</TABLE>
A Annualized
B Total returns for periods of less than one year are not annualized.
C Investment income per share reflects special dividends of $.06 and $.03
per share, respectively.
D Effective October 1, 1993, the fund adopted Statement of Position 93-2,
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
As a result, net investment income per share may reflect certain
reclassifications related to book to tax differences.
E Three months ended September 30, 1993
F Years ended June 30
A LOOK AT DESTINY II'S HISTORY
DESTINY II
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and Ratios
Years ended September
1995 1994E 1993F 1993G 1992G 1991G 1990G 1989G 1988G 1987G 1986H
30
Net asset value,
28.55 26.68 26.46 24.68 23.50 21.11 20.64 18.25 20.98 16.53 10.00
beginning of period
Income from
Investment Operations
Net investment
.66 .42 .04 .26 .33 .29 .56C .24 .13 .02 .03
income
Net realized and
5.97 2.86 1.23 4.85 4.08 2.61 2.27 2.72 (.19) 4.73 6.50
unrealized gain
(loss) on investments
Total from investment
6.63 3.28 1.27 5.11 4.41 2.90 2.83 2.96 (.06) 4.75 6.53
operations
Less Distributions
From net investment
(.50) (.12) (.14) (.36) (.34) (.35) (.36) (.18) (.09) -- --
income
From net realized gain
(2.96) (1.29) (.91) (2.97) (2.89) (.16) (2.00) (.39) (2.58) (.30) --
Total distributions
(3.46) (1.41) (1.05) (3.33) (3.23) (.51) (2.36) (.57) (2.67) (.30) --
Net asset value, end of
$ 31.72 $ 28.55 $ 26.68 $ 26.46 $ 24.68 $ 23.50 $ 21.11 $ 20.64 $ 18.25 $ 20.98 $ 16.53
period
Total returnB
26.98% 12.67% 4.93% 23.28% 20.61% 14.35% 14.42% 16.76% (.23)% 29.37% 65.30%
Net assets, end of
$ 2,032 $ 1,437 $ 1,143 $ 1,061 $ 479 $ 326 $ 221 $ 143 $ 78 $ 37 $ 5
period (in millions)
Ratio of expenses to
.80% .80% .84%A .84% .88% .84% .87% .97% 1.12% 1.50% 1.50%A,
average net D
assets
Ratio of net investment
2.33% 1.56% .69%A 1.41% 1.60% 1.70% 3.07% 1.53% 1.07% .39% 1.07%A
income to average net
assets
Portfolio turnover rate
52% 72% 80%A 81% 113% 129% 112% 128% 148% 183% 228%A
</TABLE>
A Annualized
B Total returns for periods of less than one year are not annualized.
C Investment income per share reflects special dividends of $.14 and $.06
per share, respectively.
D Expenses have been limited to a percentage of average net assets in
accordance with various state expense limitation regulations. Expenses
borne by the investment adviser amounted to $.14 per share for the period
ended June 30, 1986.
E Effective October 1, 1993, the fund adopted Statement of Position 93-2,
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
As a result, net investment income per share may reflect certain
reclassifications related to book to tax differences.
F Three months ended September 30, 1993
G Years ended June 30
H December 30, 1985 (commencement of operations) to June 30, 1986
THE FUNDS' INVESTMENT OBJECTIVE
Each fund seeks capital growth. Although many of the securities in each
fund's portfolio at any given time may be income-producing, income
generally will not be a consideration in the selection of securities. Each
fund may not always achieve its objective, but each will always follow the
investment style described below.
THE FUNDS' INVESTMENT PRINCIPLES AND RISKS
Each fund seeks capital growth primarily from equity securities. Each fund
will tend to be fully invested in common stocks and securities convertible
into common stocks, but may also buy other types of securities such as
preferred stocks or bonds. The funds have the flexibility to invest
in large or small, domestic or foreign issuers.
The value of each fund's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies and general market and economic
conditions. In the short-term, stock prices can fluctuate dramatically in
response to these factors. The securities of small, less well-known
companies may be more volatile than those of larger companies. Over time,
however, stocks have shown greater growth potential than other types of
securities. FMR may use various investment techniques to hedge a portion of
the funds' risks, but there is no guarantee that these strategies will work
as FMR intends. Also, as a mutual fund, each fund seeks to spread
investment risk by diversifying its holdings among many companies and
industries. When you sell your shares, they may be worth more or less than
what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. Each fund also reserves the right to invest without limitation in
preferred stock and investment-grade debt instruments for temporary,
defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed in the section "The
Funds' Investment Principles and Risks." A complete listing of each
fund's limitations and more detailed information about each fund's
investments are contained in the funds' SAI. Policies and limitations are
considered at the time of purchase; the sale of instruments is not required
in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Current holdings and recent investment strategies are described in each
fund's financial reports, which are sent to shareholders twice a year. For
a free SAI or financial report, call 1-800-433-0734 or your investment
professional.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTION: With respect to 75% of its total assets, each fund may not
purchase more than 10% of the outstanding voting securities of any issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities, loans and other direct debt have varying degrees of quality and
varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics, and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness,
or they may already be in default. The market prices of these securities
may fluctuate more than higher-quality securities and may decline
significantly in periods of general economic difficulty.
The following table provides a summary of ratings assigned to debt
holdings (not including money market instruments) in the funds' portfolios.
These figures are dollar-weighted averages of month-end portfolio holdings
during fiscal 1995, and are presented as a percentage of total security
investments. These percentages are historical and do not necessarily
indicate a fund's current or future debt holdings.
FISCAL 1995 DEBT HOLDINGS, BY RATING
FISCAL 1995 DEBT HOLDINGS, BY RATING MOODY'S STANDARD & POOR'S
INVESTORS SERVICE, INC. CORPORATION
RATING AVERAGE [A] RATING AVERAGE[A]
INVESTMENT GRADE
Highest quality Aaa 11.0% AAA 11.0%
High quality Aa 0.0% AA 0.0%
Upper-medium grade A 0.0% A 0.0%
Medium grade Baa 0.0% BBB 0.0%
LOWER QUALITY
Moderately speculative Ba 0.0% BB 0.0%
Speculative B 0.0% B 0.0%
Highly speculative Caa 0.0% CCC 0.0%
Poor quality Ca 0.0% CC 0.0%
Lowest quality, no interest C C
In default, in arrears -- D 0.0%
[A] FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF THE
SOVEREIGN CREDIT OF THE
ISSUING GOVERNMENT. THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT
RATED DIRECTLY OR INDIRECTLY BY
MOODY'S OR S&P AMOUNTED TO 0% FOR DESTINY I AND 0% FOR DESTINY
II . THIS MAY INCLUDE SECURITIES RATED
BY OTHER NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED
SECURITIES. REFER TO THE FUNDS' SAI FOR
A MORE COMPLETE DISCUSSION OF THESE RATINGS.
RESTRICTIONS: Purchase of a debt security is consistent with a fund's debt
quality policy if it is rated at or above the stated level by Moody's or
rated in the equivalent categories by S&P, or is unrated but judged to be
of equivalent quality by FMR. Each fund currently intends to limit its
investments in lower than Baa-quality debt securities to 10% of its assets.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that the fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTION: Each fund may not purchase a security if, as a result, more
than 10% of its net assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include real estate-related instruments.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. Economic,
business, or political changes can affect all securities of a similar type.
RESTRICTIONS: With respect to 75% of its total assets, each fund may not
purchase a security if, as a result, more than 5% would be invested in the
securities of any issuer. These limitations do not apply to U.S. Government
securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTION: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. ( FBSI ) , an affiliate of
FMR, is a means of earning income. This practice could result in a loss or
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTION: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Each fund seeks capital growth. Although many of the securities in each
fund's portfolio at any given time may be income-producing, income
generally will not be a consideration in the selection of securities.
With respect to 75% of its total assets, each fund may not purchase a
security if, as a result, more than 5% would be invested in the securities
of any issuer and may not purchase more than 10% of the outstanding voting
securities of any issuer.
Each fund may borrow only for temporary or emergency purposes, but not in
an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
MATCHING THE FUNDS TO YOUR INVESTMENT NEEDS
Shares of each fund may be acquired only through the purchase of an
interest in Fidelity Systematic Investment Plans: Destiny Plans I or
Destiny Plans II. The funds are designed for you if you are seeking
accumulation of capital through regular, systematic investing over a period
of 10 years or more. Investments in the funds are based on the concept of
"dollar-cost averaging." This involves consistently buying uniform dollar
amounts of a security regardless of the price, at regular intervals. When
prices are low, more shares are bought than when prices are high. Because
the value of the securities in each fund fluctuates with market conditions,
if you liquidate your Plan investment when the market value of your shares
is less than their original cost, including the initial Plan's Creation and
Sales Charges, you will incur a loss. Investments in a systematic
investment plan do not eliminate market risk. While FMR will seek to
realize capital growth over the lifetime of a Plan, the policies FMR
follows may not be appropriate if you are unable to complete your Plan. You
should also consider your ability to continue to invest during periods of
varying economic and market conditions.
Receipt by each fund of investments on a systematic basis tends to provide
a more consistent level of fund assets than might be the case for those
funds whose shares are sold directly and may allow each fund to plan for
the gradual accumulation of various individual security positions. One
example of how each fund could employ this concept is through the program
of dollar-cost averaging as described above. Such a program could be
hampered by increased net redemptions or the failure of Plan investors to
purchase shares.
FMR is also the investment adviser to certain other investment companies
not sold through systematic investment plans, which also have objectives of
capital growth. The investment policies employed by each of these funds
vary, as do the sales charges assessed to fund share purchases and the
investment results each has attained.
A FEW WORDS ABOUT DISTRIBUTIONS AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Normally, dividends and capital gains are
distributed in December.
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
TAXES ON TRANSACTIONS. Your redemptions-including exchanges-are subject to
capital gains tax. A capital gain or loss is the difference between the
cost of your shares and the price you receive when you sell them.
Whenever you sell shares of a fund, the transfer agent will send you a
confirmation statement showing how many shares you sold and at what price.
You will also receive a transaction statement at least quarterly. However,
it is up to you or your tax preparer to determine whether this sale
resulted in a capital gain and, if so, the amount of tax to be paid. BE
SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the information they contain
will be essential in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its
taxable income in any year, which is sometimes the result of
currency-related losses, all or a portion of the fund's dividends may be
treated as a return of capital to shareholders for tax purposes. To
minimize the risk of a return of capital, a fund may adjust its
dividends to take currency fluctuations into account, which may cause the
dividends to vary. Any return of capital will reduce the cost basis of your
shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. The statement you receive
in January will specify if any distributions included a return of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the funds
and their investments and these taxes generally will reduce the fund's
distributions.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
When you sign your Plan Application, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the funds
to withhold 31% of your taxable distributions and redemptions.
DESTINY FUNDS AND THE FIDELITY ORGANIZATION
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
Fidelity Destiny Portfolios, an open-end management investment company
originally organized as a Massachusetts corporation on January 7, 1969 and
reorganized as a Massachusetts business trust on June 20, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of the trustees are
not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent or the Plans' custodian, as applicable, will mail
proxy materials in advance, including a voting card and information about
the proposals to be voted on. The number of votes you are entitled to is
based upon the dollar value of your investment.
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, MA 02109. It includes a number of
different subsidiaries and divisions which provide a variety of financial
services and products. The funds employ various Fidelity companies to
perform activities required for their operation.
The funds are managed by FMR, which chooses their investments and handles
their business affairs. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.) in London, England, and Fidelity Management & Research (Far East)
Inc. (FMR Far East) in Tokyo, Japan, assist FMR with foreign investments.
As of September 30, 1995, FMR advised funds having approximately 22
million shareholder accounts with a total value of more than
$ 335 billion.
George A. Vanderheiden is manager and vice president of Destiny I and
Destiny II, which he has managed since 1980 and 1985, respectively. Mr.
Vanderheiden also manages Fidelity Advisor Growth Opportunities. Mr.
Vanderheiden is a managing director of FMR Corp., and leader of the growth
group. He joined Fidelity in 1971.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity funds and services. Fidelity
Service Company (FSC) performs transfer agent servicing functions for each
fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K. and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (1940
Act), control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by the funds to
reduce the custodian or transfer agent fees for the funds. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
MANAGEMENT AND SERVICE FEES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each fund's assets are reflected in that
fund's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a management fee to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays other expenses, which
are explained on page .
FMR may, from time to time, agree to reimburse each fund for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
The management fee is calculated and paid to FMR every month. The fee is
determined by taking a basic fee and then applying a performance
adjustment. The performance adjustment either increases or decreases the
management fee, depending on how well a fund has performed relative to
its comparative index .
The basic fee rate (calculated monthly) is calculated by adding a group
fee rate to an individual fee rate, and multiplying the result by each
fund's average net assets. The group fee rate is based on the average net
assets of all the mutual funds advised by FMR. This rate cannot rise above
0.52%, and it drops as total assets under management increase.
For September 30, 1995, the group fee rate was 0.31 %. The
individual fund fee rate is .17% for Destiny I and .30% for Destiny II. The
basic fee rate for fiscal 1995 was 0.49 % for Destiny I and
0.62 % for Destiny II.
The performance adjustment rate is calculated monthly by comparing each
fund's performance to that of the Standard & Poor's Composite Index of
500 Stocks (S&P 500) over the most recent 36-month period. The
difference is translated into a dollar amount that is added to or
subtracted from the basic fee. The maximum annualized performance
adjustment rate is +/ - .24% of average net assets up to and including
$100,000,000 and +/ - .20% of average net assets in excess of $100,000,000.
FMR has sub-advisory agreements with FMR U.K. and FMR Far East. These
sub-advisors provide FMR with investment research and advice on issuers
based outside the United States. Under the sub-advisory agreements, FMR
pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively,
of the costs of providing these services.
For the fiscal year ended September 30, 1995, FMR, on behalf
of Destiny I and Destiny II , paid FMR U.K. and FMR Far East
fees amounting to less than 0.01 % of its
average net assets.
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FSC performs transfer agency, dividend disbursing and shareholder
servicing functions for each fund. FSC also calculates the NAV and
dividends for each fund, maintains each fund's general accounting records,
and administers each fund's securities lending program. In the
fiscal year ended September 30, 1995, Destiny I and Destiny II
paid FSC fees amounting to less than 0.01% of its average net
assets for transfer agency and related services, and Destiny I and Destiny
II paid FSC fees equal to 0.02% and 0.04%, respectively, of each
fund's average net assets for pricing and bookkeeping services.
Each fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity. A broker-dealer may use a
portion of the commissions paid by a fund to reduce the fund's custodian or
transfer agent fee.
The portfolio turnover rates for Destiny I and Destiny II for the
fiscal year ended September 30, 1995 were 55 % and
52 %, respectively. This rate varies from year to year.
THE FUNDS' PERFORMANCE
Mutual fund performance is commonly measured as total return. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
All total returns quoted below do not include the effect of paying the
separate Creation and Sales Charges and Custodian Fees associated with the
purchase of shares of the funds through the Plans. Total returns would be
lower if Creation and Sales Charges and Custodian Fees were taken into
account. As previously discussed, shares of the funds may be acquired only
through Fidelity Systematic Investment Plans. Investors should consult the
Plans' Prospectus for complete information regarding Creation and Sales
Charges and Custodian Fees.
HISTORICAL FUND RESULTS. Each fund's fiscal year runs from October 1 to
September 30. The tables below show each fund's total returns for the
period s ended September 30, 1995:
DESTINY I
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND* ONE YEAR FIVE YEARS TEN YEARS
LIFE OF FUND*
27.49 % 25.17 % 19.47 % 18.50 % 27.49 %
207.27 % 492.48 % 7,165.73 %
DESTINY II
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND** ONE YEAR FIVE YEARS TEN YEARS
LIFE OF FUND**
26.98 % 26.25 % N/A 22.55 % 26.98 % 220.70 %
N/A 627.53 %
* Life of Fund - July 10, 1970 (Commencement of Operations) - September 30,
1995.
** Life of Fund - December 30, 1985 (Commencement of Operations) -
September 30, 1995.
HISTORICAL PLAN RESULTS. The following tables show Destiny Plans I and
Destiny Plans II average annual total returns calculated for the one, five,
ten years and Life of Plan ended September 30, 1995 for a $50/month, 15
year Plan. Life of Plan figures are for the periods October 1, 1980 to
September 30, 1995 for Destiny Plans I and Commencement of Operations
(December 30, 1985) through September 30, 1995 for Destiny Plans II. The
following Plan-related average annual total returns include change in share
price, reinvestment of dividends and capital gains, and the effects of the
separate Creation and Sales Charges and Custodian Fees assessed through the
Plans. Consult the Plans' Prospectus for more complete information on
applicable charges and fees.
DESTINY PLANS I
AVERAGE ANNUAL TOTAL RETURNS
LIFE OF
$50/MONTH, ONE YEAR FIVE YEARS TEN YEARS PLAN
15 YEAR PLAN
-39.06 % 20.66 % 17.91 % 18.33 %
DESTINY PLANS II
AVERAGE ANNUAL TOTAL RETURNS
LIFE OF
$50/MONTH, ONE YEAR FIVE YEARS TEN YEARS PLAN
15 YEAR PLAN
-39.31 % 21.69 % N/A 20.90 %
TOTAL RETURN is the change in value of an investment in a fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
A growth fund may quote its adjusted net asset value including all
distributions paid. This value may be averaged over specified periods and
may be used to calculate a fund's moving average.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please call FDC at
1-800-433-0734.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
HOW TO BUY SHARES
Each fund has an agreement with FDC under which each fund issues shares at
NAV to State Street Bank and Trust Company as Custodian for the Plans. EACH
FUND WILL NOT OFFER ITS SHARES PUBLICLY EXCEPT THROUGH THE PLANS.
Generally, State Street Bank and Trust Company will hold directly all
shares of each fund unless a Planholder owns fund shares directly after
completing or terminating a Plan. The terms of the offering of the Plans
are contained in the Plans' Prospectus.
SHARE VALUE
Each fund's NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash and other assets,
subtracting its liabilities, and dividing the result by the number of
shares outstanding. The funds are open for business each day the New York
Stock Exchange (NYSE) is open. FSC normally calculates each fund's NAV as
of the close of business of the NYSE, normally 4:00 p.m. Eastern time.
Shares are purchased at the next NAV calculated after
your order is received. Each fund's assets are valued primarily on
the basis of market quotations. Foreign securities are valued on the basis
of quotations from the primary market in which they are traded, and are
translated from the local currency into U.S. dollars using current exchange
rates. If quotations are not readily available or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets are valued by a method that the Board of Trustees believes
accurately reflects fair value.
You may initiate many transactions by telephone. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow reasonable procedures designed to verify the identity of the caller.
Fidelity will request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your confirmation
statements immediately after receipt. If you do not want the ability to
redeem and exchange by telephone, call Fidelity for instructions.
SHAREHOLDER SERVICES
THE FOLLOWING SHAREHOLDER SERVICES ARE APPLICABLE ONLY TO THOSE
SHAREHOLDERS WHO HAVE COMPLETED OR TERMINATED A PLAN AND HOLD SHARES OF A
FUND DIRECTLY. Planholders should consult the section titled "Rights and
Privileges of Planholders" on page 11 of their Plan's Prospectus for
a discussion of distribution options and other pertinent data.
CHOOSING A DISTRIBUTION OPTION
You can choose from three distribution options:
1. The SHARE OPTION reinvests your income dividends and capital gain
distributions in additional shares. You are assigned this option
automatically unless you specify otherwise in writing.
2. The INCOME-EARNED OPTION reinvests your capital gain distributions and
pays your income dividends in cash.
3. With the CASH OPTION you receive both income dividends and capital gain
distributions in cash.
Income dividends and capital gain distributions will be reinvested at the
NAV as of the record date for the distribution. On the day a fund goes
ex-dividend, the amount of the distribution is deducted from its share
price. Reinvestment of distributions will be made at that day's NAV. Cash
distribution checks will generally be mailed within seven days.
EXCHANGE PRIVILEGE
The exchange privilege is a convenient way to buy shares in Fidelity's
other funds in order to respond to changes in your goals or in market
conditions and is available only to those who have completed or terminated
a Plan and received shares of the fund directly. In addition, those who
have completed or terminated a Plan and received shares directly may
exchange at NAV into any of the Fidelity funds, including the Fidelity
Advisor Funds. However, to protect the funds' performance and shareholders,
Fidelity discourages frequent trading in response to short-term market
fluctuations. The Fidelity family of funds includes, among others, common
stock funds, tax-exempt and corporate bond funds and money market funds.
Before you make an exchange from either fund please note the following:
1. The fund you are exchanging into must be registered for sale in your
state.
2. Before exchanging into a fund, read its prospectus.
3. You may only exchange between accounts that are registered in the same
name, address, and taxpayer identification number.
4. Because excessive trading can hurt fund performance and shareholders,
each fund reserves the right to temporarily or permanently terminate the
exchange privilege of any investor who makes more than four exchanges out
of the fund per calendar year. Accounts under common ownership or control,
including accounts with the same taxpayer identification number, will be
counted together for purposes of the four exchange limit.
5. Exchanges may have tax consequences for you.
Each fund reserves the right to refuse exchange purchases by any person or
group if, in FMR's judgment, the fund would be unable to invest the money
effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincides with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
You can make exchanges either in writing or by telephone by calling
1-800-544-7777. Written requests for exchange should be sent to Fidelity
Investments, P.O. Box 660602, Dallas, TX 75266-0602.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
STATEMENTS AND REPORTS
For accounts not associated with the Plans, FSC will send a statement of
account after every transaction that affects the share balance or the
account registration (the funds currently do not issue share certificates).
A statement with tax information will be mailed to you by January 31 of
each year, and will also be filed with the IRS. To reduce annual expenses
only one copy of most reports (such as the funds' Annual Report) may be
mailed to your household. Please call Fidelity if you need additional
copies.
FSC pays for shareholder services but not for special services, such as
producing and mailing historical account documents. You may be required to
pay a fee for special services.
