FILE NO. 2-34100
FIDELITY SYSTEMATIC INVESTMENT PLANS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 64
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:
Arthur S. Loring
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 19, 1997 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. 64
TO
REGISTRATION STATEMENT FILE NO. 2-34100
PAGE
Facing Sheet 1
Table of Contents 2
Cross-Reference Sheet 3
Prospectus 7
Signature Page 69
Exhibits 70
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 19 , 199 7
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 (each a Plan and
collectively, the Plans), for the accumulation of shares of Fidelity
Destiny Portfolios, a series fund consisting of Destiny I and Destiny
II (each a Fund and collectively, the Funds), are offered by Fidelity
Distributors Corporation (Distributors or Sponsor), the Sponsor and
Principal Underwriter. Investments in Destiny Plans I purchase shares
of Destiny I and investments in 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 , , and .
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, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND
ARE SUBJECT TO INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE 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.DES - PRO-1197
[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. Partial Liquidation of 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
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" and Custodian fees is that if a Planholder
terminates the Plan between 2 months and 18 months, the Planholder may
lose as much as 17.2% o f the total investments made up to that
date and as much as 35.1% after 18 months. See the tables and
accompanying notes on pages , , and .
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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CREATION AND SALES CHARGES CUSTODIAN FEES % OF TOTAL CHARGES
Per Per
Total Invest Invest % of Net To
Monthly Investments ments ments Total Per Total Investment Total To Net
Investment (Face 1 thru 1 Invest Invest Total Charges In Fund Invest Investments in
Unit Amount) thru 12 120 Total ments ment (A) (A)(B) Shares (C) ments 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
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
</TABLE>
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 automatic 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 by pro rating each Plan's annual
administrative costs over the total number of Plan accounts. For the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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 provisions of the currently
effective 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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CREATION AND SALES CHARGES CUSTODIAN FEES % OF TOTAL CHARGES
Per Per
Total Invest Invest % of Net To
Monthly Investments ments ments Total Per Total Investment Total To Net
Investment (Face 1 thru 1 Invest Invest Total Charges In Fund Invest Investments in
Unit Amount) thru 12 180 Total ments ment (A) (A)(B) Shares (C) ments 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
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
</TABLE>
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 automatic 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 by pro rating each Plan's annual
administrative costs over the total number of Plan accounts. For the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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 provisions of the currently
effective 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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
% OF TOTAL CHARGES
CREATION
AND
SALES
TOTAL CHARGES
INVEST AS % NET
MONTHLY MENTS CREATION OF TOTAL INVESTMENT TO TO NET
INVESTMENT (FACE AND SALES INVEST CUSTODIAN TOTAL IN FUND TOTAL INVESTMENTS IN
UNIT AMOUNT) CHARGES MENTS 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
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
</TABLE>
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 automatic 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 by pro rating each Plan's annual
administrative costs over the total number of Plan accounts. For the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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 provisions of the currently
effective 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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 INVEST AMOUNT INVEST AMOUNT INVEST AMOUNT INVESTMENTS
MENTS MENTS MENTS
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
</TABLE>
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 by pro rating each Plan's annual
administrative costs over the total number of Plan accounts. For the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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 provisions of the currently
effective 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 automatic 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 (each a Fund and collectively,
the Funds), is an open-end, management investment company. Each Fund's
objective is to seek growth of capital (see the accompanying
Prospectus, which begins 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 and .
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 Plans I or
Destiny Plans 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 automatic investment, as explained on page . The
appropriate forms for automatic monthly investments should be attached
to your Plan Application.
After the Plan Application and initial investment 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 Plans I or Destiny Plans II, directly to Boston Financial.
Investments, after applicable deductions, will be applied toward the
purchase of fund 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. This
$10 fee will be deducted from plan shares unless it is paid in
advance.
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 automatic investment.
Investments credited to Automatic Investment Program Plan accounts
that are not made by automatic debit will be charged the customary
Custodian fee rate. 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 on Plans
that are established or that complete a Face Change
under an Automatic Investment Program.
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 and . 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,
individual IRA Plans at the $166.66 per month investment unit may be
combined with other newly purchased plans or plan size increases that
may qualify for 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 , UTMA Plans, and UGMA Plans ) 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 will not be entitled to exercise the right of
partial withdrawal or partial redemption. In addition, a Planholder
may:
1. transfer the Planholder's right, title, and interest to
another person whose only right shall be the privilege of complete
withdrawal from the Plan; or
2. transfer the Planholder's 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 one time during
the life of the Plan. Investments may be accrued and paid in a lump
sum. The 48 preinvestments provision described herein may be waived
ONLY to make a Plan that is in arrears current, as defined on page ,
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 and . 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 s and , 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. PARTIAL LIQUIDATION OF 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 value of the Planholder's shares, expressed
in dollars, 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.