HOW TO REDEEM SHARES
THE FOLLOWING DISCUSSION RELATES ONLY TO THOSE INVESTORS WHO HOLD SHARES
OF THE FUNDS DIRECTLY. PLANHOLDERS SHOULD CONSULT THEIR PLANS' PROSPECTUS
FOR THE REQUIREMENTS FOR REDEMPTION OF SHARES FROM A PLAN.
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at 4:00 p.m. Eastern time. Each
fund may hold payment until it is reasonably satisfied that investments
which were made by check have been collected (which may take up to seven
(7) days).
Normally, redemption proceeds will be mailed to you on the next business
day, but if making immediate payment could adversely affect a fund, it may
take up to seven days to pay you.
Redemptions may be suspended or payment dates postponed when the NYSE is
closed (other than weekends or holidays), when trading on the NYSE is
restricted, or as permitted by the SEC.
For more information, see "Systematic Withdrawal Program" on page 14 of
the Destiny Plans' prospectus.
If you are unable to reach Fidelity by phone (for example, during
periods of unusual market activity) consider placing your order by mail or
contact your investment professional.
If you have certificates for your shares, you must submit them to FSC in
order to redeem your shares, and you should call FSC for specific
instructions. The funds currently do not issue share certificates.
TO REDEEM BY MAIL - Send a "letter of instruction" to Fidelity
Investments, P.O. Box 660602, Dallas, TX 75266-0602. The letter should
specify the name of the fund, the number of shares to be sold, your name,
your account number, and the additional requirements listed below that
apply to your particular account.
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Sole Proprietorship, Letter of instruction
signed by all person(s) required to
Custodial (Uniform Gifts/Transfers to Minors Act), sign for the account
exactly as it is registered, accompa-
General Partners nied by signature guarantee(s).
Corporations, Associations Letter of instruction and a corporate
resolution, signed by
person(s) required to sign for the account by signature guarantee(s).
Trusts A letter of instruction signed by the Trustee(s)
with a signature guarantee. (If the Trustee's name
is not registered on your account, also provide a
copy of the trust document, certified within the
last 60 days.)
If you do not fall into any of the above registration categories (e.g.,
Executors, Administrators, Conservators or Guardians) please call FSC for
further instructions.
A signature guarantee is designed to protect you and Fidelity
from fraud. You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law), securities
exchange or association, clearing agency, or savings association. A notary
public cannot provide a signature guarantee.
Planholders who have redeemed shares under "Cancellation and Refund
Rights" (discussed in the Plans' Prospectus, page 14 ), may not
reinstate at NAV the proceeds from such a cancellation or refund until all
refunded Creation and Sales Charges included in the cancellation have first
been deducted in full from the amount being replaced. To redeem shares from
a Plan, see page 15 of the Plans' Prospectus.
PLANS APPLICATION
FIDELITY DESTINY I OR DESTINY II
A
P
P
L
I
C
A
T
I
O
N
GENERAL INSTRUCTIONS
1. Please print clearly with a ballpoint pen.
IMPORTANT: Application must be signed by both the Applicant(s) and
Dealer.
2. DETACH AND MAIL WITH THE INITIAL INVESTMENT TO:
Boston Financial Data Services, Inc.
P.O. Box 8300
Boston, MA 02266-8300
Note: (small solid bullet) If you have completed the Preauthorized Check
Transaction
Form a voided check MUST BE ATTACHED.
(small solid bullet) If you would like BFDS to automatically withhold 28%
from all distributions the Federal Income Tax Withholding
form must be attached.
3. If registering an account under the Uniform Gifts/Transfers to Minors
Act, only one Custodian and one minor are allowed per account.
4. If registering an account as: individual, joint tenants, or custodial
account under the Uniform Gifts/Transfers to Minors Act; then supply the
Social Security Number of the registered account owner who is to be taxed.
If registering as a Uniform Gifts/Transfers to Minors, the child is the
registered account owner. If registering an account as a trust, a
corporation, partnership, organization, etc.; then supply the Employer
Identification Number of the legal entity or organization that will report
income and/or gains.
(Complete and sign reverse side)
DESTINY PLANS APPLICATION
PLEASE CHECK ONE DESTINY PLANS I (large hollow box) OR DESTINY PLANS II
(large hollow box)
Monthly Investment Unit: $_____________
Total Plan Amount: $_____________
Initial investment submitted herewith: $_____________
No. of Investments: (large hollow box) 120 (large hollow box) 180
My objective in adopting a long-term PLAN of this nature
is to accumulate FUND SHARES for
Special Pricing applicable? Yes (large hollow box) No (large hollow box)
If yes, associated account names and/or numbers and monthly investment
unit
$
$
$
(10-yr. Plan)
(15-yr. Plan)
SPECIAL PRICING BREAKPOINT
REGISTER PLAN AS FOLLOWS:
(PLEASE PRINT OR TYPE)
REGISTRANT'S TAXPAYER IDENTIFICATION
(DEALER-USE)
NUMBER OR SOCIAL SECURITY NUMBER
TEAR ON DOTTED LINE
MUST
COMPLETE:
(dagger) If Joint Registration, both the Registrant and Joint Registrant
must
sign, and joint tenancy with right of survivorship will be created
unless another form of ownership is clearly indicated.
- -
Firm Name (Print) Representative's Name (Print)
Home Office Address (Print) Branch Address (Print)
Authorized Signature of Dealer Representative's Signature
X
X
Individual
(First)
(Middle Initial)
(Last)
Joint Tenant
(Please Print Name of Joint Registrant, if desired)(dagger) (First)
(Middle Initial) (Last)
Gifts/Transfers to Minors ___________________________________ as Custodian
for
(Custodian)
(Minor)
under the _______________________ Uniform Gifts/Transfers to Minors Act.
State
Mailing Address
Street City State Zip
Occupation
(If Military give serial #, Rank and Branch) Citizen
of Birth Date
SIGNATURE: I (We) am (are) of legal age and have received and read
Prospectuses for the Plans and Fidelity Destiny Funds: Destiny I and
Destiny II and agree to their terms. As required by federal law, I (we)
certify under penalties of perjury (1) that the Social Security or Taxpayer
Identification Number provided above is correct and (2) that the IRS has
never notified me (us) that I (we) am (are) subject to 31% backup
withholding, OR has notified me (us) that I (we) am (are) no longer subject
to such backup withholding. (Note: If part (2) of this sentence is not true
in your case, please strike out that part before signing.) MUTUAL FUND
SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
Date 19 At City State
X X
Signature of Registrant/Custodian Signature of Joint
Registrant (if any)(dagger)
A Preauthorized Check Form is attached: Yes (large hollow box) No (large
hollow box)
Monthly Investment Date: 1st (large hollow box) 15th (large hollow box)
A Federal Tax Withholding Form is attached: Yes (large hollow box) No
(large hollow box)
Check box for Government Allotment: (large hollow box) Preassigned
account number, if applicable _________________
MAKE ALL CHECKS PAYABLE TO DESTINY I OR DESTINY II
DEALER ONLY SECTION IF DOCUMENTATION IS TO BE MAILED TO REPRESENTATIVE,
PLEASE CHECK AND PROVIDE ADDRESS BELOW. (large hollow box)
DEALER'S NO. REPRESENTATIVE'S NO.
MAIL APPLICATION AND INITIAL INVESTMENT TO BOSTON FINANCIAL DATA SERVICES,
INC., P.O. BOX 8300, BOSTON, MA 02266-8300
PREAUTHORIZED CHECK TRANSACTION FORM
FOR STATE STREET BANK AND TRUST COMPANY
FIDELITY SYSTEMATIC INVESTMENT PLANS
TEAR ON DOTTED LINE
SIGNATURE OF DEPOSITOR(S) DATE
PLEASE PRINT CLEARLY WITH A BALLPOINT PEN; IT WILL BE
USED AS A MAILING LABEL TO NOTIFY YOUR BANK.
BANK NAME
STREET/P.O. BOX
CITY, STATE, ZIP
BANK ACCT. #
x
x
x
x
NAME OF DEPOSITOR(S)
SIGNATURE OF DEPOSITOR(S)
MAIL TO BOSTON FINANCIAL DATA SERVICES, INC., P.O. BOX 8300, BOSTON, MA
02266-8300
BFDS COPY
(Please print clearly with ballpoint pen)
MONTHLY
PLAN NAME: PLEASE CHECK ACCOUNT NUMBER AMOUNT ACCOUNT REGISTRATION
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
Monthly Investment Date: ( ) 1st or ( ) 15th (Should coincide
with Plans Application)
Month to Begin: (Please note: Authorization to begin or change draft must
be received no later than FIFTEEN BUSINESS DAYS prior to date of requested
change. Authorization to cancel a draft must be received no later than FIVE
BUSINESS DAYS prior to date of requested cancellation.)
A VOIDED CHECK MUST BE ATTACHED.
I (We) hereby request that the State Street Bank and Trust Company collect
deposits of funds to be made by me (us) monthly, pursuant to my (our)
investment plan(s) described below by drawing checks to its own order on my
(our) account(s).
X
X
AUTHORIZATION TO HONOR CHECKS DRAWN BY STATE STREET BANK AND TRUST COMPANY
As a convenience to me, I (we) hereby request and authorize you to pay and
charge my (our) account with checks drawn on my (our) account by, and
payable to, the order of the State Street Bank and Trust Company. I (we)
agree that your rights in regard to each such check shall be the same as if
the check were drawn on you and personally by me (us). This authority is to
remain in effect until revoked in writing, and until you actually receive
such notice, I (we) agree that you shall be fully protected on honoring any
such check.
I (We) further agree that if any such check be dishonored, whether with or
without cause, and whether unintentionally or inadvertently you shall be
under no liablility whatsoever.
PREAUTHORIZED CHECK TRANSACTION FORM
FOR STATE STREET BANK AND TRUST COMPANY
FIDELITY SYSTEMATIC INVESTMENT PLANS
TEAR ON DOTTED LINE
SIGNATURE OF DEPOSITOR(S) DATE
PLEASE PRINT CLEARLY WITH A BALLPOINT PEN; IT WILL BE
USED AS A MAILING LABEL TO NOTIFY YOUR BANK.
BANK NAME
STREET/P.O. BOX
CITY, STATE, ZIP
BANK ACCT. #
x
x
x
x
NAME OF DEPOSITOR(S)
SIGNATURE OF DEPOSITOR(S)
MAIL TO BOSTON FINANCIAL DATA SERVICES, INC., P.O. BOX 8300, BOSTON, MA
02266-8300
BANK COPY
(Please print clearly with ballpoint pen)
MONTHLY
PLAN NAME: PLEASE CHECK ACCOUNT NUMBER AMOUNT ACCOUNT REGISTRATION
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
Monthly Investment Date: ( ) 1st or ( ) 15th (Should coincide
with Plans Application)
Month to Begin: (Please note: Authorization to begin or change draft must
be received no later than FIFTEEN BUSINESS DAYS prior to date of requested
change. Authorization to cancel a draft must be received no later than FIVE
BUSINESS DAYS prior to date of requested cancellation.)
A VOIDED CHECK MUST BE ATTACHED.
I (We) hereby request that the State Street Bank and Trust Company collect
deposits of funds to be made by me (us) monthly, pursuant to my (our)
investment plan(s) described below by drawing checks to its own order on my
(our) account(s).
X
X
AUTHORIZATION TO HONOR CHECKS DRAWN BY STATE STREET BANK AND TRUST COMPANY
As a convenience to me, I (we) hereby request and authorize you to pay and
charge my (our) account with checks drawn on my (our) account by, and
payable to, the order of the State Street Bank and Trust Company. I (we)
agree that your rights in regard to each such check shall be the same as if
the check were drawn on you and personally by me (us). This authority is to
remain in effect until revoked in writing, and until you actually receive
such notice, I (we) agree that you shall be fully protected on honoring any
such check.
I (We) further agree that if any such check be dishonored, whether with or
without cause, and whether unintentionally or inadvertently you shall be
under no liablility whatsoever.
FEDERAL INCOME TAX WITHHOLDING FORM
FOR FIDELITY DESTINY I OR DESTINY II
TEAR ON DOTTED LINE
MAIL TO BOSTON FINANCIAL DATA SERVICES, INC., P.O. BOX 8300, BOSTON, MA
02266-8300
I hereby request and authorize Boston Financial Data Services, Inc. to
withhold at the rate of 28 percent on all taxable distributions from my
account. I understand that all amounts withheld shall be submitted to the
IRS as backup withholding on capital gains and dividend income. I will not
be entitled to obtain a refund or credit of such amount or assert any other
amounts withheld, and I shall hold harmless and indemnify BFDS, State
Street Bank and Trust Company, Fidelity Systematic Investment Plans,
Fidelity Destiny Funds : Destiny I and Destiny II, Fidelity
Distributors Corporation, and their agents against any and all claims,
including IRS claims, for such amounts.
I understand that authorization to begin or cancel withholding shall be
implemented within 30 days of receipt of the requested change by BFDS. I
further understand that this authorization shall not be implemented if, in
BFDS' sole judgement, any information necessary to do so has not been
provided to or verified by BFDS. This service is available only to Plans
that reinvest their dividends and other distributions but is not available
for tax-sheltered retirement plans, including IRAs.
NAME OF PLANHOLDER (PLEASE PRINT) NAME OF JOINT TENANT (PLEASE PRINT)
SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER
x
x
PLAN NAME: PLEASE CHECK ACCOUNT NUMBER(S)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
DESTINY PLANS I (medium hollow box) DESTINY PLANS II (medium hollow box)
SIGNATURE OF PLANHOLDER DATE
SIGNATURE OF JOINT TENANT DATE
SPONSOR
FIDELITY DISTRIBUTORS CORPORATION
82 Devonshire Street
Boston, Massachusetts 02109
FIDELITY INVESTMENTS INSTITUTIONAL
SERVICES CO., INC.
BROKER/DEALER SERVICES DIVISION
82 Devonshire Street
Boston, MA 02109
FOR INVESTMENT PROFESSIONALS OR POTENTIAL
INVESTORS SEEKING AN INVESTMENT PROFESSIONAL
RECOMMENDATION CALL:
NATIONWIDE: 1-800- 433-0734
IN ALASKA OR OVERSEAS (CALL COLLECT): 617 -328-5000
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
Boston, Massachusetts
TRANSFER AND SHAREHOLDERS'
SERVICING AGENT
BOSTON FINANCIAL DATA SERVICES, INC.
P.O. Box 8300
Boston, Massachusetts 02266-8300
FOR ACTIVE PLANS CALL:
Nationwide: 1-800-225-5270
In Massachusetts: 617-328-5000
FIDELITY SERVICE COMPANY
P.O. Box 660602
Dallas, TX 75266-0602
Nationwide: 1-800-544-7777
AUDITORS
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
I.BD-DESPRO -1195
Printed on recycled paper
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 62 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 20th day
of November 1995.
FIDELITY DISTRIBUTORS CORPORATION
By /s/Kurt A. Lange
Kurt A. Lange, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) 1.0 (Title) (Date)
/s/Kurt A. Lange President November 20, 1995
Kurt A. Lange
/s/Caron Ketchum Treasurer November 20, 1995
Caron Ketchum
/s/Edward C. Johnson 3d Trustee November 20, 1995
Edward C. Johnson 3d
/s/W. Humphrey Bogart Trustee November 20, 1995
W. Humphrey Bogart
EXHIBITS
1. A. (1) Custodian Agreement, as amended and restated, dated September 16,
1994 between Fidelity Distributors Corporation and State Street Bank and
Trust Company is electronically filed herein as Exhibit 1.A.(1).
(2) None.
(3) (a) Not applicable.
(b) Plan Dealer Agreement is electronically filed herein as Exhibit
1.A.(3)(b).
(c) Dealer Commission and Service Fee Schedule is electronically herein
as Exhibit 1.A.(3)(c).
(4) None.
(5) (a) Not applicable.
(b) Not applicable.
(6) Articles of Incorporation and By-laws of Fidelity Distributors
Corporation are incorporated herein by reference to Exhibit 1.A.(6) to
Post-Effective Amendment No. 50.
(7) The Consolidated Financial Statements of Seaboard Surety Company, for
the fiscal year ended December 31, 1994, are electronically filed herein as
Exhibit 1.A(7).
(8) Franchise Agreement dated August 2, 1984 between Fidelity
Distributors Corporation and Fidelity Destiny Portfolios, on behalf of
Destiny I, is electronically filed herein as Exhibit 1.A.(8)(a).
Franchise Agreement dated December 30, 1985 between Fidelity
Distributors Corporation and Fidelity Destiny Portfolios, on behalf of
Destiny II, is electronically filed herein as Exhibit 1.A.(8)(b).
(9) None.
(10) Not applicable.
2. Not applicable.
3. Audited Financial Statements, for the fiscal year ended September 30,
1995, are filed herein as part of the Prospectus.
4. Not applicable.
EXHIBIT 1.A.(1)
FIDELITY SYSTEMATIC INVESTMENT PLANS
AMENDMENT AND RESTATEMENT OF
CUSTODIAN AGREEMENT
MADE AS OF SEPTEMBER 16, 1994
This AGREEMENT ("Agreement") made as of September 16, 1994 between
FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts corporation with an
office at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Sponsor") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
corporation with an office at 225 Franklin Street, Boston Massachusetts
02110 (hereinafter called the "Custodian"), amending and restating the
original custodian agreement between Crosby Plans Corporation (whose name
has been changed to Fidelity Distributors Corporation) and State Street
Bank and Trust Company dated July 15, 1969 and subsequently amended on
March 15, 1972, June 30, 1975, November 1, 1982, and by a 1985 memorandum
(the original custodian agreement, and the original custodian agreement as
amended from time to time prior to the date of this Agreement, each
hereinafter referred to as a "Predecessor Custodian Agreement" and
collectively as the "Predecessor Custodian Agreements"), all relating to
FIDELITY SYSTEMATIC INVESTMENT PLANS ("Fidelity Plans"), for the purposes
of: (1) updating administrative procedures applicable to all periodic
payment plans of Fidelity Plans issued pursuant to any of the Predecessor
Custodian Agreements, provided that such updating of procedures does not
affect adversely any such plan issued and outstanding prior to the date of
this Agreement; (2) setting forth the terms, conditions and procedures that
shall govern such plans issued hereafter; and (3) effecting, as of the date
hereof, a combination of the custodial pool maintained under this
Agreement, for shares held on behalf of Destiny Plans II (as defined
herein), with a custodial pool maintained under another custodian agreement
to which the Sponsor and the Custodian are each parties and, in connection
therewith, subjecting the plans issued under such other agreement
(hereinafter referred to as "Destiny Plans II-A") to the terms and
provisions of this Agreement.
WITNESSETH
WHEREAS, the Sponsor was formed to develop financial planning programs and
to sell shares of mutual funds and other securities, and desires to obtain
the services of the Custodian in connection with the administration of
certain plans providing for investment in shares of Fidelity Destiny
Portfolios, a Massachusetts business trust registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), the shares of beneficial interest of which are
divided into series consisting of the Destiny I and Destiny II series
(collectively hereinafter called the "Fund") or shares of other open-end
management investment companies as herein provided. Such plans include
plans that are issued and outstanding prior to the date of this Agreement,
as well as plans that the Sponsor proposes to sell and distribute to the
public on or after the date of this Agreement; and
WHEREAS, Fidelity Plans is a unit investment trust consisting of two
series of periodic payment plans (defined more specifically below and
referred to collectively in this preamble as the "Plans"), providing for
the accumulation of shares of the Fund; and
WHEREAS, Plans of one series of Plans ("Destiny Plans I") accumulate
shares of the Destiny I series of the Fund, and Plans of a second series of
Plans ("Destiny Plans II") purchase shares of the Destiny II series of the
Fund; and
WHEREAS, in accordance with the terms of Destiny Plans I and Destiny Plans
II, administrative procedures applicable to such Plans under the terms of a
Predecessor Custodian Agreement may be updated, provided that such updating
of procedures does not affect adversely Plans issued and outstanding at the
time such updated procedures are implemented; and
WHEREAS, the Sponsor and the Custodian have determined that the updated
procedures contemplated by this Agreement would not affect adversely Plans
issued and outstanding at the time such updated procedures are proposed to
be implemented; and
WHEREAS, it is the intent of the Sponsor and the Custodian that the
updated procedures contemplated by this Agreement be applicable to all
Plans issued prior to, and on or after the effective date of this
Agreement; and
WHEREAS, the Sponsor and the Custodian, by virtue of an amendment dated as
of March 23, 1993 to a Plan Custodian and Administration Agreement dated as
of November 6, 1981, and as subsequently amended, among Security
Distributors, Inc., a Kansas corporation, Security Management Company,
Inc., a Kansas corporation, and The First National Bank of Topeka, Kansas
(the original custodian and administration agreement, and each amendment
thereof made from time to time prior to the date of this Agreement, are
each hereinafter referred to as a "Security Agreement" and collectively as
the "Security Agreements"), have assumed the responsibilities of
Underwriter and Custodian (as defined therein), respectively, under such
Security Agreements; and
WHEREAS, the Security Agreements provided for the issuance of systematic
investment plans contemplating investment in shares of Security Action
Fund, a mutual investment fund, or any other shares substituted therefor
under the terms of such plans; and
WHEREAS, pursuant to Section 16 of the Security Agreements and the terms
of systematic investment plans issued pursuant to the applicable Security
Agreement (Destiny Plans II-A), shares of the Destiny II series of the Fund
have been substituted for shares of Security Action Fund held by the
custodian under such Security Agreements, as a result of the transfer of
assets of Security Action Fund to the Destiny II series of the Fund; and
WHEREAS, the terms of the Destiny Plans II-A are substantially identical
to the terms of Destiny Plans II, and the terms of the Security Agreements
are substantially identical to the terms of the Predecessor Custodian
Agreements; and
WHEREAS, under each of the Security Agreements and the Predecessor
Custodian Agreements, the Sponsor and the Custodian have the right to make
changes in the administration of Destiny Plans II-A and Destiny Plans II,
respectively, issued and outstanding, provided that such changes will not
adversely affect the rights and privileges of the planholders thereof; and
WHEREAS, in accordance with the terms of Destiny Plans II-A,
administrative procedures applicable to such plans under the terms of the
applicable Security Agreement may be updated, provided that such updating
of procedures does not adversely affect the rights and privileges of any
Destiny Plans II-A issued and outstanding at the time such updated
procedures are implemented; and
WHEREAS, the Sponsor and the Custodian believe that it is in the best
interests of holders of Destiny Plans II-A to administer the Destiny Plans
II-A under this Agreement as plans of an existing series of Fidelity Plans
and to treat such Destiny Plans II-A as having been issued under and
governed by this Agreement; and
WHEREAS, the Sponsor and the Custodian believe that this action will not
adversely affect the rights and privileges of any holder of an outstanding
Security Plan; and
WHEREAS, the Sponsor and the Custodian intend to effect this action on
September 16, 1994; and
WHEREAS, the Custodian is willing to render the services specified in this
Agreement, but only on the terms and conditions set forth herein and in the
Plans:
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
the parties hereto agree as follows:
1. PLANS AND CUSTODIANSHIP.
(a) The Sponsor offers two types of periodic payment plans: "Fidelity
Systematic Investment Plans: Destiny Plans I, for the Accumulation of
Shares of Fidelity Destiny Portfolios: Destiny I" (referred to hereinafter
as "Destiny Plans I"); and "Fidelity Systematic Investment Plans: Destiny
Plans II, for the Accumulation of Shares of Fidelity Destiny Portfolios:
Destiny II" (referred to hereinafter as "Destiny Plans II"; together with
Destiny Plans I, the "Plans"). The Plans provide for the purchase of
shares of a specified series of the Fund, or of shares of any other
open-end management investment company substituted therefor under the terms
of the Plans (all such shares and any fractional interests therein are
hereinafter referred to as "Fund Shares"). All Destiny Plans II-A issued
and outstanding on the date of the commencement of the administration of
such plans under this Agreement shall, as of such date, be governed by and
administered in accordance with the provisions of this Agreement as Destiny
Plans II, and all references herein to the "Plans" or to "Destiny Plans II"
shall, as of such date, include such Destiny Plans II-A, unless the context
otherwise requires. Evidence that administration of the Destiny Plans II-A
under this Agreement as part of the Destiny II Series has commenced shall
consist of a receipt acknowledging the delivery of assets of Destiny Plans
II-A. Until such receipt is acknowledged, the Destiny Plans II-A shall be
administered in accordance with the applicable Security Agreement. In the
event of a conflict between an applicable Plan Document in effect at the
time of establishment of an account in connection with such Plan, the
Custodian shall administer the applicable Plan according to this Agreement
unless instructed otherwise by the Sponsor.
Plans may, but need not, be issued in certificate form. Plans that have
been issued in certificate form (a "Certificate") under a Predecessor
Custodian Agreement or a Security Agreement, respectively, are
substantially in one of the forms attached hereto at Exhibit A and Exhibit
B. If a Certificate has been issued in connection with a Plan, then such
Plan shall be governed by the terms and conditions set forth in the
Certificate. In addition, each Plan, including Plans issued in Certificate
form and Plans not issued in Certificate form, shall be governed by the
terms and conditions set forth in the prospectus for such Plan as in effect
at the time such Plan was issued ("Prospectus"). The terms and conditions
set forth in the respective Certificates and Prospectuses (together, the
"Plan Documents") are incorporated herein and made a part of this
Agreement. Each Plan shall be administered under this Agreement in
accordance with applicable Plan Documents in effect at the time of the
establishment of an account in connection with such Plan.
The Plan Documents are subject to such changes in form and content as the
Sponsor may effect from time to time and, with respect to changes in form
and content of any issued and outstanding Plans, in accordance with the
terms of applicable Plan Documents. In addition, the Sponsor may elect to
apply such changes to Plans already issued only if such changes do not
adversely affect the rights and privileges of the Planholders thereof. Any
such changes in Plan Documents affecting implementation of the provisions
of this Agreement shall be acknowledged by the Sponsor and the Custodian.
(b) The Custodian accepts the custodianship hereunder with respect to
Plans issued pursuant to the terms of each of the Predecessor Custodian
Agreements that are outstanding on the date of this Agreement, on the terms
and conditions set forth in the Plan Documents applicable to such Plans.
The Custodian accepts the custodianship hereunder with respect to Destiny
Plans II-A, on the same terms and conditions as those set forth in the Plan
Documents applicable to Destiny Plans II on the date hereof.
(c) The Custodian accepts the custodianship hereunder with respect to
Plans issued after the date of this Agreement on the terms and conditions
set forth in this Agreement and in the Plan Documents applicable to such
Plans; provided that the Custodian may, as a condition to accepting
custodianship with respect to a Plan, require the Sponsor to furnish to the
Custodian:
(i) Evidence satisfactory to the Custodian that the Sponsor has taken
all necessary action to satisfy the requirements of the Investment Company
Act of 1940, as amended (the "1940 Act"), in connection with the issuance
of the Plans; that a registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering Plans to be offered after the
date of this Agreement is effective; that the Fund shares are the subject
of a currently effective registration statement under the 1933 Act; that
the registration of the Sponsor as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act") is effective; that the
Sponsor is a member in good standing of the National Association of
Securities Dealers, Inc.; and that all other necessary approvals of the
Plans and the issuance and sale thereof by governmental authorities having
jurisdiction with respect thereto has been duly obtained.
(ii) Such additional documents, certificates and opinions as the
Custodian may reasonably require.
2. CUSTODIAN'S FUNCTIONS.
(a) Issuance of New Plans. Upon receipt by the Custodian or its agent of
an application for a Plan, and of funds, check or other order for the
payment of money representing the initial payment for a Plan by the
purchaser thereof (hereinafter called the "Planholder"), and any
Designation of Beneficiary that may be required by the Sponsor or pursuant
to applicable Plan Documents, the Custodian will then:
(i) establish an account for such Planholder that reflects the face
amount of the new Plan;
(ii) forward for collection such check or other order for the payment of
money as hereinafter provided in section 2(b)(i) hereof; and
(iii) forward to the Planholder by first-class mail the Custodian's
letter of transmittal and a notice conforming to the requirements of
Section 27(f) of the 1940 Act, Rule 27f-1 thereunder (or any successor
rule) and as described in the Plan Documents for such Plan, and such other
explanatory information or communication to the Planholders as may be
furnished by the Sponsor, including, but only if so directed by the
Sponsor, a Plan Certificate. Such form of notice shall be approved by the
Sponsor.
(b) Application of Payments Under Issued and Outstanding Plans. Upon
receipt by the Custodian or its agent of any payment identified by the
Custodian as being for the account of a Planholder and that is made in
accordance with applicable Plan Documents, including any payment being made
pursuant to an extended investment option, the Custodian will:
(i) Forward for collection any check or other order for the payment of
money representing such payment. In the event any check or other order for
the payment of money forwarded by the Custodian for collection is returned
unpaid for any reason, the Custodian may, in its discretion or as from time
to time instructed by the Sponsor, redeposit such check for collection. If
such item is returned a second time as unpaid, any Fund Shares acquired
with said check shall be redeemed and to the extent there is a deficiency
the Custodian shall charge any deficiency (including applicable custodian
fees) to the Sponsor. The Custodian shall promptly notify the Planholder
of any such returned item and send a copy of such notice to the Sponsor or
selling broker-dealer.
(ii) Deduct from the payment the amount of any applicable original
issue, stock transfer, sales or other taxes and apply such amounts to the
purchase of the necessary tax stamps or to payments to the proper taxing
authorities, as the case may be.
(iii) Deduct therefrom the applicable fees of the Sponsor and the
Custodian as set forth in Schedules 1 and 2 to this Agreement applicable to
such Plan. Such deductions shall be credited to the Sponsor or the
Custodian, as the case may be.
(iv) Apply, within two business days unless impracticable, the balance
of the payment to the purchase of Fund Shares, and credit the account of
the Planholder (computed to three decimal places) with the number of Fund
Shares so purchased.
(v) Prepare and mail to the Planholder a receipt in a form to be
approved by the Sponsor, which receipt shall be substantially in the form
attached hereto as Exhibit C and comply as to form and delivery with the
requirements of Rule 10b-10 of the 1934 Act (or any successor rule), and
which receipt shall show the Plan number, the amount of the payment
received, the price paid per Fund Share, the sales charges deducted, the
custodian charge deducted, the number of such Fund Shares purchased after
the deductions and the total Fund Shares then held by the Custodian for the
Planholder. Such receipts shall be mailed by the Custodian to Planholders,
and at the same time a copy of the receipt shall be sent to the selling
broker-dealer, both to be mailed within two business days (within seven
business days for receipts issued in connection with the purchase of Fund
Shares for the establishment of new accounts) from the date the Custodian
purchases Fund Shares with the payment for which a receipt is being
prepared and mailed (or as soon thereafter as possible).
(c) Additional Notices.
(i) Reminder Notices. The Custodian shall mail to each Planholder
prior to the Planholder's payment date a remittance form and, unless
otherwise agreed to, a return envelope to be used with the Planholder's
next payment. Such form of notice shall be approved by the Sponsor and
shall be substantially in the form attached hereto as Exhibit D.
(ii) Past Due Payment Notices. On a periodic basis as agreed upon from
time to time by the Sponsor and the Custodian, the Custodian shall prepare
and mail to the Planholder a notice of past due payment in accordance with
applicable Plan Documents and applicable law. Such form of notice shall be
approved by the Sponsor and shall be substantially in the form attached
hereto as Exhibit E. The Custodian shall provide the selling
broker-dealer, or in the absence of such, the Sponsor, with a duplicate of
each such notice sent to any Planholder.
(iii) Refund Notices. The Custodian also shall mail to each Planholder
any notice(s) required by Section 27(e) of the 1940 Act and Rule 27e-1
thereunder (or any successor rule). Such notice(s) shall comply with
Section 27(e) and Rule 27e-1 thereunder (or any successor rule) and shall
be in accordance with applicable Plan Documents. Such form of notice shall
be approved by the Sponsor and shall be substantially in the form attached
hereto as Exhibit F.
(iv) Termination Notices. In the event that a Plan is being terminated
by the Sponsor or the Custodian in accordance with the terms of applicable
Plan Documents and Section 7 of this Agreement, the Custodian shall also
mail or deliver to the affected Planholder a notice of termination as
described in applicable Plan Documents and in Section 7(c) of this
Agreement. The Custodian will provide the selling broker-dealer or, in the
absence of such, the Sponsor with a duplicate of each such notice sent to
any Planholder. Such form of notice shall be approved by the Sponsor and
shall be substantially in the form attached hereto as Exhibit G.
(v) Other Notices. The Custodian shall also mail or deliver to each
Planholder any other notices required by any applicable federal or state
law, rule, or regulation, in such form and by such means as are required by
such law, rule, or regulation. The form of any such notice shall be
approved by the Sponsor.
(d) Refund Procedures. In the event that the Custodian is required under
applicable provisions of Plan Documents to accept the return of the Plan
and to reimburse to the Planholder all or a portion of his payments made as
specified in the Plan Documents for such Plan, the Custodian shall charge
against the deposit account of the Sponsor in the banking department of the
Custodian the amount of any such reimbursed payment in excess of the net
asset value of Fund Shares purchased under such Plan; and, unless such
return is elected within 45 days of the mailing of the notice described in
Section 2(a)(iii) above, less the amount of any Custodian fees. In the
event that such refund procedures are initiated with respect to the account
of a Planholder, the Custodian shall inform the selling broker-dealer or in
the absence of such, the Sponsor.
(e) Prepayments. A Planholder will be permitted to complete a Plan ahead
of schedule, but only in accordance with the terms and conditions of
applicable Plan Documents. Any such prepayments received by the Custodian
shall be applied, to the extent of the balance thereof after authorized
deductions, to the next succeeding payments due and payable under the Plan
in the order in which they become due. In computing the commencement of
any period of default, the Planholder shall first be given full credit for
a period equal to that covered by any and all payments made ahead of
schedule by the Planholder.
(f) Changes in Plan Face Amount. A Planholder may change the face amount
of his Plan, but only in accordance with the terms and conditions of
applicable Plan Documents. If such change in face amount is approved by
the Sponsor, the Custodian shall make appropriate changes in the
Planholder's account, and if so requested by the Sponsor, prepare and
countersign a Certificate for a Plan in the changed denomination and
forward it by first class mail to the Planholder with such communications
as may be furnished to the Custodian by the Sponsor. Changes in the face
amount of a Plan shall be implemented by the Custodian only upon receipt
of:
(i) written instructions from the Planholder, Sponsor or selling
broker-dealer, as applicable, as to the increase or decrease in Plan face
amount, which instructions shall set forth the Plan account number, the
face amount of the new Plan, the amount of each monthly payment on the new
Plan, the number of Plan payments which are to be credited to the new Plan,
and the amount, if any, of the adjustment in sales charges and custodian
fees resulting from the change in face amount and such other information as
may be reasonably requested from time to time by the Custodian. Such
adjustment shall be in accordance with the terms of applicable Plan
Documents and shall be effective concurrently with the change in face
amount; i.e., at the time a new Plan is established that reflects the new
face amount;
(ii) in the case of a face amount increase, payment by check in the
amount of the first payment to be made under the Plan as increased in face
amount, as specified in applicable Plan Documents, unless such payment is
reduced or waived by the Sponsor;
(iii) if the total payments made on the Plan surrendered are not an
integral multiple of the monthly payments required on the new Plan, a check
in the sum that is required by the Sponsor to enable the remaining monthly
payments (after giving credit for payments already made) to equal the face
amount of the new Plan; and
(iv) the Plan Certificate for the Plan being surrendered, if applicable.
(g) Cash Withdrawals and Restoration or Replacement. A Planholder may
make a partial cash withdrawal from his account, but only in accordance
with the terms and conditions of applicable Plan Documents. Any such
request for a withdrawal received by the Custodian or its agent shall be
processed by the Custodian, and proceeds shall be payable by the Custodian
to such Planholder, in accordance with the terms and conditions of
applicable Plan Documents and with the 1940 Act. Following a cash
withdrawal, a Planholder is permitted to exercise a restoration or
replacement privilege with respect to such withdrawal if and to the extent
such restoration or replacement is provided for in applicable Plan
Documents. Upon receipt by the Custodian or its agent of any payment
identified by the Custodian as being a replacement or restoration of a
partial withdrawal for the account of a Planholder and that is made in
accordance with applicable Plan Documents, the Custodian will process and
credit such payment for the account of the Planholder in accordance with
the provisions of section 2(b) of this Agreement, applicable Plan
Documents, and the 1940 Act.
(h) Transfers or Assignments of Plans. A Planholder may make a transfer
or assignment of his right, title, and interest in the entire plan, but
only in accordance with the terms and conditions of applicable Plan
Documents. Any such request for a transfer or assignment received by the
Custodian or its agent shall be recorded by the Custodian in accordance
with the terms and conditions of applicable Plan Documents until the
assignee shall have notified the Custodian that the transfer or assignment
has terminated. The terms of any such transfer or assignment shall be
subject to applicable Plan Documents. During the term of the transfer or
assignment, such Planholder shall retain those rights specified in
applicable Plan Documents.
(i) Termination on Default. If the Planholder defaults in making Plan
payments for the period of time specified in applicable Plan Documents as
the default period, or if Fund Shares are not obtainable and a substitution
is not made, the Plan shall be considered in a state of default, and the
Plan may be terminated in accordance with applicable Plan Documents in the
manner and with the effect set forth therein. Such termination may only be
effected after mailing by the Custodian of written notice of the
termination to the Planholder in accordance with the terms of applicable
Plan Documents; a copy of such written notice of termination shall also be
mailed to the selling broker-dealer or in the absence of such, the Sponsor.
(j) Plan Reinstatement or Replacement Following Termination. A Planholder
that has terminated his Plan may exercise a Plan reinstatement or
replacement provision, which provides for reinvestment of a specified
amount in a Plan, but only in accordance with and pursuant to the terms and
conditions of applicable Plan Documents. Any such reinstatement or
replacement order and investment received by the Custodian or its agent
shall be processed by the Custodian and credited for the account of such
Planholder in accordance with the terms and conditions of applicable Plan
Documents, section 2(b) of this Agreement, and the 1940 Act.
(k) Records.
(i) The Custodian will prepare and maintain complete up-to-date
records of the performance of its duties hereunder, on magnetic tape or
otherwise, including records showing a separate account for each
Planholder, and the name and address of the Planholder; the number, date
and amount of each payment made by the Planholder; the date and amount of
all dividends and distributions received by the Custodian on Fund Shares
held for the account of the Planholder; any amounts withheld from
withdrawals under a Plan in accordance with the Internal Revenue Code of
1986, as amended, and any regulations thereunder (or successor
regulations); and all deductions made and the number of Fund Shares
acquired and held by the Custodian for the account of the Planholder.
These records shall be maintained and preserved in accordance with
applicable requirements of Section 31 of the 1940 Act and rules thereunder
(or any successor rule), and in accordance with state securities laws
("Blue Sky laws") applicable to records kept with regard to the Plans.
Such records shall be made available to the Sponsor for inspection or audit
via magnetic tape or at the office of the Custodian at all reasonable
times.
(ii) The Custodian shall maintain a separate account for each
Planholder showing the number of Fund Shares (to three decimal places) and
the amount of cash, if any, to the credit of each account. The records of
such accounts shall be maintained separate and apart from the Custodian's
corporate records.
(l) Statements Furnished to Sponsor and Selling Broker-Dealer. The
Custodian will render statements to the Sponsor at such time and in such
form as may be agreed upon by the parties hereto, showing for each account
in which transactions were recorded during the specified period the number
of the account, the amount of the payment(s) received, the number of such
payment(s), the deductions made, the balance applied to the purchase of
Fund Shares, and the number of Shares purchased.
(m) Application of Dividends and Distributions. The Custodian will
receive all dividends and distributions on the Fund Shares held by it as
Custodian for each Planholder and, after deduction therefrom of (i) any
applicable charges and deductions set forth in Schedules 1 or 2 or
otherwise specified in the Plan Documents, and (ii) applicable taxes
required by law or elected by a Planholder to be withheld therefrom, will
with respect to each account for a Planholder, either apply the balance to
the purchase of Fund Shares, or distribute the balance to the Planholder as
he shall have elected in accordance with applicable Plan Documents. Any
dividend or distribution payable optionally in cash or in Fund Shares, may,
at the discretion of the Custodian, be accepted by the Custodian in cash or
in Fund Shares in such proportion as may be determined by the Custodian and
the Fund.
(n) Custodian Fees and Charges. The Custodian will perform the functions
required of it by the terms of this Agreement and will be entitled to
deduct the charges set forth in Schedule 2 applicable to the Plans and as
specified in the applicable Plan Documents which charges shall be deducted
from payments or the Planholders' accounts, as specified in applicable Plan
Documents, unless the Custodian is otherwise reimbursed by the Sponsor. In
connection with the foregoing:
(i) With respect only to Plan accounts established after October 31,
1982, for the calendar year commending January 1, 1982 and each calendar
year thereafter, the Custodian shall reimburse the Sponsor for any amounts
paid to it by the Sponsor in prior fiscal years pursuant to Schedule 2 of
this Agreement the extent that the actual expenses of the Custodian covered
by the Service Charge (as specified in Schedule 2) for that fiscal year are
less than $10.00 per Plan account, and will charge each Plan account the
amount of such reimbursement in an amount not to exceed the difference
between $10.00 and the actual expenses to be charged to a Plan account for
that fiscal year.
(ii) If the amount of deductions from the accounts of Planholders as
provided in Schedule 2 are not sufficient to reimburse the Custodian for
the charges, fees, and expenses specified in Schedule 2, the Sponsor shall
pay to the Custodian the difference between the total amount of all such
charges, fees, and expenses, and the amounts which the Custodian deducted.
(iii) In case of default by the Sponsor in the performance of any
administrative service relating to the custodianship described in this
Agreement required of it under the provisions of Section 3(c) below, or at
the election of the Custodian, the Custodian will perform such service for
a consideration payable by or from the account of the Planholders. Such
consideration shall not be in excess of the amount provided for in this
Agreement, including schedules hereto.
(iv) Any deductions under the terms of this provision shall be made in
accordance with the terms of Section 26(a)(2) of the 1940 Act and any rules
thereunder (or any successor rules).
(o) Purchases of Fund Shares. All purchases of Fund Shares by the
Custodian pursuant to the provisions of this Agreement shall be made from
the Fund, or its issuing agent (or any underwriter of Fund Shares with
which the Sponsor may contract for such purpose) at the net asset value of
the Fund at the time of purchase as calculated by Fidelity Service Co. (or
any successor thereto) in accordance with the terms of the Fund's then
current prospectus. The Custodian shall be entitled to presume
conclusively that the price set by Fidelity Service Co. (or any successor
thereto) with respect to any Fund Shares purchased by the Custodian is said
net asset value. Funds received by the Custodian to be applied to the
purchase of Fund Shares shall, unless impracticable, be applied to such
purchase within two business days after the receipt by the Custodian of
said payments, dividends or distributions.
(p) Sales of Fund Shares. All sales of Fund Shares by the Custodian, as
agent, pursuant to the provisions of this Agreement, shall be made by
deposit of the shares with the Fund or its duly authorized agent together
with a request that the shares be repurchased at the net asset value of the
Fund at the time of sale as calculated by Fidelity Service Co. (or any
successor thereto) in accordance with the terms of the Fund's then current
prospectus, so long as the privilege of redemption at net asset value is
available to holders of Fund Shares as set forth in the Fund's then current
prospectus. Whenever pursuant to the provisions of this Agreement Fund
Shares are to be sold or redeemed, the Custodian shall first withdraw the
Fund Shares from the custodianship hereunder and, as agent for the
Planholder, shall sell or redeem said shares by depositing them for
repurchase as set forth above. Anything herein to the contrary
notwithstanding, (i) the Custodian, as agent for the Planholders, is
authorized to offset sales and purchases for all of the Planholders on a
business day and, accordingly, to place with the Fund or its agent a net
purchase order for the excess of purchases over sales, or a net sale order
for the excess of sales over purchases; and (ii) any such sales of Fund
Shares in connection with a Plan termination, a withdrawal of shares by a
Planholder, or an exercise of an exchange privilege by a Planholder, shall
be effected by the Custodian in accordance with the terms and conditions of
applicable Plan Documents.