If you prefer, you may also withdraw an amount not in excess of
$100,000 from your Plan, subject to the conditions applicable to
withdrawals (please see above), by calling 1-800-225-5270. The
telephone redemption privilege is not available to Planholders of
Destiny tax sheltered retirement plans. If you change your address,
the telephone redemption privilege is not allowed within 30 days of
that change . To redeem shares within 30 days of a change of
address, you must send a signature guaranteed letter of instruction to
the Boston Financial.
Redemption requests must be made by 4:00 p.m. Eastern time.
Planholders will receive proceeds by check made payable as the account
is registered and mailed to the address of record.
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 Plan shares, a Planholder may -
although there is no obligation to do so - repurchase
Destiny Plan 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 Plan 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 the Destiny Plans a dollar 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 Plan 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 Rule 2830 of the Rules of the Association of
the National Association of Securities Dealers, Inc. (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. An IRA does
not have to be completed if a Planholder is 59 1/2 years old or wishes
to start a Systematic Withdrawal Plan based on life expectancy.
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 Restrictions" on page
of the Destiny Portfolios prospectus .)
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 rights 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
After an initial period of 60 days, a Planholder may terminate his
Plan 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 Company, Inc.
(Service), the transfer agent of the Funds, the Fund shares
accumulated in the Plan for at least 60 days, properly registered in
the Planholder's name; (2) direct the Custodian, as agent, to withdraw
the shares and redeem the m and to 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 Restrictions" on
page of the Destiny Portfolios prospectus . When held in
conjunction with the Plan, shares of Destiny I may not be exchanged
for shares of Destiny II, nor may shares of Destiny II be exchanged
for shares of Destiny I.
The right of redemption of shares of Destiny I and Destiny II 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 including re-registration from one retirement account to
another . Reinstatement is at the NAV of the F und 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 , unless reinstatement is requested from one retirement
account to another . 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 , 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 and .
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 the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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 DESTINY 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 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 pro rata 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 (Distributors) , 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 , and Chairman and a
Director of FMR Texas Inc., Fidelity Management & Research (U.K.)
Inc., and Fidelity Management & Research (Far East) Inc. He is Trustee
and President of Fidelity's mutual funds.
James C. Curvey, Director (1997), is President and Director of
Fidelity Investments Retail Marketing, Inc. (1997).
Michael Mlinac, Director (1995) , is President of Fidelity
Investments Southwest Company (Southwest), a division of Distributors
(1996) , and Senior Vice President of Southwest (1994).
Martha Willis, President, Fidelity Distributors Corporation
(1997).
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 (1995) , Controller.
Gary Greenstein, Assistant Treasurer (1995) , is Vice
President, Taxation of FMR Corp. (1993).
Jay Freedman, Assistant Clerk (1996) , is Clerk of FMR Corp.
(1996) , Associate General Counsel of FMR Corp. (1995) ,
and Senior Legal Counsel of FMR Co rp.
Linda Capps Holland, Compliance Officer (1995) , is a
Director of FMR Corp. Compliance Department.
During the twelve months ended September 30, 1997, 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 Funds, 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 Funds.
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 for sale
in all states. Ohio salesmen must be registered under the Ohio Bond
Debenture Act.