(q) Holding Fund Shares. The Custodian shall have possession of, and
shall segregate and hold all of the securities and other properties in
which the funds of the Planholders of each Series are invested, all funds
held for such investment, any redemption or other special funds to the
Planholders, and all income upon and accretion to and proceeds of such
properties and funds subject only to the deductions specified in this
Agreement or in the Plan Documents, unless and until distributed to the
Planholders in accordance with the terms of applicable Plan Documents. The
Custodian is authorized to commingle all cash or other property and all
Fund Shares held by it hereunder for a Series, but only with other cash,
property or Fund Shares held by it hereunder for such Series, and to cause
any certificates for Fund shares to be registered in its name as Custodian
or in the name of its nominees. Except as provided below with respect to
bank accounts, nothing herein shall be construed as permitting the
Custodian to commingle the Fund Shares, securities or other properties of
Plans of one Series with plans other than the Plans of the same Series.
All monies deposited with or received by the Custodian hereunder shall be
held by it without interest as part of the custodianship until required to
be disbursed in accordance with the provisions of this Agreement or of the
Plans. The Custodian shall open and maintain separate bank accounts in the
banking department of the Custodian in the name and for the benefit of each
Series of the Plans, subject only to the draft order of the Custodian or
order of the Custodian acting pursuant to the terms of this Agreement, and
shall hold in such bank accounts all monies received by the Custodian from
and for the account of each Series of the Plans. The Custodian may
aggregate or commingle the bank accounts of each Series as instructed by
the Sponsor.
(r) Reports and Other Mailings to Planholders. The Custodian will:
(i) Upon the instructions of the Sponsor or the Fund, mail to all
Planholders such prospectuses, annual reports, semi-annual reports,
quarterly reports and/or other periodic financial reports, dividend or
other account statements, tax notices, notices of meetings and proxy
soliciting material as are available and the mailing of which is required
by applicable law or regulation. The cost of the above, including postage,
shall be reimbursed to the Custodian by the Sponsor. It is understood and
agreed that the services performed by the Custodian hereunder are separate
and apart from the services performed under Section 2(n) above and Section
2(s) below.
(ii) Prepare and file such reports and returns as are required by law
or regulation to be prepared and filed by the Custodian to permit its
custodianship under the Agreement to continue in operation.
(s) IRS Reporting. The Custodian shall furnish to the Internal Revenue
Service and to each Planholder all required returns relating to dividends
or other distributions to such Planholder's account(s) for federal income
tax reporting purposes.
(t) Delegation of Duties. The Custodian assumes primary responsibility
for the preparation and filing of all such reports or documents as are
required of it as Custodian by law or regulation, but may delegate the
performance of such duties to the Sponsor. Upon the written request of the
Sponsor, the
Custodian will delegate any of its functions described in this Section 2 or
in Section 3 of this Agreement, provided that such delegation is not
inconsistent with Sections 26 or 27 of the 1940 Act. In addition, the
Custodian may delegate its duties under this Agreement to its affiliate,
Boston Financial Data Services, Inc. ("BFDS"), a transfer agent registered
under Section 17A(c)(2) of the 1934 Act, provided that such delegation is
not inconsistent with Sections 26 or 27 of the 1940 Act. In the event that
the Custodian delegates one or more of its duties hereunder to BFDS, the
Custodian shall remain responsible for the acts and omissions of BFDS as it
is for its own acts and omissions hereunder.
3. SPONSOR'S FUNCTIONS.
(a) General Functions. The Sponsor agrees to perform the functions
required of it by the terms hereof and of the Plan Documents. The Sponsor
will use its best efforts to distribute Plans, maintain adequate office
facilities and management staff, and keep current records. The Sponsor
assumes full responsibility for the preparation, contents, and distribution
of the current Plan prospectus and the current Fund prospectus, for
complying with all applicable requirements of the 1933 Act, the 1940 Act,
and any other applicable laws, rules and regulations of governmental
authorities having jurisdiction. With respect to any duties for which the
Custodian assumes primary responsibility but which it delegates to the
Sponsor, the Sponsor covenants and agrees to take all action, and not to
omit any action, necessary to carry out such duties, and agrees to furnish
to the Custodian, upon request, evidence thereof satisfactory to the
Custodian and its counsel. The Sponsor will use its best efforts to make
shares of the Fund available for purchase by the Custodian at net asset
value.
(b) Issuance of New Plans. The Sponsor will require each selling
broker-dealer to agree to forward to the Custodian upon the sale of each
Plan the application for such Plan, the check, funds (by wire or Automatic
Clearinghouse (ACH) transfer) or order for the payment of money
representing the initial payment under such Plan, and any required
Designation of Beneficiary.
(c) Statements Furnished to Custodian. The Sponsor will furnish to the
Custodian and file to the extent required by law on behalf of the
Custodian:
(i) As soon as available, a copy of each audit report and other
financial statements relating to the custodianship of the Plans and
sufficient reports and other documents required to be mailed to Planholders
under Section 2(r)(i) and (ii) above.
(ii) Not less than 20 calendar days prior to the due date thereof, all
Federal and State income tax returns, and all other tax returns, if any,
required by law to be filed by the Custodian with respect to its
custodianships hereunder, prepared in form for execution and filing,
together with advice concerning the proper allocation of expenses and other
items among the Planholders. Such tax returns shall be filed by the
Sponsor on behalf of the Custodian.
(iii) Any instructions received by the Sponsor from Planholders as a
result of the distribution of proxy soliciting material or otherwise in
connection with the voting of Fund Shares held by the Custodian. The
Custodian will vote those Fund Shares for which instructions have been
received from Planholders only in accordance with such instructions. The
Custodian will vote Fund Shares for which instructions have not been
received such that the total votes cast by the Custodian in favor,
abstaining, or opposed on any matter submitted to Fund shareholders,
including the election of Directors, will be in the same proportion as the
votes in favor, abstaining, or opposed cast by the Custodian with respect
to the Fund Shares for which instructions have been received.
(iv) Draft copies of all literature, plans, prospectuses, printed
matter and other material which contain any reference to the Custodian,
except material which is merely circulated among or sent to employees,
stockholders, or representatives of the Sponsor and except for
correspondence in the ordinary course of business which refers in accurate
terms to the Custodian's functions under the Plans. The Sponsor agrees
that none of the documents specified in this clause shall be reproduced in
final form or distributed without the Custodian's approval (which in each
instance must be given or denied within fifteen business days and which
will not in any instance be unreasonably withheld) of the Custodian.
(v) As soon as possible after January first of each year, printed
forms for reporting distributions to Planholders for income tax purposes,
unless the Custodian furnishes its own form.
(vi) As promptly as possible after receiving notice of the declaration
of dividends and distributions or the fixing of any record date, notice
thereof.
(d) Plans in Default. Upon receipt from the Custodian of a monthly
statement of Planholders specifying those Plans in current default on
payments, the Sponsor will require the selling broker-dealer to promptly
endeavor to have said Planholders remedy their defaults.
(e) Planholder Inquiries. The Sponsor and the Custodian will respond
promptly to each Planholder inquiry received by the Sponsor and Custodian,
respectively, to the extent that the Sponsor or Custodian, as applicable,
can respond to such inquiry. In the event that any such inquiry cannot be
responded to, the party receiving such inquiry will refer the inquiry to
other party to this Agreement.
(f) Plan Cancellations. In the event that the Sponsor receives from the
Custodian a notice of Plan cancellation by a Planholder, and such
cancellation is subject under applicable law and Plan Documents to a refund
of a portion of the Creation and Sales Charge previously imposed under the
Plan, the Sponsor shall transmit funds to the order of the Custodian in an
amount equal to the refundable amount calculated in accordance with
applicable law and Plan Documents.
4. SUBSTITUTION.
(a) Procedures and Expenses. In the event that the Sponsor substitutes
shares of another investment medium for shares of the Fund in accordance
with the procedures set forth in applicable Plan Documents, all required
notices shall be prepared and mailed by the Sponsor. In connection with
such substitution, the Custodian is authorized to charge against the
account of a Planholder such Planholder's pro rata share of the expenses
(including tax liability) incurred by the Custodian, BFDS as the agent of
the Custodian, or the Sponsor, and to pay over to BFDS or to the Sponsor,
as applicable, the amount of such charge attributable to expenses incurred
by BFDS or the Sponsor, respectively, in connection with the substitution.
The Sponsor and the Custodian shall furnish to one another, and make
available to Planholders upon request, a detailed statement itemizing their
respective expenses.
(b) Purchases of Fund Shares. In the event of a substitution of shares as
described in Section 4(a) above, any purchases of fund shares associated
with such substitution shall be made at the net asset value or at the
liquidation value of such fund shares (whichever term the issuer of such
fund shares uses) as determined by the issuer or the issuer's agent thereof
as of the date such substitution is effected.
(c) Effect of Substitution. In the event of any substitution of shares as
described in Section 4(a) above, the term "Fund" as used throughout this
Agreement shall be deemed to include the open-end management investment
company the shares of which have been thereby substituted for Fund Shares;
and the term "Fund Shares" as used throughout this Agreement shall be
deemed to include the shares (or comparable interests) in the open-end
management company the shares of which have been substituted for Fund
Shares.
5. INDEMNIFICATION.
The Sponsor, its successors and assigns, shall at all times fully
indemnify and hold harmless the Custodian, its successors and assigns, from
any and all liability, claims, demands, actions, suits, cost or expense of
any nature as the same may arise or be made against or be incurred by the
Custodian from the failure of the Sponsor to comply with any law, rule,
regulation or order of the United States, any State or any other
jurisdiction, governmental authority, body or board having jurisdiction,
relating to the sale, registration or qualification of the Plans or any of
them, or the securities sold in connection therewith. The Sponsor also
agrees to indemnify the Custodian for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on the
part of the Custodian, arising out of or in connection with the acceptance
hereof or the performance of its duties hereunder, as well as the costs and
expenses of defending against any claim or liability in the premises,
provided that no claim against the Custodian which might be subject to the
foregoing indemnification provisions shall be confessed, settled or
compromised by the Custodian without the Custodian first having given
fifteen days notice in writing to the Sponsor of the material facts, and
provided further that the Sponsor shall have the right upon written demand
delivered to the Custodian within fifteen days following the date of such
notice to contest or defend such claim in the name of the Custodian.
6. QUALIFICATIONS AND RESIGNATION OF CUSTODIAN.
(a) Capital. The Custodian and any successor Custodian shall be a bank or
trust company having at all times an aggregate capital, surplus and
undivided profits in excess of $2,000,000. The Custodian certifies that it
is now, and agrees that so long as it acts as Custodian under any Plan will
continue to be, so qualified.
(b) Holding of Monies. All monies received by the Custodian under or
pursuant to any provision of this Agreement or any Plan or other instrument
referred to herein shall be held by the Custodian as a deposit for the
purposes for which they were paid or are held, and the Custodian shall not
be under any liability for interest on any such monies, except such as it
may agree to pay thereon.
(c) Duties of the Custodian. The Custodian shall be obligated to perform
such duties and only such duties as are specifically set forth in this
Agreement and Plan Documents, and no implied obligations shall be read into
this Agreement or Plan Documents against the Custodian, and in the absence
of bad faith on its part the Custodian may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any instruments, certificates, opinions or other writings
furnished to the Custodian and conforming to the requirements hereof. The
Custodian shall not be responsible in any manner whatsoever for the
correctness of the recitals (as distinguished from particular covenants) of
the Custodian herein, or recitals in Plan Documents made solely by the
Sponsor. The Custodian makes no representations as to Plan Documents or
the securities issued in connection therewith, or the validity thereof, and
the Custodian shall incur no liability or responsibility with respect to
any such matters. The Custodian shall not be responsible for any actions
or inactions of, and may rely on information, records, documents or
services (including functions performed by the Sponsor under Section 2(t)
of this Agreement) that have been taken or have failed to be taken,
prepared, maintained or performed by, the Sponsor or any other person
authorized by the Sponsor on behalf of the Custodian, the Sponsor or the
Plans, including but not limited to any previous Sponsor or Custodian of
the Plans.
(d) Additional Capacities. The Custodian may, at the same time it acts
hereunder, act in any one or more of the following capacities: as
registrar, transfer agent and custodian for the issuer of Fund Shares, as
agent for the parties or for the Planholders or the Sponsor, or the issuer
of Fund Shares, and in other capacities customary for banks on behalf of
these persons and of others dealing with them.
(e) Advice of Counsel; Liabilities. The Custodian may consult with legal
counsel to be selected with reasonable care by the Custodian (who may be
counsel to the Sponsor) and the Custodian shall not be liable for any
action taken, omitted or suffered by it in good faith in accordance with
the advice of such counsel. Whenever in the performance of its duties
hereunder the Custodian shall deem it necessary or desirable, a matter may
be proved or established by a certificate signed by any two officers of the
Sponsor and delivered to the Custodian, and such certificate shall be full
warrant what is this to the Custodian for any action taken, suffered or
omitted by or in reliance thereon. The Custodian may, in the absence of
bad faith on its part, rely and shall be protected in acting upon any
request, letter or transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, Plan or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties. The Custodian shall be liable only for its
wilful misconduct or gross negligence.
(f) Resignation. The Custodian may resign at any time if, but only if,
either (I) the securities and other property in which the funds of the
Planholders are invested have been completely liquidated and the proceeds
of such liquidation distributed to the Planholders, or (II) a successor
Custodian meeting with the reasonable approval of the Sponsor and having
the qualifications specified in Section 6(a) above has been designated by
the resigning Custodian or the Sponsor and has accepted such custodianship.
7. TERMINATIONS.
(a) Termination of Plan by Planholder. A Plan may be terminated by the
Planholder in accordance with the provisions of applicable Plan Documents.
(b) Termination of Plan by Sponsor or Custodian. Neither the Sponsor nor
the Custodian may terminate a Plan until such time as is specified in
applicable Plan Documents, unless and to the extent that conditions
specified in Plan Documents applicable to such Plan and permitting such
termination have been satisfied. If a Plan is in a state of default or
delinquency, as defined in applicable Plan Documents, either the Sponsor or
the Custodian may terminate such Plan in the manner provided in such Plan
Documents.
(c) Plan Termination Procedures. In connection with the termination of
any Plan in accordance with the provisions of applicable Plan Documents and
this Section 7, the Custodian will furnish the Planholder and the Sponsor
with a notice of termination showing all changes in such Planholder's
account since the date of the last previous statement issued by the
Custodian, and the Planholder shall thereafter have no further claim
against the Custodian, except as may be set forth in such statement, and
shall not be entitled to any further accounting. In the event of
termination of a Plan, liquidation of the Planholder's account and final
payment to said Planholder shall be effected by the Custodian in accordance
with applicable Plan Documents.
(d) Return of Certificate Upon Termination of Plan. If a Certificate was
issued in connection with such terminated Plan and the Planholder fails to
surrender his Certificate within a period of sixty days after the mailing
of the notice of termination referred to above, the Custodian may in its
discretion mail to such Planholder at his address noted upon its records,
its check for all cash standing to his credit and such Fund Shares, if any,
which have been transferred to his name; and such Planholder shall have no
further rights hereunder and such Certificate shall be null and void and
shall convey no rights whatsoever except that if such check or Fund Shares
are returned to the Custodian undelivered, the Custodian shall continue to
hold the assets for the benefit of the Planholder subject only to escheat
laws.
(e) Termination by Custodian of Custodian's Obligation.
(i) The obligation of the Custodian to accept any new Plan for
custodianship hereunder shall terminate if the Sponsor (I) fails to
maintain an effective registration statement under the Securities Act of
1933, as amended, in connection with the issuance of the Plans; (II) fails
to cause the requirements of the 1940 Act to remain satisfied in connection
with the issuance of the Plans; (III) has either its membership in the
National Association of Securities Dealers, Inc., or its registration as a
broker-dealer under the Securities Exchange Act of 1934, as amended,
cancelled or revoked, or suspended for more than 120 days for any cause
involving failure on the part of an executive officer or director to follow
ethical standards or serious neglect of his duty to require representatives
to follow such standards; (IV) defaults in the performance of any other
duty, covenant or agreement contained in this Agreement, and such default
shall remain unremedied for 30 days after written notice thereof shall have
been given to the Sponsor by the Custodian (except with respect to item
III, for which such remedy period shall be 120 days), or (V) shall without
the approval of the Custodian change the form or content of the Plans in
any way materially affecting the rights or duties of the Custodian.
(ii) Notwithstanding the provisions of Section 7(e)(i) above, the
Custodian may terminate its obligation to accept any new Plans for
custodianship hereunder by giving written notice to the Sponsor at least 90
days prior to the expiration of the third year from the date of this
Agreement, or at least 30 days prior to the expiration of any further
two-year period. In the event that the Custodian does not so terminate its
obligation to accept any new Plans for custodianship hereunder as of the
expiration of three years from the date of this Agreement, then this
Agreement shall be automatically renewed for further periods of two years
each with the right on the part of the Custodian to terminate its
obligations under the Agreement by giving written notice at least 30 days
prior to the expiration of any further two-year period.
(f) Replacement of Custodian by Sponsor; Assumption of Administrative
Functions by Sponsor. The Sponsor shall have the right, by giving written
notice to the Custodian at least 90 days prior to the expiration of this
three-year Agreement, or at least 90 days prior to the expiration of any
two year extension period described in Section 7(e)(ii) above, to replace
the Custodian with any other bank or trust company having the requisite
qualifications as the Custodian, both with respect to any Plans issued and
outstanding at the time of such replacement, and under any Plans issued
after such time, whether such Plans are otherwise identical with those
issued under this Agreement or not. The Sponsor shall further have the
right, by giving written notice to the Custodian 90 days prior to the
event, to assume such administrative functions with respect to Plans as may
be mutually agreed upon by it and the Custodian.
(g) Upon such termination the Sponsor shall bear the cost of all
reasonable out-of-pocket expenses associated with the movement of materials
and records. Additionally, the Custodian reserves the right to charge for
any other reasonable expenses associated with such termination, provided
that the Custodian advises the Sponsor of such additional charges in
advance.
8. MISCELLANEOUS.
(a) This Agreement shall not be assigned by either of the parties hereto
without the prior consent in writing of the other party. Notwithstanding
the foregoing, (I) the Custodian shall delegate responsibilities under this
Agreement to the extent so directed by the Sponsor in accordance with
Section 2(t) of this Agreement; and (II) each party to this Agreement may
enter into such agreements with third parties as are deemed necessary by
such party to perform such party's obligations under this Agreement or
under the Plans, provided that written acknowledgement of such third party
agreements is obtained from the other party to this Agreement.
(b) All communications provided hereunder shall be in writing sent by
first-class mail or delivered to the respective parties as follows:
Fidelity Distributors Corporation State Street Bank and
82 Devonshire Street Trust Company
Boston, MA 02109 225 Franklin Street
Boston, MA 02110
provided that either party may by notice given in accordance herewith
specify a different address for the purpose hereof.
(c) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one and
the same instrument.
(d) An executed copy of this Agreement and all amendments thereto shall be
kept on file by the Custodian and shall be open to inspection by any
Planholder at any time during the business hours of the Custodian.
(e) This Agreement, including but not limited to Schedules 1 and 2 hereto,
may be amended from time to time as mutually agreed by the parties hereto
in writing. Notwithstanding the foregoing, this Agreement shall not be
amended in such a manner as to affect adversely the rights and privileges
of any Planholder without first obtaining his written consent.
(f) All references herein to Schedules 1 and 2 hereto shall be deemed to
refer to Schedules 1 and 2 attached to this Agreement which are hereby
expressly made a part thereof; provided, however, that in the case of Plans
issued prior to the effective date of this Agreement of which the Custodian
has notice, references to Schedules 1 and 2 shall be deemed to refer to
such schedules as in effect at the time of such issuance.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year above written.
FIDELITY DISTRIBUTORS CORPORATION
By_________________________________
ATTEST: Date: ____________________________
___________________________
Date: ____________________ STATE STREET BANK AND TRUST COMPANY
By_________________________________
ATTEST: Date: ____________________________
___________________________
Date: ____________________
EXHIBIT A
PLAN CERTIFICATE
EXHIBIT B
PLAN CERTIFICATE
EXHIBIT C
FORM OF CONFIRMATION
EXHIBIT D
FORM OF REMINDER NOTICE
EXHIBIT E
FORM OF PAST DUE PAYMENT NOTICE
EXHIBIT F
FORM OF REFUND NOTICE
EXHIBIT G
FORM OF TERMINATION NOTICE
EXHIBIT 1.A.(3)(B)
FIDELITY
SYSTEMATIC INVESTMENT PLANS:
DESTINY PLANS I
DESTINY PLANS II
________________________________
Dealer Agreement
DEALER AGREEMENT
___________________________________________________
<TABLE>
<CAPTION>
<S> <C>
Dear Dealer: As sponsor and principal underwriter, we invite you to join a Selling Group to distribute
</TABLE>
Fidelity Systematic Investment Plans, a plan consisting of two series,
Destiny Plans I and Destiny Plans II (collectively referred to as the
"Plan" or "Plans"), for the Accumulation of Shares of Fidelity Destiny
Portfolios, a series fund consisting of Destiny I and Destiny II
(collectively referred to as the "Fund") upon the following terms and
conditions.
7. The Dealer Agreement previously in effect is hereby terminated,
effective at the opening of business this date, and our relations
thereafter will be governed by the terms of this Agreement.