5.ILLUSTRATION OF A HYPOTHETICAL $50 MONTHLY
DESTINY PLAN S I
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 1982 to September
1997, with all investments 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 OF PLAN (C)
GAINS
1-12 Sept-83 $ 600.00 $ 300.00 $ 13.20 25.771 $ 5.91 $ 38.01 $ 292.73 $ 5.72 $ 36.83 $ 335.28
13-24 Sept-84 1,200.00 34.32 13.20 83.834 19.96 100.39 753.57 27.11 143.17 923.85
25-36 Sept-85 1,800.00 34.32 13.20 147.826 56.14 139.12 1,241.51 80.66 274.35 1,596.52
37-48 Sept-86 2,400.00 34.32 13.20 230.118 57.80 458.82 1,845.46 144.71 745.93 2,736.10
49-60 Sept-87 3,000.00 34.32 13.20 312.714 70.79 605.62 2,871.90 249.76 1,522.14 4,643.80
61-72 Sept-88 3,600.00 34.32 13.20 397.525 84.05 294.36 2,885.70 293.64 1,559.16 4,738.50
73-84 Sept-89 4,200.00 34.32 13.20 465.136 122.68 239.74 4,211.82 503.71 2,191.74 6,907.27
85-96 Sept-90 4,800.00 34.32 13.20 559.232 161.22 522.13 3,602.82 510.90 2,076.98 6,190.70
97-108 Sept-91 5,400.00 34.32 13.20 626.763 195.39 254.59 5,731.04 923.83 3,210.38 9,865.25
109-120 Sept-92 6,000.00 34.32 13.20 782.685 211.68 1,585.74 5,997.31 1,099.58 4,674.69 11,771.58
121-132 Sept-93 6,600.00 34.32 13.20 922.135 230.35 1,433.11 7,295.09 1,480.75 6,771.36 15,547.20
133-144 Sept-94 7,200.00 34.32 13.20 1018.515 102.02 964.52 8,220.36 1,663.96 8,143.40 18,027.72
145-156 Sept-95 7,800.00 34.32 13.20 1257.867 348.06 2,589.95 9,342.28 2,224.51 12,055.95 23,622.74
157-168 Sept-96 8,400.00 34.32 13.20 1371.885 542.95 1,022.76 10,735.93 3,022.47 14,241.77 28,000.17
169-180 Sept-97 9,000.00 34.32 13.20 1546.978 619.23 2,380.61 13,818.15 4,491.36 20,488.70 38,798.21
$ 9,000.00 $ 780.48 $198.00 $ 2,828.12 $12,629.47 TOTAL $ 38,798.21
</TABLE>
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 the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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 PLAN S I
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 1982 to September
1997, with all investments 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 OF PLAN (C)
GAINS
1-12 Sept-83 $ 1,999.92 $ 999.96 $ 18.00 88.237 $ 20.25 $ 130.15 $ 1,002.26 $ 19.62 $ 126.08 $ 1,147.96
13-24 Sept-84 3,999.84 75.96 18.00 288.410 68.63 345.18 2,593.30 93.18 491.80 3,178.28
25-36 Sept-85 5,999.76 75.96 18.00 509.057 193.29 479.03 4,276.78 277.54 943.50 5,497.82
37-48 Sept-86 7,999.68 75.96 18.00 792.740 199.12 1,580.53 6,359.68 498.19 2,567.81 9,425.68
49-60 Sept-87 9,999.60 75.96 18.00 1077.492 243.90 2,086.69 9,899.04 860.03 5,241.69 16,000.76
61-72 Sept-88 11,999.52 75.96 18.00 1369.935 289.63 1,014.31 9,948.40 1,011.34 5,369.89 16,329.63
73-84 Sept-89 13,999.44 75.96 18.00 1603.095 422.80 826.26 14,521.67 1,735.14 7,549.15 23,805.96
85-96 Sept-90 15,999.36 75.96 18.00 1927.542 555.32 1,799.59 12,422.83 1,760.19 7,154.87 21,337.89
97-108 Sept-91 17,999.28 75.96 18.00 2160.432 673.49 877.57 19,762.23 3,183.15 11,059.82 34,005.20
109-120 Sept-92 19,999.20 75.96 18.00 2697.988 729.66 5,466.12 20,681.07 3,789.04 16,107.63 40,577.74
121-132 Sept-93 21,999.12 75.96 18.00 3178.783 794.06 4,940.14 25,157.13 5,102.76 23,334.39 53,594.28
133-144 Sept-94 23,999.04 75.96 18.00 3511.105 351.67 3,324.89 28,348.66 5,734.23 28,063.67 62,146.56
145-156 Sept-95 25,998.96 75.96 18.00 4336.311 1,199.85 8,928.31 32,218.55 7,666.51 41,550.86 81,435.92
157-168 Sept-96 27,998.88 75.96 18.00 4729.438 1,871.73 3,525.82 37,025.35 10,417.19 49,085.29 96,527.83
169-180 Sept-97 29,998.80 75.96 18.00 5333.111 2,134.76 8,206.95 47,655.74 15,480.40 70,618.28 133,754.42
$ 29,998.80 $2,063.40 $ 270.00 $ 9,748.15 $43,531.55 TOTAL $ 133,754.42
</TABLE>
NOTES:
(A) Under the terms of this Plan, out of the initial investment of
$166.66, $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 the
fiscal year ended September 1997, the charge was $ 7.11 for
Destiny Plans I and $ 6.32 for Destiny Plans 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
F ace A mount 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
because an investment of a fixed dollar amount would buy more shares
when the share price is low and fewer shares when the share price is
high.
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 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.
RIGHTS OF ACCUMULATION: The right to apply reduced C reation and
S ales C harges based on the face amount of the Plan. (See
pages and 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, 1997
ASSETS:
Securities of investment company:
228,364,289 shares of Destiny
I held for investors, valued at net asset
value of $ 25.08 per share (Note 1)
(average cost $ 3,427,560,009 ) $ 5,727,376,368
Cash $ 143,517
Receivable for Destiny I shares sold 52,018
Total assets 5,727,571,903
LIABILITIES:
Payable for Destiny I shares purchased $ 146,003
Payable to custodian, sponsor and
broker/dealer (Note 4) 1,035,930
Total liabilities 1,181,933
NET ASSETS (Note 2) $ 5,726,389,970
Statements of Operations
Year Ended Year Ended Year Ended
September 30, September 30, September 30,
1997 1996 1995
INVESTMENT INCOME:
Distributions received on shares of Destiny I from:
Net investment income
$ 96,561,988 $ 89,281,971 $ 60,916,170
Realized gains
371,227,198 168,182,318 453,287,974
467,789,186 257,464,289 514,204,144
EXPENSES (Note 4):
Custodian Fees
394,357 367,960 370,441
Administrative expenses
601,473 585,608 572,532
Net expenses
995,830 953,568 942,973
Investment income - net
466,793,356 256,510,721 513,261,171
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Complete and partial liquidations, including Destiny I shares
delivered
to investors at market value:
Proceeds received
311,271,265 239,729,317 201,989,707
Cost of Destiny I shares
(211,499,168) (176,894,004) (170,341,528)
Net realized gain on Plan liquidations
99,772,097 62,835,313 31,648,179
Net increase in unrealized appreciation
993,262,758 300,213,194 306,455,241
Net realized and unrealized gain on Plan shares
1,093,034,855 363,048,507 338,103,420
Net increase in net assets resulting from operations
$ 1,559,828,211 $ 619,559,228 851,364,591
DESTINY PLANS I - FINANCIAL STATEMENTS - CONTINUED
Statements of Changes in Net Assets Invested in Shares of Destiny I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended
September 30, 1997 September 30, 1996 September 30, 1995
Amount Shares Amount Shares Amount Shares
Net assets at
beginning of
period $ 4,391,840,146 215,228,493 $ 3,908,031,571 208,146,062 $ 3,167,159,095 178,987,821
Additions during period:
From investor
payments 119,944,885 123,968,130 123,584,347
Less: creation and
sales charges
(Note 4) (4,415,669) (4,613,942) (4,266,731)
Custodian Fees
and insurance
premiums
(Note 4) (832,079) (879,688) (918,278)
Balance invested in
Destiny I
shares 114,697,137 5,401,996 118,474,500 6,323,547 118,399,338 7,248,988
Investment income
- net 466,793,356 256,510,721 513,261,171
Less: Cash
distributions
to
investors (28,704,259) (14,495,836) (26,901,746)
Balance reinvested in
Destiny I
shares 438,089,097 21,927,033 242,014,885 13,211,616 486,359,425 34,156,291
Net realized gain on
Plan
liquidat
ions 99,772,097 62,835,313 31,648,179
Net increase
in unrealized
appreciat
ion 993,262,758 300,213,194 306,455,241
Total 6,037,661,235 242,557,522 4,631,569,463 227,681,225 4,110,021,278 220,393,100
Deductions during period:
Redemptions and
cancellations of
Destiny I
shares (311,271,265) (14,193,233) (239,729,317) (12,452,732) (201,989,707) (12,247,038)
Net assets at end
of period $ 5,726,389,970 228,364,289 $ 4,391,840,146 215,228,493 $ 3,908,031,571 208,146,062
</TABLE>
FIDELITY SYSTEMATIC INVESTMENT PLANS: DESTINY PLANS II
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 1997
ASSETS:
Securities of investment company:
243,583,375 shares of Destiny II
held for investors, valued at net asset
value of $ 14.40 per share
(Note 1)
(average co st $2,223,664,510 ) $ 3,507,600,600
Cash 571,971
Receivable for Destiny II shares sold 12,285
Total assets 3,508,184,856
LIABILITIES:
Payable for Destiny II shares purchased $ 206,252
Payable to custodian, sponsor and
broker/dealer (Note 4) 1,987,237
Total liabilities 2,193,489
NET ASSETS (Note 2) $ 3,505,991,367
Statements of Operations
Year Ended Year Ended Year Ended
September 30, September 30, September 30,
1997 1996 1995
INVESTMENT INCOME:
Distributions received on shares of Destiny II from:
Net investment income
$ 161,931,472 $ 42,663,716 $ 25,297,415
Realized gains
53,977,157 59,856,556 149,760,699
215,908,629 102,520,272 175,058,114
EXPENSES (Note 4):
Custodian Fees
446,865 367,638 316,099
Administrative expenses
1,219,410 1,204,257 1,053,084
Net expenses
1,666,275 1,571,895 1,369,183
Investment income - net
214,242,354 100,948,377 173,688,931
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Complete and partial liquidations, including Destiny II shares
delivered
to investors at market value:
Proceeds received
150,705,546 115,283,136 82,247,858