8. All applications for the Plans shall be made on application forms
supplied by us, and all initial investments collected shall be remitted in
full without deduction of any discounts representing your profit on the
sale of Plans, as principal (hereinafter called "commissions"), together
with such application forms, signed by each applicant (as "Planholder") to
our principal office. Checks or money orders for initial investments shall
be drawn to the order of State Street Bank and Trust Company, Custodian. A
separate check or money order shall accompany the application form
submitted for each Plan. After the initial investment has been made and
the Plan had been issued, the Planholder may send all future investments
made, payable to State Street Bank and Trust Company, Custodian, to Boston
Financial Data Services, Inc., P.O. Box 8300, Boston, Massachusetts
02266-8300.
9. Planholders of Destiny Plans I purchase shares of Destiny I and
Planholders of Destiny Plans II purchase shares of Destiny II.
10. We reserve the right in our sole discretion to reject any Plan
application and to return any investment made in connection therewith. We
also reserve the right in our sole discretion to give any accepted
applicant the privilege of canceling his/her Plan in accordance with any
rights described in the prospectus effective at the time of purchase of the
Plan. We further reserve the right to refund all or part of any investment
or investments made by any Planholder in the event that we, in our sole
discretion, believe that the solicitation and/or sale associated therewith
was effected in violation of any applicable State or Federal law or rule or
regulation of the National Association of Securities Dealers, Inc.
("NASD"). In the event of any such refund or refunds you shall not be
entitled to any commissions thereon and, if such commissions have been
paid, you shall promptly refund same to us or we may at our option charge
the same against future commissions. To this end you hereby grant us a
lien on any such commissions.
11. On all approved sales of Plans made by you and its acceptance by the
applicant, we shall pay you commissions in accordance with the terms of
this Agreement and the "Dealer Commission and Service Fee Schedule"
(Schedule A), which is attached hereto and made a part of this Agreement.
As nearly as practicable, Destiny Plans I and Destiny Plans II commissions
on first-year investments will be paid monthly as the Creation and Sales
Charges applicable thereto are received by us from the Custodian.
Beginning January, 1993 for Destiny Plans I and as nearly as practicable,
servicing fees for Destiny Plans I and Destiny Plans II will be paid
monthly as they are received by us from the Custodian. Such servicing fees
on Destiny Plans I and Destiny Plans II are not to be construed as earned
commissions, but are designed solely as continuing compensation for
servicing the Planholder's account during the life of this Agreement.
After the expiration of 18 months from the date on which a Plan has been
issued, if any investment on a Plan is due, and no investment has been made
by the Planholder for 6 months, the Plan account shall revert back to us
for collection, and in such event no further commissions or servicing fees
with respect to such account shall be due or payable to you. Your rights
to commissions or servicing fees on Plans sold during the term of this
Agreement shall survive termination of this Agreement only as outlined in
Paragraph 13 hereof.
12. After the effective date of this Agreement, dealer commission and
servicing fees that are outlined in Schedule A will be paid according to
the tier to which the dealer firm qualifies. Such qualifications is
determined by the face amount written by that dealer in the previous
calendar year. Qualification for the various tiers can be expected to be
amended from time to time. When amendments to commission and servicing
fees are made they will only affect new Plans; adjustments will not affect
payments made to Plans already established.
13. In the event a Planholder exercises his/her right under Section 27 of
the Investment Company Act of 1940, as amended, or in accordance with state
law (to surrender his Plan within the first 18 months or 28 months,
respectively, following its issuance, and to receive the value of his/her
account plus an amount equal to that part of the excess paid with respect
to that Plan for Creation and Sales Charges which exceeds 15% of the gross
investment made), you shall promptly refund to us a portion of the
commission or servicing fees previously paid to you with respect to such
Plan that bears the same relationship to the total amount of such
commission or servicing fees as the amount refunded to the Planholder bears
to the total Creation and Sales Charges paid by him/her with respect to
such Plan, or we may, at our option, charge such amount against future
commissions receivable by you. To this end you hereby grant us a lien on
any such commissions or servicing fees. In order to assure us that you
will have sufficient assets to make such repayment, we shall initially
establish on our books an account in your name to which shall be credited
10% of the commissions or servicing fees due and payable to you and we
shall retain such portion of those commissions or servicing fees as a
reserve from which any claims for refund with respect to Plans sold by you
can be paid in the event you shall fail to honor any request of ours for
such repayment. We shall have the right in our sole discretion to reduce
or waive such reserve requirements on the basis of your refund experience,
level of business or any other circumstances that we may deem relevant.
14. You will accept Plan applications only from persons who, to the best
of your knowledge and belief, can and will complete all investments
specified in the applications. If any Planholder becomes delinquent in
his/her investments, it shall be your responsibility to contact the
Planholder for the purpose of reinstating the investment schedule.
15. Plans shall be offered and sold in such denominations and units
calling for such periodic investments as we shall from time to time
determine and set forth int he Plans' Prospectus. We reserve the right in
our sole discretion, with 30 days' written notice, to suspend, restrict,
alter, or modify in any way the sale of any of the Plans or to withdraw the
offering of the Plans entirely.
16. No person is authorized or permitted to give nay information or make
nay representations concerning the Plans other than those that are
contained in the current Plans' Prospectus and in such other printed
information as may be subsequently issued by us as information supplemental
to such Plans' Prospectus or approved by us in writing for use in
connection therewith. You will not use the words "Fidelity Destiny
Portfolios," "Destiny I" or "Destiny II" or "Fidelity Distributors
Corporation" whether in writing, by radio or television or any other
advertising media without our prior written approval.
17. Additional copies of the current Plans' Prospectus, any printed
information issued as supplemental to such Plans' Prospectus and the Plans'
application forms will be supplied by us in reasonable quantities upon
request.
18. You represent that you are and will remain a member in good standing
of the NASD and agree to abide by all of its rules and regulations,
including its Rules of Fair Practice. You further agree to comply with all
applicable State and Federal laws and rules and regulations of regulatory
agencies having jurisdiction. Reference is hereby specifically made to
Section 26, Article III, of the Rules of Fair Practice of the NASD, which
is incorporated herein as if set forth in full. Any breach of said Section
26 will immediately and automatically terminate this Agreement.
19. Your commissions or servicing fees shall vest, subject to the
limitation in the event of non-investment by a Planholder set forth in the
next-to-last sentence of Paragraph 5 and Paragraph 8 hereof, as follows:
a. Commissions on first-year investments and servicing fees on Plan
investments in subsequent years will be paid to you so long as this
Agreement remains in force and effect and you continue membership in the
NASD.
b. In the event this Agreement is terminated, we reserve the right to
assign Plan accounts as to which you are the Dealer of record and the right
to receive commissions or servicing fees with respect to such Plan accounts
to one of our active dealers.
c. If you should voluntarily terminate your membership in the NASD we
reserve the right to assign Plan accounts as to which you are the Dealer of
record and the right to receive commissions or servicing fees with respect
to such Plan accounts to one of our active dealers. Nevertheless, we, in
our sole discretion, may pay commissions or servicing fees on Plan
investments made with respect to such Plan accounts subsequent to such
voluntary termination to you, your widow, direct beneficiaries or
assignees.
d. In the event your membership in the NASD is discontinued or suspended
because of disciplinary proceedings by the NASD, the Securities and
Exchange Commission, or other regulatory bodies, we reserve the right to
assign Plan accounts as to which you are the Dealer of record and the right
to receive commissions or servicing fees with respect to such Plan accounts
to one of our active dealers. If we do not assign Plan accounts as to
which you are the Dealer of record and the right to receive commissions or
servicing fees with respect to such Plan accounts to one of our active
dealers, no commissions or servicing fees will be paid on any Planholder's
investments received during the period of a suspension or after the
effective date of an expulsion or revocation of a membership; provided,
however, that in the event your NASD membership is thereafter reinstated in
good standing, or if such disciplinary action by another regulatory body is
thereafter terminated by same, payment of such commissions or servicing
fees to you shall then resume, if such payment is allowable under laws,
rules or regulations.
20. In all sales of the Plans to the public you shall act as a dealer for
your own account and in no transaction shall you have any authority to act
or hold yourself out as agent for us, the Fund, or any other member of the
Selling Group, and nothing in this Agreement, including the use of the word
"commissions," shall constitute your partner, employee, or agent of ours or
give you any authority to act for us. Neither we nor the Fund shall be
liable for any of your acts or obligations as a dealer under this
Agreement.
21. Each party hereto has the right to terminate or amend this Agreement
at any time upon written or telegraphic notice to the other.
22. You will comply with all applicable State and Federal laws and with
the rules and regulations of authorized regulatory agencies thereunder.
You will not offer Plans for sale unless such Plans are duly registered
under the applicable State and Federal statutes and the rules and
regulations thereunder.
23. All communications to us shall be sent to the address below or to such
other address as we may authorize in writing. All communications and/or
notices to you shall be duly given, mailed or telegraphed to you, at the
address specified by you below, or at such other address as you may
authorize in writing.
24. Failure of either party to terminate this Agreement upon the
occurrence of any event set forth in this Agreement as a cause for
termination shall not constitute a waiver of the right to terminate this
Agreement at a later time on account of such occurrence.
25. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and no modification hereof shall be valid
unless in writing.
26. We reserve the right to amend this Agreement upon 30 days' notice.
27. This Agreement or any monies due or to become due hereunder shall not
be assignable by you without prior written approval by us. Any request for
an assignment shall be on a form approved by us, which may be obtained from
Boston Financial Data Services, Inc., P.O. Box 8300, Boston, Massachusetts
02266-8300.
28. This Agreement supersedes and cancels all previous agreements between
us whether oral or written.
VERY TRULY YOURS,
FIDELITY DISTRIBUTORS CORPORATION
Fidelity Systematic Investment Plans
82 Devonshire Street
Boston, Massachusetts 02109
By:
__________________________________________________________________________
_______
The undersigned hereby accepts your invitation to become a member of the
Selling Group referred to herein and
agrees to abide by all the foregoing terms and conditions.
DATED AS OF _________________, 19 _______.
FIRM:
__________________________________________________________________________
____
BY: _______________________________________
______________________________________
(Printed Signature) (Authorized
Signature)
TITLE: _______________________________________
______________________________________
ADDRESS:
__________________________________________________________________________
____
__________________________________________________________________________
____________
Schedule A
Dealer Commission and Service Fee Schedule
___________________________________________________
PERCENTAGE OF SALES AND CREATION
CHARGES PAID TO DEALER
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRODUCTION CALENDAR YEAR FIRST TWELVE TRAIL YEAR
LEVEL FACE AMOUNT INVESTMENTS COMMISSIONS
I 0 - $ 2,000,000 80.0% 41.7%
II $ 2,000,001 - $ 30,000,000 85.0% 50.0%
III $ 30,000,001 - $182,000,000 89.4% 60.0%
IV $182,000,001 + 92.4% 92.4%
</TABLE>
DESTINY
(large solid box) Fidelity Investments
Fidelity Systematic Investment Plans
82 Devonshire Street
Boston, Massachusetts 02109
Nationwide: 1-800-752-2347
In Alaska or Overseas (call collect): 617-439-0547
Fidelity Distributors Corporation
EXHIBIT 1.A.(3)(C)
Schedule A
Dealer Commission and Service Fee Schedule
___________________________________________________
PERCENTAGE OF SALES AND CREATION
CHARGES PAID TO DEALER
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRODUCTION CALENDAR YEAR FIRST TWELVE TRAIL YEAR
LEVEL FACE AMOUNT INVESTMENTS COMMISSIONS
I 0 - $ 2,000,000 80.0% 41.7%
II $ 2,000,001 - $ 30,000,000 85.0% 50.0%
III $ 30,000,001 - $182,000,000 89.4% 60.0%
IV $182,000,001 + 92.4% 92.4%
</TABLE>
Exhibit 1.A.(7)
1994 ANNUAL REVIEW
Seaboard Surety Company
St. Paul Fire and Marine Insurance Company
St. Paul Guardian Insurance Company
St. Paul Mercury Insurance Company
Table of Contents
Selected Financial Data - St. Paul Surety 1
Products and Services/Facts 1
Message from the President 2
A Glossary of Selected Terms 5
Operations Review 6
Summary of Selected Financial Data 9
Consolidated Balance Sheets 10
Consolidated Statements of Income 11
Consolidated Statements of Shareholder's Equity 12
Consolidated Statements of Cash Flows 13
Notes to Consolidated Financial Statements 14
Independent Auditors' Report 21
Board of Directors/Officers 22
St. Paul Surety Branches 23
Selected Financial Data - St. Paul Surety
For the year ended December 31,
(Dollars in thousands) 1994 1993 1992
Gross premiums written $179,325 $177,585 $191,297
Net premiums written 117,320 111,589 114,237
Net premiums earned 110,298 111,623 112,539
Losses and loss adjustment expenses 34,302 36,004 44,371
Underwriting expenses 66,216 66,220 65,534
Other Selected Financial Data
GAAP underwriting results $ 9,780 $ 9,399 $ 2,634
Statutory Ratios:
Losses and loss adjustment
expenses to net premiums
earned 31.1 32.3 39.4
Underwriting expenses to
net premiums written 57.4 58.5 55.7
Statutory Combined Ratio 88.5 90.8 95.1
Products and Services
(solid bullet) Contract surety bonds
(solid bullet) Directors and officers liability coverage for nonprofit
organizations
(solid bullet) Fidelity and crime coverages, including comprehensive
blanket fidelity policies for
law firms
(solid bullet) Miscellaneous surety bonds, including court, public official
and license and permit bonds
(solid bullet) Owners and contractors protective
liability coverage
(solid bullet) Railroad protective liability coverage
(solid bullet) Liability coverage for advertising agencies, broadcasters
and cablecasters
(solid bullet) Other specialty coverages, including transfer agents
liability, mail indemnity, blanket lost securities and waiver of probate
Facts
(solid bullet) A member of The St. Paul Companies, a worldwide group of
companies providing insurance and insurance-related products
and services.
(solid bullet) Includes the surety bond operations of Seaboard Surety
Company, St. Paul Fire
and Marine Insurance Company, St. Paul Guardian Insurance Company, St. Paul
Mercury Insurance Company, and selected casualty insurance operations of
Seaboard Surety Company.
(solid bullet) All four companies are rated A+ (superior) by A.M. Best
Company.
(solid bullet) At year-end 1994, net written premiums were $117.3 million,
slightly ahead
of 1993.
(solid bullet) Based in Bedminster, NJ; about 400 employees serving
customers from headquarters and 31 branch offices across
the United States, Canada and the
United Kingdom.
(solid bullet) For further information, see pages 23
and 24 for a list of branch offices and telephone numbers.
Contract Surety, largely made up of performance and payment bonds for
construction contractors, represented 62 percent of our written premiums
this year for a total of $110.7 million.
To Our Friends and Associates
As we at St. Paul Surety look forward to the second half of 1995, we see
our first year of "business as usual," something we have not experienced
since 1991. That's because last year we concluded the business integration
initiatives that began in 1992 with the merger of the surety operations of
Seaboard and The St. Paul and ended in 1994 with the merger of our
financial operations with the parent company.
In spite of the turmoil of the merger, 1994 was the fifth year in
succession that St. Paul Surety produced
an underwriting profit. That profit is particularly significant since 1994
was also characterized by the most competitive surety market in the past 25
or
30 years.
Every account has become a target for competitive predators to attack on
the basis of less than adequate underwriting requirements. In the contract
surety area especially, the marketplace
is one where "winners" ask the fewest questions, require the least amount
of information, and ask for the least amount of financial support. While
there is no real hope that the market will
ever return to the "good old days," this underwriting approach most likely
will result in sizable losses to our industry.
Although the special casualty cover's market continues to be very
competitive, we continue to show acceptable growth in those lines because
of our people's hard work.
In reviewing our 1994 operating results, keep in mind that the financial
data reflects the combined operations of St. Paul Surety. As most of you
know, that includes all premium income from Seaboard Surety Company and
surety premium of St. Paul Fire and Marine Insurance Company, St. Paul
Guardian Insurance Company, and St. Paul Mercury Insurance Company.
Operating Results
The combined 1994 operation was almost a mirror image of 1993. Gross
written premiums increased by 1 percent in 1994, ending at $179.3 million.
Net written premiums increased by 5.1 percent, to $117.3 million. Earned
premiums were off by 1.2 percent at $110.3 million. GAAP underwriting
profit for the year was $9.8 million, compared to $9.4 million in 1993. Our
combined ratio was an acceptable 88.5 percent, compared to 1993's 90.8
percent.
Audited Seaboard Surety Company financial statements and notes are included
in the back of this report to provide additional detail regarding
Seaboard's results. The decline in Seaboard Surety Company underwriting
profit was primarily the result of increased loss and loss adjustment
expenses. We did not experience as favorable prior accident year loss
results in 1994 as in 1993. We experienced a $1.5 million reduction in 1994
in the provision for losses incurred in prior accident years compared with
a reduction of $8.4 million in 1993.
Our contract surety business produced an underwriting profit of $2.8
million and a combined ratio of 97.4 percent; the miscellaneous surety
group produced an underwriting profit of $9.2 million and a combined ratio
of 66.3 percent; and our special casualty lines produced an underwriting
loss of $2.2 million and a combined ratio of 126.8 percent. Reserve
strengthening of $3.5 million for assumed pools, that the company withdrew
from during the early to mid 1980's and previously, was included in special
casualty lines. Given the current competitive as well as historical factors
surrounding these business enterprises in 1994, our operations performed
well.
Prospects for 1995
As we enter 1995, we are optimistic about the prospects for all our
business segments. During the last half of 1994 we saw a marked increase in
our contract surety premiums, which were a direct result of an improvement
in the construction economy. With one or two exceptions, our areas of
operation report good news for the construction industry for 1995 and 1996.
While contractors' prices are still somewhat below acceptable levels, they
too are improving which, in turn, increases their margins and
profitability. We expect 1995 to be a year in which we can measure the true
value of our contract surety book after the integration of the two
operations.
Our miscellaneous surety book continues to grow in a profitable manner.
Large bond opportunities are increasing, as is the competition for them. We
are extremely confident that our professionals will continue to do an
outstanding job of retaining our business and obtaining our fair share of
new business.
Our special casualty lines, as mentioned above, had an outstanding year in
1994. We look for continued growth in our D&O, railroad protective, and OCP
lines. Notwithstanding the competitiveness of these markets, we have been
able to maintain our market share with a highly aggressive marketing
approach.
Employee Benefits
St. Paul Surety's participation in
The St. Paul Companies' flexible benefits program offers employees a broad
range of health, disability and life insurance options, as well as flexible
spending accounts for medical and dependent care. Available choices ensure
that employees can elect coverages based on their personal and family
needs. A managed health care plan, introduced in 1993, has resulted in
significant cost savings as almost 80 percent of medical claims have been
paid through the PruCare provider network. Participants may elect
traditional indemnity coverage with the high deductible option, HMO
coverage, or a combination of indemnity and managed care coverage through
the "point-of-service" plan.
The Employees' Retirement Plan and the Employee Stock Ownership Plan (ESOP)
are funded entirely by the company. Also, almost 90 percent of eligible
employees participate in our "Savings Plus" 401(k) plan. The plan permits
tax-advantaged savings, multiple investment options with varying risk,
low-interest loans and a generous company match which is credited to
employee accounts in shares of a special class of preferred company stock.
In 1994, St. Paul introduced automated Savings Plus processing for fund
transfers, loans and up-to-date fund performance information through
"Savings Connection." A toll-free number and touch-tone menu options give
employees complete control of their 401(k) investments.
In addition to these welfare, retirement and capital accumulation benefits,
the company offers three programs which respond to work-family issues.
Through Employee Advisory Counselors (EAR), an employee assistance program,
employees are provided confidential counseling and information services on
topics ranging from personal financial planning to parenting teenagers to
dealing with alcohol and substance abuse. The Child Care Resource and
Referral Program provides employees with local information and referrals
for day care. The Elder Care Counseling and Referral Service offers
information about providing care and services through public and private
agencies to employees with responsibility for an elder relative.
Elections
During the past year there were a number of director and officer
appointments in our companies:
(solid bullet) Louise A. Ryan, vice president of St. Paul Re, was named a
director of Seaboard Surety Company in January 1994.
(solid bullet) Steven R. Grunsfeld, vice president, secretary and general
counsel of Seaboard Surety Company, and Robert W. McDowell, partner of
Fasken, Campbell, Godfrey, were named directors of Seaboard Surety Company
of Canada in March 1994.
(solid bullet) Patrick A. Thiele, executive vice president and chief
financial officer of The St. Paul Companies, Inc., and Andrew I. Douglass,
senior vice president and general counsel of The St. Paul Companies, Inc.,
were named directors of Seaboard Surety Company in April 1994.
(solid bullet) Mark D. Leskanic was elected a vice president of Seaboard
Surety Company of Canada in October 1994.
(solid bullet) Michael J. Hurley was elected assistant general counsel and
assistant corporate secretary of Seaboard Surety Company in January 1995.
(solid bullet) James A. Monroe was elected an assistant vice president in
January 1995.
Finally, it is with sadness that I report the passing of Francis R. Prigge,
a long-time employee of Seaboard Surety Company, who retired in 1989, as a
director and vice president of the company. Mr. Prigge had been employed by
this
company for 34 years. His friendship
and support will be missed.
Seaboard Surety Company of Canada
Seaboard Surety Company of Canada, our Canadian subsidiary, showed an
increase in gross, net, and earned premiums in 1994. The numbers were $4.8
million, $3.6 million, and $3.1 million respectively. The company produced
a GAAP underwriting profit and, along with investment income, showed pretax
earnings of $1.7 million. The combined ratio for the Canadian company was
an acceptable 89.7 percent.
Conclusion
These results were achieved through the hard work and dedication of many
people. The last three years have been filled with changes in our company
and in our industry. I am grateful to the members of the senior management
group for their continued support and efforts. A special thanks also goes
to all of our producers and clients because without them our efforts would
not be possible. Lastly, and certainly not least, I want to thank all of
our employees. They have played a major role in our success, keeping us in
the preeminent position we hold in our business. We are extremely proud of
how they have worked through many changes, both within our organization and
within the marketplace. Our employees continue to be at the top of our
profession.