Cost of Destiny II shares
(106,291,151) (82,011,653) (70,179,662)
Net realized gain on Plan liquidations
44,414,395 33,271,483 12,068,196
Net increase in unrealized appreciation
625,457,740 185,902,326 221,801,939
Net realized and unrealized gain on Plan shares
669,872,135 219,173,809 233,870,135
Net increase in net assets resulting from operations
$ 884,114,489 $ 320,122,186 $ 407,559,066
DESTINY PLANS II - FINANCIAL STATEMENTS - CONTINUED
Statements of Changes in Net Assets Invested in Shares of Destiny II
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended
September 30, 1997 September 30, 1996 September 30, 1995
Amount Shares Amount Shares Amount Shares
Net assets at
beginning of
period $ 2,465,355,584 212,482,392 $ 1,978,480,817 187,243,794 $ 1,404,707,380 147,714,375
Additions during period:
From investor
payments 338,228,567 311,357,075 275,033,552
Less: creation and
sales charges
(Note 4) (27,036,368) (26,843,231) (24,297,468)
Custodian Fees
(Note 4) (2,062,876) (1,961,326) (1,692,890)
Balance invested i n
Destiny II
shares 309,129,323 24,641,643 282,552,518 26,251,535 249,043,194 26,849,400
Investment income
- net 214,242,354 100,948,377 173,688,931
Less: Cash
distributions
to
investors (1,902,483) (516,801) (580,964)
Balance reinvested in
Destiny II
shares 212,339,871 18,308,982 100,431,576 9,616,656 173,107,967 21,475,284
Net realized gain
on Plan
liquidations 44,414,395 33,271,483 12,068,196
Net increase in
unrealized
appreciation 625,457,740 185,902,326 221,801,939
Total 3,656,696,913 255,433,017 2,580,638,720 223,111,985 2,060,728,676 196,039,059
Deductions during period:
Redemptions and
cancellations of
Destiny II
shares (150,705,546) (11,849,642) (115,283,136) (10,629,593) (82,247,859) (8,795,265)
Net assets at end
of period $ 3,505,991,367 243,583,375 $ 2,465,355,584 212,482,392 $ 1,978,480,817 187,243,794
</TABLE>
Shares have been adjusted for a 3 - for - 1 split (see note 3).
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES: The Plans are a unit investment
trust registered under the Investment Company Act of 1940, as amended,
with the Securities and Exchange Commission, investing only in shares
of Fidelity Destiny Portfolios: Destiny I and Destiny II (the
"Funds"). 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.
The financial statements have been prepared in conformity with
generally accepted accounting principles for unit investment trusts
which permit management to make certain estimates and assumptions at
the date of the financial statements. The following summarizes the
significant accounting policies of the Plans:
SECURITY VALUATION. The investments 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.
2. PLAN ASSETS
Destiny Plans I assets consisted of the following at September 30,
1997:
Systematic
Systematic Investment
Investment Plans with Total of
Plans Insurance All Plans
Payments received from investors on outstanding Plans
$ 1,431,087,093 $ 977,931 $ 1,432,065,024
Deduct :
Sponsor fees
73,941,747 52,322 73,994,069
Custodian Fees
10,800,579 10,552 10,811,131
Insurance premiums
-- 29,538 29,538
Total deductions
84,742,326 92,412 84,834,738
Net payments invested in shares of Destiny I
1,346,344,767 885,519 1,347,230,286
Add:
Distributions from investment income reinvested
337,237,054 913,655 338,150,709
Distributions from realized gains reinvested
1,737,640,372 4,538,642 1,742,179,014
Unrealized appreciation in Destiny I shares held at September 30, 1997
2,295,552,656 4,263,703 2,299,816,359
Deduct: Fees payable
(986,379) (19) (986,398)
Net assets
$ 5,715,788,470 $ 10,601,500 $ 5,726,389,970
NOTES TO FINANCIAL STATEMENTS - CONTINUED
2. PLAN ASSETS - CONTINUED
Destiny Plans II assets consisted of the following at September 30,
1997:
Payments received from investors on outstanding
Plans $ 1,797,836,660
Deduct:
Sponsor fees 185,455,642
Custodian Fees 13,989,665
Total deductions 199,445,307
Net payments invested in shares of Destiny II 1,598,391,353
Add:
Distributions from investment income
reinvested 102,146,117
Distributions from realized gains
reinvested 523,127,040
Unrealized appreciation in Destiny II
shares held at September 30, 1997 1,283,936,090
Deduct:
Fees payable (1,609,233)
Net assets $ 3,505,991,367
3. CAPITAL SHARES: On January 18, 1996, the Trustees of Destiny II
approved a three-for-one stock split of the capital shares of Destiny
II for shareholders of record as of June 21, 1996. A total of
139,172,552 capital shares of Destiny II were issued to Destiny Plans
II in connection with the split. Share amounts in the accompanying
financial statements have been restated to reflect the aforementioned
split.