Cordially,
George F. Thompson
President and Chief Executive Officer
George F. Thompson
President and Chief Executive Officer
In spite of the turmoil of the merger, 1994 was the fifth year in
succession that St. Paul Surety produced an underwriting profit. That
profit is particularly significant since 1994 was also characterized by the
most competitive surety market in the past 25 or 30 years.
We expect 1995 to be a year in which we can measure the true value of
our contract surety book after the integration of the two operations.
The last three years have been filled with changes in our company and in
our industry. We are extremely proud of how [our employees] have worked
through many changes, both within our organization and within the
marketplace. Our employees continue to be at the top of our profession.
A Glossary of Selected Terms
Premiums: The cost of insurance coverage, often described as "written" or
"earned." Written premiums refer to premiums for all policies sold during a
specific accounting period. Earned premiums refer to premiums an insurance
company has recorded as revenues during a specific accounting period. For
example, a one-year policy sold January 1 would produce just three months'
worth of "earned premium" in the first quarter of the year.
Combined ratio: An accepted measure used to gauge the profitability of
insurance companies. The ratio is a combination of two other measures: the
loss ratio (the ratio of claims and claim expenses to earned premiums), and
the expense ratio (the ratio of expenses to written premiums).
A combined ratio of less than 100 indicates an underwriting profit; a
combined ratio of more than 100 indicates an underwriting loss.
Surety bonds: An insurance contract that guarantees the performance of a
certain act in a stated period of time (for example, completion of a
construction project). If the party identified defaults, the surety company
is responsible for the financial loss resulting from the failure to perform
the act.
Examples: bid, performance and payment bonds for construction projects;
bonds purchased by corporations as a precondition for licensing; and a bond
purchased for the release of property impounded during a lawsuit,
guaranteeing its availability when needed.
Fidelity bonds: A form of suretyship, often called "honesty insurance," to
protect employers against financial losses due to theft, embezzlement or
other dishonest or fraudulent acts
by employees.
Employers purchase fidelity bonds as protection against employee
dishonesty. Fidelity bonds may be written to cover a single named employee;
employees occupying specific "scheduled" positions; or all employees of a
firm.
Operations Review
Competition was the predominant force affecting our operations in 1994,
perhaps more so than ever in the past 25 years. Successful results of the
surety industry in general seem to have prompted some competitors to be
applying a philosophy that volume is preferable to profit, and the route to
volume is via relaxed underwriting requirements. We have witnessed this
approach in the past and its results, and it is totally unacceptable to us.
We will maintain a consistent underwriting philosophy and a selective
customer base that will produce an underwriting profit for us and for our
reinsurers, even if volume suffers. That was our plan in 1994 and will be
for the future.
Following is a report on each
operational area by line of business:
Contract Surety
This segment of our operations, largely made up of performance and payment
bonds for construction contractors, represented 62 percent of our written
premiums. This book of business represents some of the very finest
organizations in the industry covering many different types of
construction, primarily general building contractors, asphalt paving
contractors, heavy highway and bridge contractors, pipeline and underground
contractors and electrical, mechanical and other subcontractors.
The diversification of this book of business by class and also by size and
geographical location prevents a poor construction economy adversely
affecting the overall results.
The 1994 gross written premiums totaled $110.7 million, up slightly from
$110.6 million in 1993. A statutory underwriting profit of $4.6 million
was produced with a statutory combined ratio of 97.4 percent, an acceptable
result in these most competitive times.
As we look to the overall contract surety industry results in 1995 and
beyond with apprehension, we feel confident of the strong performance of
our underwriters in both the field and home office. They have the
experience and knowledge to produce strong results for the future, even
better than those of 1994.
Fidelity, Casualty and Miscellaneous Surety
These segments of our operations generated $68.6 million of gross written
premiums in 1994, up from $67.0
million in 1993.
The miscellaneous surety group produced gross written premiums of $46.5
million, up from $42.8 million and an excellent combined ratio of 66.3
percent on a statutory basis.
This area of our business includes traditional miscellaneous surety bonds,
such as court, fiduciary and license and permit bonds. It also includes
special classes for the organizations who transfer securities, individual
lost security bonds and other classes for areas of the financial services
industry, such as mutual funds.
The other segments include fidelity and burglary coverages and casualty
lines including directors and officers liability, owners and contractors
protective liability, railroad protective liability and advertising agency
and broadcasters and cablecasters liability.
Together, these lines of business generated gross written premiums of $22.1
million and a statutory underwriting loss of $2.8 million for a statutory
combined loss and expense ratio of 126.8 percent.
Following are some additional comments on each line of business:
Fidelity and Burglary
Gross written premiums in this area were $2 million, almost identical to
last year's total. However, a statutory underwriting loss of $855,000 was
produced.
We continue to review our strategy and underwriting approach to this line
of business to hopefully return it to profitability. Our areas of
concentration continue to be nonprofit organizations, small law firms and
commercial organizations with minimal cash exposures with the plan of
making this once again a profitable niche area of our operations.
Directors and Officers Liability
As the competition continued in this line we were able to produce a very
nice increase over last year of $402,000 to $7.1 million in gross written
premiums. Most important, however, was an improved statutory loss ratio
from 53.8 percent to 41.3 percent resulting in a statutory underwriting
profit of $817,000.
We write this coverage for non-profit organizations such as church
organizations, country clubs, and condominium and homeowners' associations.
We are a leading underwriter of national programs for nonprofit
organizations whose memberships and activities are spread throughout the
country. In addition to a very competitive policy form, our service from
policy issuance to claims handling is second to none in the industry. Once
again, the expertise of both field and home office underwriters allows us
to provide a facility for this coverage to our agents and brokers that
greatly enhances their ability to write and retain profitable business. Our
approach will only get better in the future.
Owners and Contractors Liability
Our premium writings continued the steady growth we had planned with gross
written premiums increasing to $2.4 million, up from $1.8 million in 1993.
While a statutory underwriting loss of $695,000 was produced, an adjustment
to our reinsurance pattern starting in 1995 should allow this niche area to
contribute a profitable result in the future.
Once again the expertise of our underwriters and our service in this line
continues to get steady recognition by our producers which will only allow
the book to grow and to grow profitably.
Railroad Protective Liability
In spite of continued competition, this line of business once again grew
significantly from $5 million in 1993 to $6.5 million in 1994. A greatly
improved loss ratio of 26.6 percent produced a statutory underwriting
profit of $660,000.
As a leader in the industry in this niche line also, our knowledge of the
construction industry and its exposures puts us in an enviable position. We
have excellent communication with the major railroads in the United States
and at the same time the construction industry and its insurance producers.
Our future in this line should continue the fine results of 1994.
Advertising Agency Liability and Broadcasters and Cablecasters Liability
This libel and slander coverage produced gross written premiums of $4.1
million, almost identical to last year. A small statutory underwriting
profit was produced which was an improvement over last year's loss.
Competition continues in this line, perhaps more so than in the past few
years, but our plan of underwriting for profit will not vary.
Transfer Agents Liability, First Class and Registered Mail Contracts,
Uncollectible Items of Deposit Coverage and Individual Lost Instrument
Bonds
An active stock market and increased production efforts brought the gross
written premiums from these coverages to $16.4 million, up from $13.7
million in 1993. While some increased loss activity occurred, a loss ratio
of 38.4 percent is still acceptable.
We maintain our position as an industry leader by continuing to review the
business operations of our customers and responding to their needs
by designing improvements to these niche coverages. In addition, our
service and support of their industry associations is a continual reminder
to them
of our interest in their business.
Miscellaneous Surety
The traditional types of bonds in this category (court, fiduciary and
license and permit, to name a few) generated $30.1 million in gross written
premiums, up from $29.1 million in 1993. The bottom line was once again
impressive here with a statutory underwriting profit of $6.8 million and
statutory combined ratio of 62.1 percent.
As I reported last year, competition is extremely aggressive in this line
as the results have traditionally been very attractive. We are fortunate in
having a very talented group of underwriters in this area who will pursue a
consistent philosophy and maintain a competitive pricing structure. With
that as a guide, I am confident our results will continue as they have in
1994.
Conclusion - "... stay close to your customers..."
While a lot can be said about competition and how it challenges every fiber
of our business, no one minds good competition. I have reported that the
competition in our business in 1994 and so far into 1995 is extremely
aggressive. I think our results indicate we have challenged our
competitors, particularly the good ones, and we will continue to do so in
the future.
Author Tom Peters, known for his research and books on excellence in
American business once said, "In every instance, we found that the best run
companies stay as close to their customers as humanly possible."
Our philosophy is just that. To be competitive in this market, we must know
our competition, but more importantly know and stay close to
our customers.
We sincerely appreciate the continued efforts of our employees. We must
also thank our producers, clients and reinsurers for their continued
support.
Very truly yours,
Thomas P. Gorke
Executive Vice President
We will maintain a consistent underwriting philosophy and a selective
customer base that will produce an underwriting profit for us and for our
reinsurers, even if volume suffers. That was our plan in 1994 and will be
for the future.
We will maintain a consistent underwriting philosophy and a selective
customer base that will produce an underwriting profit for us and for our
reinsurers, even if volume suffers. That was our plan in 1994 and will be
for the future.
While a lot can be said about competition and how it challenges every fiber
of our business_I think our results indicate we have challenged our
competitors, particularly the good ones, and we will continue to do so in
the future.
The Special Olympics is one of the many nonprofit organizations that turn
to St. Paul Surety, through Seaboard Surety Company, for directors and
officers liability coverage. Written premium increased $402,000 in 1994 to
$7.1 million.
Summary of Selected Financial Data - Seaboard Surety Company
(Dollars in thousands) 1994 1993 1992
Net premiums written $68,351 62,462 60,889
Net premiums earned 62,291 62,542 59,010
Total shareholder's equity 157,629 165,887 140,301
Other Selected Financial Data
Gross premiums written 118,801 108,647 115,237
GAAP underwriting results 1,969 13,657 6,172
Net investment income 17,683 16,275 16,780
Net income 13,714 19,149 17,671
Total assets 404,260 420,312 407,288
Total liabilities 246,631 254,425 266,987
Statutory Ratios:
Losses and loss adjustment
expenses to net premiums
earned 34.9 20.4 34.2
Underwriting expenses to
net premiums written 58.8 60.0 52.4
Statutory Combined Ratio 93.7 80.4 86.6
Consolidated Balance Sheets - Seaboard Surety Company
(Dollars in thousands, except per
share data)Years ended December
31, 1994 1993
Assets
Investments and cash:
Fixed maturities, primarily bonds,
at estimated market value $244,673 243,567
Real estate at cost less accumulated
depreciation of $149 in 1993 - 614
Short-term investments, at cost
(approximates market) 13,221 10,316
Cash 1,721 1,724
Total investments and cash $259,615 256,221
Receivables:
Insurance premiums 17,422 16,399
Interest and dividends 4,144 3,892
Other 4,463 5,183
Reinsurance recoverable on paid
losses 1,640 12,254
Reinsurance recoverable on unpaid
losses 55,416 59,653
Current income taxes 1,691 -
Deferred income taxes 1,141 -
Deferred policy acquisition
expenses 26,274 24,769
Prepaid reinsurance premiums 32,130 36,429
Office property and equipment,
at cost less accumulated
depreciation of
$129 in 1994 and $6,510 in 1993 51 4,585
Other assets 273 927
Total assets $404,260 420,312
Liabilities and Shareholder's
Equity
Liabilities:
Insurance reserves:
Losses and loss adjustment expenses $118,683 114,656
Unearned premiums 100,930 99,295
Total insurance reserves 219,613 213,951
Accounts payable and accrued
expenses 4,310 5,076
Reinsurance premiums payable 9,242 11,840
Policyholders' dividends 3,891 4,519
Open securities transactions 3,811 -
Income taxes:
Current - 630
Deferred - 7,264
Other liabilities 5,764 11,145
Total liabilities 246,631 254,425
Shareholder's equity:
Common stock, 500,000 shares
authorized, issued and
outstanding,
par value $10 per share in 1994
and $5 per share in 1993 5,000 2,500
Additional paid-in capital 15,085 17,585
Retained earnings 143,117 134,673
Unrealized appreciation
(depreciation) of fixed
maturities, net of taxes (3,566) 12,389
Unrealized loss on foreign
currency translation (2,007) (1,260)
Total shareholder's equity 157,629 165,887
Total liabilities and
shareholder's equity $404,260 420,312
See accompanying notes to consolidated financial statements.
Consolidated Statements of Income - Seaboard Surety Company
(Dollars in thousands)
Years ended December 31, 1994 1993
Revenues
Premiums earned $62,291 62,542
Net investment income 17,683 16,275
Realized investment gains 115 87
Total revenues 80,089 78,904
Expenses
Losses and loss adjustment
expenses 21,767 12,756
Policy acquisition expenses 29,360 26,642
Underwriting expenses 9,193 9,605
Dividends to policyholders 775 1,106
Other expenses 958 1,588
Total expenses 62,053 51,697
Income before income taxes 18,036 27,207
Income tax expense (benefit):
Current 4,867 7,658
Deferred (545) 400
Total income tax expense 4,322 8,058
Net income $13,714 19,149
See accompanying notes to consolidated financial statements.
Consolidated Statements of Shareholder's Equity - Seaboard Surety Company
(Dollars in thousands)
Years ended December 31, 1994 1993
Common stock
Beginning of year $2,500 2,500
Increase in par value from
$5 to $10 2,500 -
End of year 5,000 2,500
Additional paid-in capital
Beginning of year 17,585 17,585
Increase in par value of common
stock from $5 to $10 (2,500) -
End of year 15,085 17,585
Retained earnings
Beginning of year 134,673 120,794
Net income 13,714 19,149
Dividends declared and paid (5,270) (5,270)
End of year 143,117 134,673
Unrealized appreciation
(depreciation) of fixed maturities,
net of taxes
Beginning of year 12,389 -
Change for the year (15,955) 12,389
End of year (3,566) 12,389
Unrealized loss on foreign
currency translation
Beginning of year (1,260) (578)
Change for the year (747) (682)
End of year (2,007) (1,260)
Total shareholder's equity $157,629 165,887
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows - Seaboard Surety Company
(Dollars in thousands)
Years ended December 31, 1994 1993
Operating Activities
Net income $ 13,714 19,149
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation expense 17 1,355
Change in:
Net insurance reserves 14,449 (776)
Insurance premiums receivable (1,056) 1,950
Deferred policy acquisition
expenses 1,505) (1,254)
Deferred income taxes (545) 401
Accounts payable and accrued
expenses (793) (3,929)
Income tax payable or refundable (2,330) (1,440)
Reinsurance recoverable on paid
losses 10,614 2,935
Reinsurance premiums payable (2,573) 791
Other liabilities (7,573) 7,106
Other receivables 2,674 6,254
Other assets 789 1,169
Funds held under reinsurance
contracts (491) (764)
Other, net (562) (656)
Net cash provided by operating
activities 24,829 32,291
Investing Activities
Purchases of fixed maturities (43,433) (70,409)
Proceeds from sale of fixed
maturities 3,513 6,180
Proceeds from fixed maturities 14,396 37,530
Change in short-term investments (2,847) (1,142)
Purchases of office properties and
equipment (5) (374)
Proceeds from sale of real estate 614 -
Proceeds from sales of office
properties and equipment 4,519 36
Change in open securities
transactions 3,811 (24)
Other, net (113) 113
Net cash used in investing
activities (19,545) (28,090)
Financing Activities:
Dividends paid (5,270) (5,270)
Net cash used in financing
activities (5,270) (5,270)
Effect of exchange rate changes on
cash (17) (26)
Decrease in cash (3) (1,095)
Cash at beginning of year 1,724 2,819
Cash at end of year $ 1,721 1,724
Supplemental disclosures of
cash flow information
Income taxes paid $ 5,216 8,618
Interest paid $ 21 157
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements - Seaboard Surety Company
Years ended December 31, 1994 and 1993 (Dollars in thousands)
Note 1
Affiliation
Seaboard Surety Company (the Company) is a wholly-owned subsidiary of the
St. Paul Fire and Marine Insurance Company (the Parent). The Parent is a
wholly-owned subsidiary of The St. Paul Companies, Inc. (SPC).
Note 2
Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying financial statements have been prepared
in accordance with generally accepted accounting principles (GAAP). The
Company is also required to file with state
regulatory authorities statutory basis financial statements which differ
from GAAP (see note 7).
Consolidation Policy
The accompanying financial statements include the accounts of the Company
and Seaboard Surety Company of Canada
(a wholly-owned subsidiary). All significant intercompany accounts have
been eliminated in consolidation.
Premium Revenues
Premiums are recognized as earned on a pro rata basis over
the contract period. Premiums not yet recognized as earned are recorded as
unearned premiums.
Deferred Policy Acquisition Expenses
Costs incurred in the acquisition of business are deferred
and amortized ratably over the life of the policies in the same manner as
premiums are earned and consist of commissions, state premium taxes and
other direct underwriting expenses.
If deferred policy acquisition expenses were to exceed the
sum of unearned premiums and related anticipated investment income less
expected losses and loss adjustment expenses, the excess costs would be
expensed immediately.
Loss and Loss Adjustment Expense Reserves
Loss and loss adjustment expense (LAE) reserves are based
on case basis estimates for reported claims and on past loss experience,
for unreported losses and loss adjustment expenses. The amounts are based
on estimates of future rates of social and economic inflation and other
factors. Such estimates are continuously monitored and any changes are
reflected in
operating earnings on a current basis. The Company's reserves are reduced
for the estimated amounts of salvage and subrogation. Estimated amounts
recoverable from reinsurers on unpaid losses and LAE are reflected as
assets.
The Company believes that the reserves currently established for losses and
loss adjustment expenses are adequate to cover their eventual costs.
However, final claim payments may differ from the reserves, particularly
when payments may not take place for several years.
Investments
The Company implemented Statement of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
as of December 31, 1993. Fixed maturities, primarily bonds, are classified
as "available-for-sale." Accordingly, these investments are reported at
estimated market value at December 31, 1994 and 1993, with unrealized
appreciation (depreciation) (net of deferred taxes) recorded in
shareholder's equity. Classifying these portfolios as "available-for-sale"
did not impact net income.
Realized investment gains and losses are reported as a component of pre-tax
income. The Company records the cost of each individual investment security
so that when it is sold, the Company is able to identify and record the
gain or loss
on that transaction. The Company continually monitors the difference
between the cost and estimated market value of its investments. If any of
the Company's investments experience
a decline in value that is other than temporary, the Company establishes a
valuation allowance for the decline and records
a realized loss on the statement of income.
Foreign Currency Translation
Assets and liabilities of the Company's subsidiary are translated into U.S.
dollars at year-end exchange rates. Revenues and expenses are translated at
the average exchange rates during the year. The statement of cash flows is
translated into U.S. dollars
at the average exchange rates during the year. The unrealized gains or
losses from translating the financial statements of the subsidiary are
shown as part of shareholder's equity.
Reclassifications
Certain reclassifications have been made in the 1993 consolidated financial
statements and notes to conform with the 1994 presentation. These
reclassifications have no effect on net income or shareholder's equity, as
previously reported in 1993.
Note 3
Investments
The following presents the amortized cost, gross unrealized appreciation
and depreciation and estimated market value of investments in fixed
maturities:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1994 Cost Appreciation Depreciation Value
U.S. Treasury $ 53,684 - (4,205) 49,479
U.S. Government
Guaranteed 30,892 804 (333) 31,363
Canada & UK
Government and
Government
Guaranteed Bonds 7,131 67 (228) 6,970
State, Municipal
and Special
Revenue Bonds 105,297 4,863 (714) 109,446
Other Canadian
Investments 8,165 201 (166) 8,200
Sinking Fund
Preferred 536 - - 536
Corporate 43,625 5 (4,951) 38,679
Total $249,330 5,940 (10,597) 244,673
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1993 Cost Appreciation Depreciation Value
U.S. Treasury $ 31,307 426 (116) 31,617
U.S. Government
Guaranteed 30,978 2,878 - 33,856
Canada & UK
Government and
Government
Guaranteed Bonds 7,680 744 - 8,424
State, Municipal
and Special
Revenue Bonds 99,998 14,000 - 113,998
Other Canadian
Investments 9,141 1,143 - 10,284
Sinking Fund
Preferred 895 - - 895
Corporate 44,510 482 (499) 44,493
Total $224,509 19,673 (615) 243,567
At December 31, 1994 and 1993, bonds carried at estimated market of $6,133
and $6,807, respectively, were on deposit with various state and
governmental authorities, as required by law.
The following table presents the breakdown of fixed maturities by years to
maturity. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties:
Estimated
Amortized Market
December 31, 1994 Cost Value
Due in one
year or less $ 1,522 1,534
Due after one
year through five
years 7,966 8,160
Due after five
years through ten
years 88,258 85,038
Due after ten
years 121,657 119,355
Mortgage-backed
securities with
various maturity
dates 29,391 30,050
Sinking Fund
Preferred 536 536
Total $249,330 244,673
Note 3 (continued)
Investments
The following table presents a summary of net investment income:
Years ended December 31, 1994 1993
Interest Income
U.S. Treasury $ 2,762 1,402
U.S. Government Guaranteed 2,436 3,851
Canada & UK Government &
Government Guaranteed Bonds 577 910
State, Municipal and Special
Revenue Bonds 7,169 7,112
Other Canadian Investments 919 985
Corporate 3,360 1,870
Total $17,223 16,130
Interest on short-term
investments and cash 566 367
Dividends on preferred stocks 56 81
Gross investment income 17,845 16,578
Investment expenses 162 303
Net investment income $17,683 16,275
Investment Transactions
Realized gains on our fixed maturities investment portfolio included gross
realized gains of $116 and $91 and gross
realized losses of $1 and $4 in 1994 and 1993, respectively.
Note 4
Loss and Loss Adjustment Expense Reserves
The accompanying table presents a reconciliation of beginning and ending
liabilities for losses and LAE:
Years ended December 31, 1994 1993
Losses and LAE reserves at
beginning
of year, as reported $114,656 $129,792
Less reinsurance recoverable
on unpaid
losses at beginning of year (59,653) (73,977)
Net loss and LAE reserves at
beginning of year 55,003 55,815
Provision for losses and LAE
for
claims incurred:
Current year 23,313 21,117
Prior years (1,546) (8,361)
Total incurred 21,767 12,756
Losses and LAE payments for
claims incurred:
Current year 1,932 1,327
Prior years 11,429 12,125
Total paid 13,361 13,452
Unrealized foreign exchange
gain (142) (116)
Net loss and LAE reserves at
end of year 63,267 55,003
Plus reinsurance
recoverables on unpaid
losses at end of year 55,416 59,653
Loss and LAE reserves at
end of year,
as reported 118,683 $114,656
In both years shown in the table, the Company has recorded reductions in
the provision for losses and loss adjustment expense for claims incurred in
prior years.The majority of the 1993 decrease was related to favorable
contract surety case development. The conservative reserving philosophy of
the Company has evolved over time and is the product of many years of
experience underwriting surety bonds. The nature of contract surety claims
is such that severe claims are infrequent but can occur suddenly and must
be provided for. The potential impact for future salvage and subrogation on
severe claims can also be very difficult to estimate.
Note 5
Income Taxes
The Company's results are included in the consolidated Federal income tax
return of SPC. Provisions for income taxes have been computed as if the
Company filed a separate return. The current federal income taxes are paid
or payable to or recoverable from SPC.
The Company computes tax expense in accordance with SFAS No. 109
"Accounting for Income Taxes." The primary objective of SFAS No. 109 is to
ensure that the deferred tax asset or liability on the balance sheet
properly reflects the amount due from or to the government in the future.
Therefore, the tax expense relating to the change in the
deferred tax asset or liability may not always be consistent with the
income reported in the statements of income.
Some items of revenue and expense included in the statements of income may
not be currently taxable or deductible on the Company's income tax returns.
Therefore, the Company's income tax assets and liabilities are divided into
a current portion, which is the amount attributable to the Company's
current year's tax return, and a deferred portion, which is the amount
attributable to another year's tax return. The revenue and expense items
not currently taxable or deductible are called temporary differences.
The Internal Revenue Service has examined the consolidated federal income
tax returns through 1990 and is currently examining years 1991 and 1992.
The Company believes that any additional taxes assessed as a result of
these examinations will not have a material effect on its overall financial
position, results of operations, or liquidity.
Components of Income Tax Expense
The components of income tax expense are as follows:
Years ended December 31, 1994 1993
Federal current tax expense $2,895 6,684
Federal deferred tax expense
(benefit) (545) 329
Total federal income tax
expense 2,350 7,013
Foreign current tax expense 1,972 974
Foreign deferred tax expense - 71
Total income tax expense $4,322 8,058
The reconciliations between total income tax expense
applicable to income before income taxes and the amount computed at the
statutory federal income tax rate of 35%
are depicted below:
Years ended December 31, 1994 1993
Federal income tax expense at
statutory rate $6,313 9,524
Nontaxable investment income (1,987) (2,029)
Other, net (4) 563
Total income tax expense $4,322 8,058
The tax effects of temporary differences that give rise to
the deferred tax assets and deferred tax liabilities are
presented below:
December 31, 1994 1993
Deferred Tax Assets
Loss reserves $ 2,579 2,387
Unearned premium
reserves 4,655 4,257
Employee benefit plans 1,790 1,790
Unrealized depreciation
of investments 1,125 -
Other 1,085 347
Total gross deferred
tax asset $11,234 8,781
Deferred Tax Liabilities
Unrealized appreciation
of investments - 6,670
Deferred acquisition
cost 9,003 8,501
Other 1,090 874
Total gross deferred
tax liability 10,093 16,045
Net deferred tax
asset (liability) $ 1,141 (7,264)
If the Company believes that all deferred tax assets will not result in
future tax benefits, it must establish a "valuation allowance" for the
portion of these assets that will not be
realized. Based upon a review of refundable taxes, anticipated future
earnings, and all other available evidence, both positive and negative, the
Company has concluded it is "more likely than not" that net deferred tax
assets will be realized.
Note 6
Retirement Plans, Deferred Compensation and Other Postretirement Benefit
Plans
Employee Retirement Plans
The Company participates in a noncontributory, funded, defined benefit
pension plan, sponsored by SPC (SPC Plan) that provides pension benefits to
substantially all U.S. company employees. Pension benefits are based on
years of service and the employee's compensation while employed by the
Company. Pension benefits generally vest after five years of service.
Contributions to the plan provide for current service cost and any unfunded
projected benefit obligation over a specified period of time. SPC's funding
policy is to contribute annually the minimum funding requirements of the
Employee Retirement Income Security Act and any additional amounts that may
be necessary. This may result in no contribution being made in a particular
year. SPC charges each participating subsidiary for its allocable share of
such contributions based on a percentage of payroll.
Note 6 (continued)
The following table details the Company's portion of the SPC Plan periodic
pension cost:
Years ended December 31, 1994 1993
Service cost-benefits earned
during the year $ 945 764
Interest cost on projected
benefit obligation 966 921
Actual return on plan assets (159) (1,723)
Net amortization and deferral (1,362) 265
Net periodic pension cost $ 390 227
The following table summarizes the Company's portion of the funded status
of the SPC Plan:
December 31, 1994 1993
Accumulated benefit
obligation:
Vested $ 9,015 10,187
Nonvested 1,004 1,337
Subtotal 10,019 11,524
Effect of projected salary
increases 3,219 3,380
Projected benefits obligation 13,238 14,904
Plan assets at fair value. 15,909 15,839
Assets greater than
projected benefit
obligation (2,671) (935)
Unrecognized net loss (132) (1,587)
Unrecognized net asset
at transition 1,476 1,687
Unrecognized prior service
cost (107) (122)
Prepaid pension cost recorded
on
the balance sheet $(1,434) (957)
This plan uses the services of an independent actuary to assist in the
determination of pension costs and obligations. Pension cost is determined
using assumptions at the beginning of the year. The funded status is
determined using assumptions at
the end of the year. Assumptions as of December 31, used to determine
projected benefits obligation and pension cost
are as follows:
1994 1993 1992
Discount rate 8.00% 6.25% 7.25%
Rate of increase in
compensation 5.00% 4.25% 5.50%
Expected rate of return
on plan assets 9.00% 9.00% 9.00%
The SPC Plan assets are invested primarily in equities and fixed maturities
and included 380,172 shares of SPC's
common stock with a market value of $17.0 million and $17.1 million at
December 31, 1994 and 1993, respectively.
SPC also sponsors a non-contributory, unfunded pension plan that provides
certain employees with pension benefits in excess of limits imposed by
federal tax law. At the end of 1994 and 1993, the Company had a liability
of $522 and $330, respectively recorded for this plan.
Employee Stock Ownership Plan
The Company participates in an Employee Stock Ownership Plan (ESOP)
maintained by SPC. The plan was established to purchase shares of SPC stock
on the open market for allocation to qualified employees of U.S.-based
corporate and insurance underwriting operations. In 1994 and 1993, the
Company recorded expense related to this plan of $481 and $451,
respectively.
Preferred Stock Ownership Plan
The Company participates in a Preferred Stock Ownership Plan (PSOP)
maintained by SPC. The PSOP allocates preferred shares to participating
employees of the SPC Savings Plus Plan. The allocation is equivalent to 60%
of employees' contributions up to a maximum of 6% of their salary plus
shares equal to the value of dividends on previously allocated shares. In
1994 and 1993, the Company recorded expense related to this plan of $552
and $476, respectively.
In addition, the Company also participates in other
incentive plans sponsored by SPC which cover certain
eligible employees.
Postretirement Benefits Other Than Pension
SPC provides certain health care and life insurance benefits for retired
employees and their eligible dependents. The Company currently anticipates
that most of its employees will become eligible for these benefits if they
retire while working for the Company. The cost of these benefits is shared
with the retiree. These benefits are generally provided through the SPC
Employee Benefits Trusts to which periodic contributions
are made to cover benefits paid during the year.
The following table details the components of the net periodic
postretirement benefit cost:
Years ended December 31, 1994 1993
Service cost-benefits attributed to
service during the year $ 192 156
Interest cost on accumulated
post-retirement benefits obligation 273 246
Actual return on plan assets - -
Net amortization and deferral (2) (14)
Net periodic postretirement
benefits cost $ 463 388
The following table summarizes the funded status of the plan:
December 31, 1994 1993
Accumulated postretirement
benefits obligation:
Retirees $1,723 1,841
Fully eligible active plan participants 258 222
Other active plan participants 1,028 1,401
Subtotal 3,009 3,464
Plan assets at fair value - -
Assets less than accumulated post-
retirement benefits obligation 3,009 3,464
Unrecognized net gain (loss) 272 (515)
Unrecognized prior service cost 236 251
Accrued postretirement benefits cost
recorded on the balance sheet $3,517 3,200
The Company uses the services of an independent actuary to assist in the
determination of the benefits cost and obligation. Postretirement benefits
cost is determined using assumptions at the beginning of the year. The
funded status is determined using the assumptions at the end of the year.
Assumptions as of December 31 used to determine the postretirement benefits
obligation are as follows:
1994 1993 1992
Discount rate 8.50% 7.00% 7.75%
Rate of increase in 5.00% 4.25% 5.50%
compensation
A health care inflation rate of 14% was assumed to change to 8% in 1995,
decrease annually to 6% in 2002 and then remain at that level. This
inflation rate assumption has a significant impact on the health care
portion of the postretirement benefits. For example, a 1% increase in this
rate would have increased the accumulated postretirement benefits
obligation at December 31, 1994 by $468 and the 1994 periodic benefits cost
by $94.
Note 7
Statutory Financial Information
Under the insurance company laws of the State of New York (the Company's
state of incorporation), the maximum dividend that may be paid without
prior approval of the Superintendent of Insurance is the lesser of 10% of
statutory surplus ($12,681) or 100% of the adjusted net investment income
($16,554). Based on these restrictions, the maximum amount available
for dividend payment as of year end is $12,681.
Below is the reconciliation of shareholder's equity with statutory capital
and surplus and net income with net income on a statutory basis:
Years ended December 31, 1994 1993
Total shareholder's equity $157,629 165,887
Deferred policy acquisition expense 26,274) (24,769)
Other non-admitted assets (7,228) (11,220)
Deferred income taxes (16) 594
Statutory reserves (5,030) (4,471)
Postretirement benefits 2,014 2,132
Bad debt reserve 500 450
PSOP 1,121 1,121
Unrealized depreciation (appreciation)
on fixed maturity investments,
net of tax 3,566 (12,389)
Other 527 1,325
Total statutory capital and surplus $126,809 118,660
Net income $ 13,714 19,149
Change in deferred policy
acquisition expenses (1,505) (1,254)
Deferred income taxes (545) 400
Increase in allowance for
doubtful accounts 50 (255)
Other (248) 621
Net income, statutory basis $ 11,466 18,661
Note 8
Reinsurance
The Company reinsures a percentage of its direct premiums written to
provide for the sharing of risk in the event of losses. A contingent
liability exists with respect to reinsurance ceded which would become a
liability of the Company in the event that any reinsurer is unable to meet
the obligations assumed under reinsurance agreements.
Note 8 (continued)
The effect of assumed and ceded reinsurance on premiums written, premiums
earned and insurance losses and loss adjustment expenses is as follows:
Years ended December 31, 1994 1993
Premiums Written
Direct 111,700 108,270
Assumed 100 378
Ceded (43,449) (46,186)
Net premiums written 68,351 62,462
Premiums Earned
Direct 109,815 114,469
Assumed 193 335
Ceded (47,717) (52,262)
Net premiums earned 62,291 62,542
Insurance Losses and Loss
Adjustment Expenses
Direct 28,876 31,827
Assumed 3,273 1,065
Ceded (10,382) (20,136)
Net insurance losses and
loss adjustment expenses 21,767 12,756
In addition, the Company has recoverables for losses paid and unpaid
including IBNR, loss adjustment expenses, and unearned premiums that
exceeds 10% of the Company's policyholder surplus from the following
companies:
A.M. Best
Company Amount Rating*
St. Paul Fire & Marine
Insurance Company $21,814 A+
Employers Reinsurance Corporation $15,653 A++
*Rating is available as of latest publication dated 1994 which
contains data through December 1993.
Note 9
Related Party Transactions
The following summarizes transactions between the Company and its Parent:
1994 1993
Ceded Reinsurance:
Written premiums $9,031 10,520
Commissions 3,405 3,840
Paid losses and loss
adjustment expenses 1,181 10,270
Recoverable on paid losses at
year end 1,968 4,558
Recoverable on unpaid losses and
loss
adjustment expenses at year end 11,046 9,657
Prepaid premiums at year end 8,800 10,167
Reinsurance premiums payable at
year end 1,835 4,087
Intercompany balances 1,033 1,834
Allocation of shared expenses* 13,589 15,122
Allocation of shared expenses
receivable* $1,389 2,817
*The Company has a management agreement with other SPC affiliated insurance
companies to conduct surety business on their behalf. The companies are
required to reimburse the manager (Seaboard Surety Company) for the direct
allocable share of expenses and overhead for the services and facilities
provided.
Note 10
Commitments, Concentrations and Contingencies
Monetary Commitments
The Company leases certain office properties and equipment. Total rental
expenses under such operating leases were $4,332 in 1994 and $4,415 in
1993. Certain leases are non-cancelable and the Company would remain
responsible for payment, even if the office space and equipment are not
utilized. The future minimum lease payments for which the Company would be
liable under these leases appear below:
1995 $ 3,878
1996 3,711
1997 3,024
1998 2,503
1999 2,606
Later years 9,590
Total $25,312
The Company writes contract surety, miscellaneous surety and various
specialty casualty lines of business. Coverage is provided through 31
branch offices and approximately 1,700 independent agents. A substantial
portion of the premium volume is dependent upon the activity in the
construction industry.
During 1994, there was one agency group that accounted for a substantial
amount (more than 20%) of the Company's direct premiums written. Unlike
insurance policies, surety bonds are three party contracts that require the
Company to provide coverage once a bond is issued, regardless of whether
the premium is paid and the Company may not reduce claim payments by the
amount of premium due. The Company's exposure to credit risk in this area
is mitigated by its underwriting expertise which in part consists of credit
risk assessment.
Legal Matters
In the ordinary course of conducting business, the Company has been named
as defendant in various lawsuits. Some of these lawsuits attempt to
establish liability under bonds or policies issued by the Company.
Although it is possible that the settlement of a contingency may be
material to the results of operations and liquidity in the period in which
the settlement occurs, the Company believes that the total amounts that it
will ultimately have to pay in all of these lawsuits will have no material
effect on the Company's overall financial position.
Independent Auditors' Report
The Board of Directors
Seaboard Surety Company:
We have audited the accompanying consolidated balance
sheets of Seaboard Surety Company, (a wholly owned subsidiary of the St.
Paul Fire and Marine Insurance Company) and subsidiary as of December 31,
1994 and 1993, and the related consolidated statements of income,
shareholder's equity, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Seaboard Surety Company and subsidiary at December 31, 1994 and 1993, and
the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in note 2 to the consolidated financial
statements, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" in 1993.
KPMG Peat Marwick
Minneapolis, Minnesota
March 31, 1995
Seaboard Surety Company
Board of Directors
Nicholas M. Brown, Jr.
Executive Vice President -
Chief Operating Officer
St. Paul Fire and Marine
Insurance Company
Chairman of the Board
Seaboard Surety Company
Brian P. Curry
Vice President
Seaboard Surety Company
Howard E. Dalton
Senior Vice President
Chief Accounting Officer
The St. Paul Companies, Inc.
Patrick A. Thiele
Executive Vice President
Chief Financial Officer
The St. Paul Companies, Inc.
John Darr
Vice President and Treasurer
Seaboard Surety Company
James F. Duffy
President and Chief Executive Officer
St. Paul Reinsurance
Management Corp.
Thomas P. Gorke
Executive Vice President
Seaboard Surety Company
Steven R. Grunsfeld
Vice President, Secretary and
General Counsel
Seaboard Surety Company
Andrew I. Douglass
Senior Vice President
General Counsel
The St. Paul Companies, Inc.
Michael B. Keegan
Vice President
Seaboard Surety Company
J. Daryl LaForge
Vice President
Seaboard Surety Company
Douglas W. Leatherdale
Chairman, President and Chief
Executive Officer
The St. Paul Companies, Inc.
Susan J. Ousey
Vice President
Seaboard Surety Company
Edward G. Pendergast
Vice President
Fixed Income Investments
The St. Paul Companies, Inc.
Louise A. Ryan
Vice President
St. Paul Reinsurance
Management Corp.
George F. Thompson
President and Chief Executive Officer
Seaboard Surety Company
Robert A. Wheeler
Senior Vice President
Seaboard Surety Company
Seaboard Surety Company
Officers
Nicholas M. Brown, Jr. (1,2)
Chairman of the Board
George F. Thompson (1,2)
President and Chief Executive Officer
Thomas P. Gorke (1,2)
Executive Vice President
Steven R. Grunsfeld (1,2)
Vice President
Secretary & General Counsel
John Darr
Vice President & Treasurer
Robert A. Wheeler (1,2)
Senior Vice President
Brian P. Curry
Vice President
James W. Hansen
Vice President
Michael B. Keegan
Vice President
J. Daryl LaForge
Vice President
Susan J. Ousey
Vice President
Michael W. Anderson
Assistant Vice President
James E. Chelberg
Assistant Vice President
Peter J. Daly
Assistant Vice President
Richard E. Long
Assistant Vice President
John Marcelliano
Assistant Vice President
James A. Monroe
Assistant Vice President
Michael J. Hurley
Assistant General Counsel and
Assistant Corporate Secretary
1 Member, Executive Committee
2 Member, Personnel Committee
Seaboard Surety Company of Canada
Board of Directors
Robert D. Armstrong (2,3)
former Chairman of the Board
Canron, Inc.
Georges Dub (2)
Partner
Lavery, DeBilly
Steven R. Grunsfeld
Vice President, Secretary and
General Counsel
Seaboard Surety Company
J. Daryl LaForge
Vice President
Seaboard Surety Company
Robert F. Smith
President and Chief Operating Officer
Seaboard Surety Company of Canada
Robert W. McDowell
Partner
Fasken Campbell Godfrey
Jerome C. Smyth Q.C. (3)
Partner
Lavery, DeBilly
George F. Thompson (1)
Chairman of the Board and Chief
Executive Officer
Seaboard Surety Company of Canada
President and Chief Executive Officer
Seaboard Surety Company
Robert B. Tuer (3)
Managing Partner
Fasken Campbell Godfrey
1 Member, Executive Committee
2 Member, Audit Committee
3 Member, Conduct Review Committee
Seaboard Surety Company of Canada
Officers
George F. Thompson
Chairman of the Board and Chief
Executive Officer
Robert F. Smith
President and Chief Operating Officer
Susan J. Trocenko
Vice President
Mark D. Leskanic
Vice President
Augustine A. LaRoque
Comptroller
Steven R. Grunsfeld
Secretary
John Darr
Treasurer
St. Paul Surety Branches
Atlanta Office
1990 Lakeside Parkway, Suite 200
Tucker GA 30084
404/939-5378
Fax: 404/938-2188
Baltimore Office
100 West Road, Suite 410
Towson MD 21204-2331
410/828-0737
Fax: 410/828-7797
Boston Office
One Memorial Drive, 10th Floor
Cambridge MA 02142-1355
617/225-2626
Fax: 617/225-2565
Charlotte Office
2101 Rexford Road, Suite 123 East
Charlotte NC 28211
704/364-1996
Fax: 704/364-6505
Chicago Office
300 South Wacker Drive, Suite 1600
Chicago IL 60606-6701
312/987-0140
Fax: 312/987-0136
Columbus Office
555 Metro Place North, Suite 575
Dublin OH 43017-5306
614/761-2112
Fax: 614/761-2609
Dallas Office
8144 Walnut Hill Lane, Suite 1199
Dallas TX 75231-4345
214/363-1645
Fax: 214/373-9038
Denver Office
950 South Cherry Street, Suite 615
Denver CO 80222-2665
303/756-3334
Fax: 303/756-3525
Great Falls Office
300 River Drive North
Great Falls MT 59403
406/761-5331
Fax: 406/771-7134
Honolulu Office
745 Fort Street, Suite 307
Honolulu HI 96813
808/538-3874
Fax: 808/523-8580
Indianapolis Office
5875 Castle Creek Parkway, N. Drive,
Ste. 291
Indianapolis IN 46250
317/576-0390
Fax: 317/576-0429
Kansas City Office
6320 Lamar Avenue, Suite 240
Overland Park KS 66201
913/432-8448
Fax: 913/432-0370
St. Paul Surety Branches (continued)
Little Rock Office
10810 Executive Center Drive,
Suite 322
Little Rock AR 72211-4388
501/223-0100
Fax: 501/223-4984
London Office
Warnford Court
Throgmorton Street
London EC2N 2 JQ
011/44171-638-0112
Fax: 011/44171-374-8344
Los Angeles Office
19900 MacArthur Boulevard, Suite 680
Irvine CA 92715-2445
714/851-1911
Fax: 714/851-9627
Milwaukee Office
375 Bishops Way, Suite 105
Brookfield, WI 53005-6200
414/782-1500
Fax: 414/782-3665
Minneapolis Office
Norwest Financial Center
7900 Xerxes Avenue South,
Suite 1000
Bloomington MN 55431-1104
612/831-3050
Fax: 612/831-2435
Nashville Office
Brentwood Commons I
750 Old Hickory Boulevard,
Suite 200
Brentwood TN 37027
615/377-4684
Fax: 615/377-4692
New Orleans Office
3838 North Causeway Boulevard,
Suite 2650
Metairie LA 70002-1767
504/835-4206
Fax: 504/835-4259
New Jersey Office
150 Allen Road, Suite 109
Liberty Corner NJ 07938
908/604-9700
Fax: 908/604-8411
New York Office
199 Water Street, 20th Floor
New York NY 10038-3590
212/509-8500
Fax: 212/968-9381
Oklahoma City Office
Circle Building
5101 N. Classen Boulevard, Suite 303
Oklahoma City OK 73118-4422
405/840-1766
Fax: 405/842-6880
Orlando Office
2600 Lake Lucien Drive, Suite 225
Maitland FL 32751
407/875-0808
Fax: 407/875-2715
Philadelphia Office
Plymouth Meeting Executive Campus
600 W. Germantown Pike, Suite 260
Plymouth Meeting PA 19462-1046
610/828-2221
Fax: 610/828-2309
Phoenix Office
4742 North 24th Street, Suite 330
Phoenix AZ 85016-4861
602/955-6646
Fax: 602/955-6862
Richmond Office
6620 West Broad Street, Suite 410
Richmond VA 23230
804/288-1948
Fax: 804/285-1034
Salt Lake City Office
First Interstate Plaza
170 South Main Street
Salt Lake City, UT 84101
801/565-0393
Fax: 801/565-0397
San Francisco Office
Citicorp Center
One Sansome Street, Suite 1050
San Francisco CA 94104-4405
415/544-0105
Fax: 415/544-0206
Seattle Office
411 108th Avenue, N.E., Suite 1950
Bellevue WA 98004-5515
206/451-9060
Fax: 206/451-0189
Seaboard Surety Company of Canada
Toronto Office
2 Bloor Street W, Suite 1500
Toronto, Ontario M4W 3E2 Canada
416/925-9360
Fax: 416/925-5336
Montreal Office
2001 Rue University, Bureau 2030
Montreal, Quebec H3A 2A6 Canada
514/843-8039
Fax: 514/843-8047
32380 Rev. 6-95 Printed in U.S.A. on 50% recycled paper with 10%
post-consumer waste
EXHIBIT 1.A.(8)(A)
FRANCHISE AGREEMENT
between
Fidelity Destiny Portfolios:
Destiny I and Destiny II
Destiny I Portfolio
and
Fidelity Distributors Corporation
THIS AGREEMENT made this 2nd day of August, 1984 between FIDELITY DESTINY
PORTFOLIOS: DESTINY I AND DESTINY II, a Massachusetts business trust having
its principal office in Boston, Massachusetts which may issue one or more
series of beneficial interest (hereinafter called the "Issuer"), on behalf
of Destiny I Portfolio, (hereinafter called the "Portfolio"), and FIDELITY
DISTRIBUTORS CORPORATION, a Massachusetts corporation, having its principal
office in Boston, Massachusetts (hereinafter called "Distributors").