4. EXPENSES AND DEDUCTIONS: For information regarding Creation and
Sales Charges, Custodian Fees, and Administrative expenses see pages
16 and 17 of this Prospectus.
Fidelity Distributors Corporation, a wholly owned subsidiary of FMR
Corp. and sponsor of Fidelity Systematic Investment Plans, received
approximately $ 1,427,000 , $812,000, and $907,000 as its portion
of the Creation and Sales Charges on sales of Plans I during the years
ended September 30, 1997, 1996, and 1995, respectively; $ 2,908,000,
$3,285,000, and $2,927,000 on sales of Plans II during the
year s ended September 30, 1997, 1996, and 1995, 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, 1997, and the related
statements of operations and changes in net assets invested in shares
of Destiny I and Destiny II for each of the three years in the period
ended September 30, 1997. 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, 1997, 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, 1997, the results of their operations and the changes
in their net assets invested in shares of Destiny I and Destiny II for
each of the three years in the period ended September 30, 1997, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 11 , 1997
FIDELITY DISTRIBUTORS CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
STATEMENT OF FINANCIAL CONDITION
as of December 31, 199 6
(in thousands except for share amounts)
ASSETS
Cash $ 1 31
Receivables:
Brokers, dealers, and customers 36,252
Other 15,134
Investments, at market (cost $16,7 77 ) 1 6,892
Property and equipment, net 1 4,180
Other assets 28,457
Total Assets $ 111,046
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Payable to mutual funds $ 36,217
Other liabilities 470
Total Liabilities 36,687
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 13,494
Retained earnings 118,656
132,626
Less: Receivable from parent company ( 58,267)
Total Stockholder's Equity 74,359
Total Liabilities and Stockholder's Equity $ 111,046
The accompanying notes are an integral part of this financial
statement.
FIDELITY DISTRIBUTORS CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO STATEMENT OF FINANCIAL CONDITION
A. PRINCIPAL BUSINESS ACTIVITIES:
Fidelity Distributors Corporation ("FDC" or the "Company") is a
registered broker/dealer under the Securities Exchange Act of 1934.
The Company is the principal underwriter and distributor of mutual
funds under agreements with 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:
USE OF ESTIMATES
The preparation of the statement of financial condition in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of December 31, 199 6 . Actual results
could differ from the estimates included in the statement of financial
condition.
INCOME TAXES
The Company is included in the consolidated federal and certain state
income tax returns filed by FMR Corp.
The Company's deferred tax assets at December 31, 199 6
approximated $ 3,216,000. The principal sources of temporary
differences relate to deferred compensation, pension expense ,
depreciation and relocation reserves.
INVESTMENTS
Investments, comprised principally of shares held in Fidelity mutual
funds, are stated at market value.
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. Internally developed software is expensed as incurred.
Any gain or loss on the sale or retirement of property and equipment
is included in net income.
OTHER ASSETS
Other assets includes deferred charges in the amount of $24,846,000
net of amortization of $7,775,000. These deferred charges represent
dealer concessions paid to dealers of funds that are subject to
contingent deferred sales charges. The charges are amortized over five
years.
FIDELITY DISTRIBUTORS CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO STATEMENT OF FINANCIAL CONDITION (continued)
C. TRANSACTIONS WITH AFFILIATED COMPANIES:
FDC is party to several arrangements with affiliated companies. Under
these arrangements, FDC charged these affiliates for shareholder
services, marketing and distribution expenses and other administrative
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 to
affiliated companies which will ultimately be settled by FMR Corp. on
behalf of the Company against its 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.
D. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following (in thousands):
Equipment $ 24,852
Leasehold improvements 7,860
Furniture and fixtures 1,425
34,137
Less: Accumulated depreciation and amortization 19,957
$ 14,180
FIDELITY DISTRIBUTORS CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO STATEMENT OF FINANCIAL CONDITION (continued)
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, 199 6 , FDC had net capital of $15,919,000 which was
$15,875,000 in excess of its required net capital of
$44,000 . Additionally, the ratio of aggregate indebtedness to
net capital at December 31, 199 6 was 0.0 4 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 statement of financial condition of
Fidelity Distributors Corporation as of December 31, 199 6 . 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 financial position of Fidelity
Distributors Corporation as of December 31, 199 6 , in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 2 9 , 199 7
FIDELITY
DESTINY PORTFOLIOS:
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.
To learn more about each fund and its investments, you can obtain a
copy of a fund ' s most recent financial report and
portfolio listing or a copy of the Statement of Additional Information
(SAI) dated November 19, 1997. T he SAI has been filed with the
Securities and Exchange Commission (SEC) and is available along with
other related materials on the SEC's Internet Web site
(http:/www.sec.gov). The SAI is incorporated herein by reference
(legally forms a part of the prospectus). For a free copy of either
document, call Fidelity Distributors Corporation (FDC) , 82
Devonshire Street, Boston, MA 02109 at the appropriate number
listed below, or your investment professional.
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
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
DES-PRO-1197
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION.
SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
Destiny I (fund number 006)
Destiny II (fund number 306)
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.
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.
PROSPECTUS
DATED NOVEMBER 19, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PROSPECTUS
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's financial data.
PERFORMANCE How each fund has done over time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How operating costs are calculated and
what they include.
YOUR ACCOUNT HOW TO BUY SHARES
HOW TO SELL SHARES Taking money out and closing your account.
INVESTOR SERVICES Services to help you manage your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Each fund is designed for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns
and who want to be invested in the stock market for its long-term
growth potential. Each fund invests for growth and does not pursue
income.
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 investors who 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 fund 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.
The value of each fund's investments varies from day to day,
generally reflecting changes in market conditions and other company,
political, and economic news. In the short-term, stock prices can
fluctuate dramatically in response to these factors. Over time,
however, stocks have shown greater growth potential than other types
of securities.
Each fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of a fund. Neither fund will offer its shares publicly
except through the 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 Plans'
Prospectus for details.
Destiny Destiny II
I
Sales charge on purchases None None
and reinvested distributions
Deferred sales charge on None None
redemptions
ANNUAL 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 "Breakdown of Expenses," beginning on page and
the Plans' Prospectus for further information.
The following figures are based on historical expenses of each fund
and are calculated as a percentage of average net assets of
each fund. A portion of the brokerage commissions that a fund
pays is used to reduce that fund's expenses. In addition, each fund
has entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash
balances are used to reduce custodian and transfer agent
expenses. Including these reductions, the total fund operating
expenses presented in the table would have been 0.38% and 0.53% for
Destiny I and Destiny II, respectively.
Destiny I Destiny II
Management fee 0.36% 0.50%
12b-1 fee (Distribution Fee) None None
Other expenses 0.03% 0.04%
TOTAL OPERATING EXPENSES 0.39% 0.54%
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment in a fund, assuming a 5% annual return
and full redemption at the end of each time period. Total expenses
shown below include any shareholder transaction expenses and a fund's
annual operating expenses.
1 Year 3 Years 5 Years 10 Years
Destiny I $ 4 $ 13 $ 22 $ 49
Destiny II $ 6 $ 17 $ 30 $ 68
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT
TO SUGGEST ACTUAL OR EXPECTED EXPENSES 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 Plans'
Prospectus.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow for Destiny I and
Destiny II have been audited by Coopers & Lybrand L.L.P. ,
independent accountants. The funds' financial highlights, financial
statements, and report of the auditor are included in the
funds' Annual Report, and are incorporated by reference into (are
legally a part of) the funds' SAI. Contact FDC or your investment
professional for a free copy of the Annual Report or the SAI.