WITNESSETH:
WHEREAS Distributors has been formed for the purpose, inter alia, of
sponsoring Periodic Payment Plan Certificates based upon open-end
investment company shares and other securities, and is able and desirous of
sponsoring Periodic Payment Plan Certificates based upon Issuer shares as
hereinafter provided; and
WHEREAS Distributors desires to arrange for the acquisition of Issuer
shares for deposit and use under Systematic Investment Plans (hereinafter
sometimes collectively referred to as the "Plans"), of which the STATE
STREET BANK AND TRUST COMPANY will be the Custodian; and
WHEREAS Distributors represents it is a member in good standing of the
National Association of Securities Dealers, Inc.; and
WHEREAS the Issuer is registered under the Investment Company Act of 1940,
as amended (hereinafter called the "1940 Act"), Issuer shares are
registered under the Securities Act of 1933, as amended, (hereinafter
called the "1933 Act") and the Issuer is willing to take the necessary
steps, subject to approval of its shareholders to continue to register
Issuer shares under the 1933 Act to the end that there will be available
for sale such number of Issuer shares as Distributors may reasonably be
expected to sell.
NOW, THEREFORE in consideration of the sum of one dollar and other good
and valuable considerations by each of the parties hereto to the other in
hand paid, the receipt whereof is hereby acknowledged, and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. The Franchise Agreement, for Destiny I Portfolio, previously in effect
is hereby terminated, effective as of the opening of business this date,
and relations between the Issuer and Distributors thereafter will be
governed by the terms of this Agreement.
2. The Issuer agrees to sell upon demand at the net asset value,
determined as provided by the then current prospectus (as determined by
Fidelity Service Co., Boston, Massachusetts, as agent for the Issuer),
which is without imposition of any sales charge, to Distributors, or any
bank or banks acting as Custodian for the Plans sponsored and issued by
Distributors, a sufficient number of Issuer shares to meet the requirements
of all such Plans as are sold, distributed and/or issued by Distributors.
3. The Issuer agrees that it will comply to the best of its ability with
the federal securities laws, and the Issuer agrees it will use its best
efforts to maintain enough shares registered under the 1933 Act to permit
the continued sale of Issuer shares. The Issuer further agrees to make
readily available to Distributors any data, information or material in its
possession that may be necessary to the registration or qualification for
the Plans for sale under the federal securities laws, or the laws of any
state.
4. The Issuer agrees to supply to Distributors or the bank or banks acting
as Custodian for the Plans issued by Distributors a sufficient number of
copies of any and all general mailings, together with the necessary
envelopes, including without limitation, proxy material, proxies, annual,
semi-annual and quarterly reports, notices and prospectuses, sent from time
to time to the holders of Issuer shares so as to provide a single copy,
together with the necessary envelope and postage, to each Distributors'
Planholder. The Issuer agrees to furnish all the above mentioned material
at no cost to Distributors. Additional copies of any current prospectus
and any printed information issued as supplemental to such prospectus of
the Portfolio will be supplied by the Issuer at Distributors' expense in
sufficient quantities to accommodate Distributors in selling, distributing
and/or issuing the Plans. It is understood that Distributors is
wholly-owned by Fidelity Management & Research Company (hereinafter called
"FMR"), investment adviser of the Issuer and that the Issuer's agreement to
supply information and printed materials described in this agreement may be
fulfilled by FMR. Distributors agrees that it will furnish the Portfolio
for its files two copies of all material supplied to Planholders by
Distributors.
5. The Issuer shall indemnify and hold harmless Distributors and each
person, if any, subjected to liability because of connection with
Distributors and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability, claims,
damage or expense (including, unless the Issuer elects to assume the
defense, the reasonable cost of investigating and defending any alleged
liability, claim, damage, or expense and reasonable counsel fees in
connection therewith), joint or several, arising by reason of any person
acquiring any Plans for Issuer shares on the ground that the registration
statement or prospectus for shares of the Issuer includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make statements therein not
misleading, unless such statement or omission occurred by reason of a
variance in the prospectus prepared by Distributors from the prospectus as
contained in the composition, etc., supplied by the Issuer or was made in
reliance upon information furnished by Distributors for use therein. In no
case is the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any such person against
any liability to the Issuer or its security holders to which Distributors
or any controlling person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement. Upon the commencement of any suit against any
Defendant in respect of which indemnity may be sought as aforesaid, such
Defendant shall promptly notify the Issuer, but failure so to notify the
Issuer shall not relieve the Issuer from any liability the Issuer may have
to the Defendants otherwise than on account of said indemnity agreement.
6. Distributors shall indemnify and hold harmless the Issuer and each
person, if any, subjected to liability because of connection with the
Issuer and their respective successors (all hereinafter in this paragraph
referred to as the "Defendants") against any liability, claims, damages, or
expense (including, unless Distributors elects to assume the defense, the
reasonable cost of investigating and defending any alleged liability,
claim, damages or expense and reasonable counsel fees in connection
therewith), joint or several, arising by reason of the sponsorship or
distribution by Distributors of Plans based upon the Issuer shares unless
such liability, claim, damages or expense arise by reason of an untrue
statement of a material fact or omission to state a material fact required
to be stated in the prospectus or registration statement of the Issuer, or
necessary in order to make the statements therein not misleading. In no
case is the indemnity of Distributors in favor of the Issuer or any person
indemnified to be deemed to protect the Issuer or any such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Agreement. Upon the
commencement of any suit against any Defendant in respect of which
indemnity may be sought as aforesaid, such Defendant shall promptly notify
Distributors but failure to notify Distributors shall not relieve
Distributors from any liability Distributors may have to the Defendants
otherwise than on account of said indemnity agreement.
7. The Agreement on the part of the Issuer to sell Issuer shares upon
demand, at net asset value set forth in paragraph 2 hereof, is subject to
the following limitations:
(a) That the Plans are maintained in good standing as unit investment
trusts under the federal securities laws, provided, however, that
Distributors reserves the right to change the terms or conditions of, or
suspend or discontinue, any Plans at any time after notification thereof to
the Issuer by letter or prepaid telegram; and
(b) That the membership of Distributors in the National Association of
Securities Dealers, Inc. and its registration as a broker-dealer under the
Securities Exchange Act of 1934, as amended, have not been cancelled,
revoked or suspended; and
(c) That Distributors is not in violation of any of the federal or state
laws and regulations relating to the registration and sale of said Plans.
If Distributors shall, within thirty days after a default under any of the
provisions of this paragraph, cure such default to the reasonable
satisfaction of the Issuer, then the agreement of the Issuer to sell at the
net asset value Issuer shares in accordance with paragraph 2 hereof shall
remain unimpaired, anything in this paragraph 7 to the contrary
notwithstanding.
8. This Agreement shall have a term of two years from the effective date
of the registration of the Plans under the 1933 Act. Thereafter this
Agreement shall continue from year to year, unless either party shall serve
a notice upon the other by certified or registered mail, return receipt
requested, 120 days prior to the end of the year after which termination is
desired, cancelling this Agreement, provided that it shall be approved by
the directors or shareholders of the Issuer as required by Section 15 of
the 1940 Act. Notwithstanding to the termination of this Agreement, the
Issuer agrees to sell sufficient Issuer shares to Distributors or any bank
or banks acting as Custodian for the Plans to permit completion of all
Plans begun prior to such termination. Distributors represents and agrees
that it will use its best efforts to sell Plans based upon Issuer shares
throughout the term of this Agreement.
9. Distributors or any bank or banks acting as Custodian for the Plans may
from time to time substitute a new investment medium for the Issuer shares
in accordance with the provisions of the Plan certificate and prospectus in
effect at the time.
10. All communications provided for hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed by first
class mail prepaid (unless delivery by certified or registered mail, return
receipt requested, is provided for) to the respective parties as follows:
Fidelity Destiny Portfolios: Fidelity Distributors Corporation
Destiny I 82 Devonshire Street
82 Devonshire Street Boston, Massachusetts 02109
Boston, Massachusetts 02109
or to such other address as the Issuer or Distributors designates by
written notice to that effect to the other.
11. This Agreement contains the entire understanding between the parties
and any modification, alteration, change or subsequent agreement hereafter
made shall be ineffective to change, modify or discharge this Agreement in
whole or in part unless such modification, alteration, change or subsequent
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or alteration is sought.
12. This Agreement shall be construed in accordance with the laws of
Massachusetts.
13. This Agreement shall be binding upon and enforceable by and shall bind
and inures to the benefit of the Issuer and Distributors and their
respective heirs, executors, administrators, successors and assigns.
14. Distributors is expressly put on notice of the limitation of
shareholder liability as set forth in Article XI Section 3 of the
"Declaration of Trust" of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all cases to
the Issuer and its assets and Distributors shall not seek satisfaction of
any obligation from the shareholders or any shareholder of the Issuer. Nor
shall Distributors seek satisfaction of any obligations from the trustees
or any individual trustee of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
FIDELITY DESTINY PORTFOLIOS:
DESTINY I AND DESTINY II on behalf
of Destiny I Portfolio
By /s/J. Gary Burkhead
President
WITNESS:
/s/Arthur S. Loring FIDELITY DISTRIBUTORS CORPORATION
Secretary
By /s/John F. O'Brien
President
ATTEST:
/s/Arthur S. Loring
Clerk
EXHIBIT 1.A.(8)(B)
FRANCHISE AGREEMENT
between
Fidelity Destiny Portfolios:
Destiny I and Destiny II
Destiny II Portfolio
and
Fidelity Distributors Corporation
THIS AGREEMENT made this 30th day of December, 1985 between FIDELITY
DESTINY PORTFOLIOS: DESTINY I AND DESTINY II, a Massachusetts business
trust having its principal office in Boston, Massachusetts which may issue
one or more series of beneficial interest (hereinafter called the
"Issuer"), on behalf of Destiny II Portfolio, (hereinafter called the
"Portfolio"), and FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts
corporation, having its principal office in Boston, Massachusetts
(hereinafter called "Distributors").
WITNESSETH:
WHEREAS Distributors has been formed for the purpose, inter alia, of
sponsoring Periodic Payment Plan Certificates based upon open-end
investment company shares and other securities, and is able and desirous of
sponsoring Periodic Payment Plan Certificates based upon Issuer shares as
hereinafter provided; and
WHEREAS Distributors desires to arrange for the acquisition of Issuer
shares for deposit and use under Systematic Investment Plans (hereinafter
sometimes collectively referred to as the "Plans"), of which the STATE
STREET BANK AND TRUST COMPANY will be the Custodian; and
WHEREAS Distributors represents it is a member in good standing of the
National Association of Securities Dealers, Inc.; and
WHEREAS the Issuer is registered under the Investment Company Act of 1940,
as amended (hereinafter called the "1940 Act"), Issuer shares are
registered under the Securities Act of 1933, as amended, (hereinafter
called the "1933 Act") and the Issuer is willing to take the necessary
steps, subject to approval of its shareholders to continue to register
Issuer shares under the 1933 Act to the end that there will be available
for sale such number of Issuer shares as Distributors may reasonably be
expected to sell.
NOW, THEREFORE in consideration of the sum of one dollar and other good
and valuable considerations by each of the parties hereto to the other in
hand paid, the receipt whereof is hereby acknowledged, and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. The Franchise Agreement, for Destiny II Portfolio, is hereby effective
as of the opening of business this date, and relations between the Issuer
and Distributors thereafter will be governed by the terms of this
Agreement.
2. The Issuer agrees to sell upon demand at the net asset value,
determined as provided by the then current prospectus (as determined by
Fidelity Service Co., Boston, Massachusetts, as agent for the Issuer),
which is without imposition of any sales charge, to Distributors, or any
bank or banks acting as Custodian for the Plans sponsored and issued by
Distributors, a sufficient number of Issuer shares to meet the requirements
of all such Plans as are sold, distributed and/or issued by Distributors.
3. The Issuer agrees that it will comply to the best of its ability with
the federal securities laws, and the Issuer agrees it will use its best
efforts to maintain enough shares registered under the 1933 Act to permit
the continued sale of Issuer shares. The Issuer further agrees to make
readily available to Distributors any data, information or material in its
possession that may be necessary to the registration or qualification for
the Plans for sale under the federal securities laws, or the laws of any
state.
4. The Issuer agrees to supply to Distributors or the bank or banks acting
as Custodian for the Plans issued by Distributors a sufficient number of
copies of any and all general mailings, together with the necessary
envelopes, including without limitation, proxy material, proxies, annual,
semi-annual and quarterly reports, notices and prospectuses, sent from time
to time to the holders of Issuer shares so as to provide a single copy,
together with the necessary envelope and postage, to each Distributors'
Planholder. The Issuer agrees to furnish all the above mentioned material
at no cost to Distributors. Additional copies of any current prospectus
and any printed information issued as supplemental to such prospectus of
the Portfolio will be supplied by the Issuer at Distributors' expense in
sufficient quantities to accommodate Distributors in selling, distributing
and/or issuing the Plans. It is understood that Distributors is
wholly-owned by Fidelity Management & Research Company (hereinafter called
"FMR"), investment adviser of the Issuer and that the Issuer's agreement to
supply information and printed materials described in this agreement may be
fulfilled by FMR. Distributors agrees that it will furnish the Portfolio
for its files two copies of all material supplied to Planholders by
Distributors.
5. The Issuer shall indemnify and hold harmless Distributors and each
person, if any, subjected to liability because of connection with
Distributors and their respective successors (all hereinafter in this
paragraph referred to as the "Defendants") against any liability, claims,
damage or expense (including, unless the Issuer elects to assume the
defense, the reasonable cost of investigating and defending any alleged
liability, claim, damage, or expense and reasonable counsel fees in
connection therewith), joint or several, arising by reason of any person
acquiring any Plans for Issuer shares on the ground that the registration
statement or prospectus for shares of the Issuer includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make statements therein not
misleading, unless such statement or omission occurred by reason of a
variance in the prospectus prepared by Distributors from the prospectus as
contained in the composition, etc., supplied by the Issuer or was made in
reliance upon information furnished by Distributors for use therein. In no
case is the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any such person against
any liability to the Issuer or its security holders to which Distributors
or any controlling person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement. Upon the commencement of any suit against any
Defendant in respect of which indemnity may be sought as aforesaid, such
Defendant shall promptly notify the Issuer, but failure so to notify the
Issuer shall not relieve the Issuer from any liability the Issuer may have
to the Defendants otherwise than on account of said indemnity agreement.
6. Distributors shall indemnify and hold harmless the Issuer and each
person, if any, subjected to liability because of connection with the
Issuer and their respective successors (all hereinafter in this paragraph
referred to as the "Defendants") against any liability, claims, damages, or
expense (including, unless Distributors elects to assume the defense, the
reasonable cost of investigating and defending any alleged liability,
claim, damages or expense and reasonable counsel fees in connection
therewith), joint or several, arising by reason of the sponsorship or
distribution by Distributors of Plans based upon the Issuer shares unless
such liability, claim, damages or expense arise by reason of an untrue
statement of a material fact or omission to state a material fact required
to be stated in the prospectus or registration statement of the Issuer, or
necessary in order to make the statements therein not misleading. In no
case is the indemnity of Distributors in favor of the Issuer or any person
indemnified to be deemed to protect the Issuer or any such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Agreement. Upon the
commencement of any suit against any Defendant in respect of which
indemnity may be sought as aforesaid, such Defendant shall promptly notify
Distributors but failure to notify Distributors shall not relieve
Distributors from any liability Distributors may have to the Defendants
otherwise than on account of said indemnity agreement.
7. The Agreement on the part of the Issuer to sell Issuer shares upon
demand, at net asset value set forth in paragraph 2 hereof, is subject to
the following limitations:
(a) That the Plans are maintained in good standing as unit investment
trusts under the federal securities laws, provided, however, that
Distributors reserves the right to change the terms or conditions of, or
suspend or discontinue, any Plans at any time after notification thereof to
the Issuer by letter or prepaid telegram; and
(b) That the membership of Distributors in the National Association of
Securities Dealers, Inc. and its registration as a broker-dealer under the
Securities Exchange Act of 1934, as amended, have not been cancelled,
revoked or suspended; and
(c) That Distributors is not in violation of any of the federal or state
laws and regulations relating to the registration and sale of said Plans.
If Distributors shall, within thirty days after a default under any of the
provisions of this paragraph, cure such default to the reasonable
satisfaction of the Issuer, then the agreement of the Issuer to sell at the
net asset value Issuer shares in accordance with paragraph 2 hereof shall
remain unimpaired, anything in this paragraph 7 to the contrary
notwithstanding.
8. This Agreement shall have a term of two years from the effective date
of the registration of the Plans under the 1933 Act. Thereafter this
Agreement shall continue from year to year, unless either party shall serve
a notice upon the other by certified or registered mail, return receipt
requested, 120 days prior to the end of the year after which termination is
desired, cancelling this Agreement, provided that it shall be approved by
the directors or shareholders of the Issuer as required by Section 15 of
the 1940 Act. Notwithstanding to the termination of this Agreement, the
Issuer agrees to sell sufficient Issuer shares to Distributors or any bank
or banks acting as Custodian for the Plans to permit completion of all
Plans begun prior to such termination. Distributors represents and agrees
that it will use its best efforts to sell Plans based upon Issuer shares
throughout the term of this Agreement.
9. Distributors or any bank or banks acting as Custodian for the Plans may
from time to time substitute a new investment medium for the Issuer shares
in accordance with the provisions of the Plan certificate and prospectus in
effect at the time.
10. All communications provided for hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed by first
class mail prepaid (unless delivery by certified or registered mail, return
receipt requested, is provided for) to the respective parties as follows:
Fidelity Destiny Portfolios: Fidelity Distributors Corporation
Destiny II 82 Devonshire Street
82 Devonshire Street Boston, Massachusetts 02109
Boston, Massachusetts 02109
or to such other address as the Issuer or Distributors designates by
written notice to that effect to the other.
11. This Agreement contains the entire understanding between the parties
and any modification, alteration, change or subsequent agreement hereafter
made shall be ineffective to change, modify or discharge this Agreement in
whole or in part unless such modification, alteration, change or subsequent
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or alteration is sought.
12. This Agreement shall be construed in accordance with the laws of
Massachusetts.
13. This Agreement shall be binding upon and enforceable by and shall bind
and inures to the benefit of the Issuer and Distributors and their
respective heirs, executors, administrators, successors and assigns.
14. Distributors is expressly put on notice of the limitation of
shareholder liability as set forth in Article XI Section 3 of the
"Declaration of Trust" of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all cases to
the Issuer and its assets and Distributors shall not seek satisfaction of
any obligation from the shareholders or any shareholder of the Issuer. Nor
shall Distributors seek satisfaction of any obligations from the trustees
or any individual trustee of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
FIDELITY DESTINY PORTFOLIOS:
DESTINY I AND DESTINY II on behalf
of Destiny II Portfolio
By /s/J. Gary Burkhead
President
WITNESS:
/s/Arthur S. Loring FIDELITY DISTRIBUTORS CORPORATION
Secretary
By /s/John F. O'Brien
President
ATTEST:
/s/Arthur S. Loring
Clerk
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in this Post-Effective No. 62 to
Registration Statement No. 2-34100 on Form S-6 of our report dated November
14, 1995 on our audit of the financial statements of Fidelity Systematic
Investment Plans: Destiny Plans I and Destiny Plans II.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 20, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of Fidelity Distributors
Corporation (a Wholly-owned Subsidiary of FMR Corp.):
We hereby consent to the inclusion in this Post-Effective No. 62 to
Registration Statement No. 2-34100 on Form S-6 of our report dated January
27, 1995 on our audit of the consolidated statement of financial condition
of Fidelity Distributors Corporation and Subsidiary as of December 31,
1994.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 20, 1995