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 30
1997 1996 1995 1994E 1993H 1993I 1992I 1991I 1990I 1989I 1988I
Net asset value, beginning
$ 20.41 $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24 $ 14.03 $ 12.44 $15.93
of period
Income from Investment
Operations
Net investment income
.49C .45 .41 .30 .04 .26 .31 .33 .46D .30 .24
Net realized and unrealized
6.36 2.42 3.54 1.69 .75 3.16 2.55 1.25 1.18 1.81 (.35)
gain (loss)
Total from investment
6.85 2.87 3.95 1.99 .79 3.42 2.86 1.58 1.64 2.11 (.11)
operations
Less Distributions
From net investment income
(.45) (.43) (.34) (.11) (.14) (.30) (.49) (.10) (.38) (.26) (.39)
From net realized gain
(1.73) (.81) (2.53) (1.04) (1.01) (2.44) (1.06) (.49) (1.05) (.26) (2.99)
Total distributions
(2.18) (1.24) (2.87) (1.15) (1.15) (2.74) (1.55) (.59) (1.43) (.52) (3.38)
Net asset value, end of period
$ 25.08 $ 20.41 $ 18.78 $ 17.70 $ 16.86 $ 17.22 $ 16.54 $ 15.23 $ 14.24 $ 14.03 $12.44
Total returnB
36.29% J 16.04% 27.49% 12.30% 4.77% 23.90% 20.18% 11.93% 12.17% 17.90% (1.45)%
Net assets, end of period
$ 5,96 1 $ 4,565 $ 4,053 $ 3,273 $ 2,973 $ 2,86 9 $ 2,37 3 $ 2,023 $ 1,832 $ 1,66 2 $1,4 40
( In millions )
Ratio of expenses to
.39% .65% .68% .70% .65%A .66% .61% .50% .53% .60% .60%
average net assets
Ratio of expenses to
.38%F .65% .68% .70% .65%A .66% .61% .50% .53% .60% .60%
average net assets after
expense reductions
Ratio of net investment
2.20% 2.40% 2.35% 1.69% 1.11%A 1.83% 2.00% 2.45% 3.37% 2.35% 2.10%
income to average net assets
Portfolio turnover rate
3 2% 42% 55% 77% 82%A 75% 75% 84% 75% 72% 80%
Average commissions rateG
$ .0478 $ .0175
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGES AND CUSTODIAN FEES ASSESSED THROUGH FIDELITY SYSTEMATIC
INVESTMENT PLANS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS OF $.09 PER
SHARE.
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 FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H THREE MONTHS ENDED SEPTEMBER 30, 1993
I YEARS ENDED JUNE 30
J THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
DESTINY II
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NOTE: PER SHA RE D ATA HAVE BEEN ADJUSTED FOR A 3-FOR-1 SHARE SPLIT PAID JUNE 21, 1996.
Selected Per-Share Data and Ratios
Years ended September 30
1997 1996 1995 1994E 1993H 1993I 1992I 1991I 1990I 1989I 1988I
Net asset value, beginning
$ 11.61 $ 10.57 $ 9.52 $ 8.89 $ 8.82 $ 8.23 $ 7.83 $ 7.04 $ 6.88 $ 6.08 $ 6.99
of period
Income from Investment
Operations
Net investment income
.27C .24 .22 .14 .01 .09 .11 .10 .19D .08 .04
Net realized and unrealized
3.52 1.34 1.99 .96 .41 1.61 1.36 .86 .76 .91 (.06)
gain (loss)
Total from investment
3.79 1.58 2.21 1.10 .42 1.70 1.47 .96 .95 .99 (.02)
operations
Less Distributions
From net investment income
(.25) (.22) (.17) (.04) (.05) (.12) (.11) (.12) (.12) (.06) (.03)
From net realized gain
(.75) (.32) (.99) (.43) (.30) (.99) (.96) (.05) (.67) (.13) (.86)
Total distributions
(1.00) (.54) (1.16) (.47) (.35) (1.11) (1.07) (.17) (.79) (.19) (.89)
Net asset value, end of period
$ 14.40 $ 11.61 $ 10.57 $ 9.52 $ 8.89 $ 8.82 $ 8.23 $ 7.83 $ 7.04 $ 6.88 $ 6.08
Total returnB
34.72% J 15.43% 26.98% 12.67% 4.93% 23.28% 20.61% 14.35% 14.42% 16.76% (.23)%
Net assets, end of period
$ 3,609 $ 2,538 $ 2,03 2 $ 1,437 $ 1,143 $ 1,061 $ 479 $ 326 $ 221 $ 143 $ 7 8
( In millions )
Ratio of expenses to
.5 4 % .78% .80% .80% .84%A .84% .88% .84% .87% .97% 1.12%
average net assets
Ratio of expenses to average
.5 3 %F .78% .80% .80% .84%A .84% .88% .84% .87% .97% 1.12%
net assets after expense
reductions
Ratio of net investment
2.1 1 % 2.38% 2.33% 1.56% .69%A 1.41% 1.60% 1.70% 3.07% 1.53% 1.07%
income to average net assets
Portfolio turnover rate
35% 37% 52% 72% 80%A 81% 113% 129% 112% 128% 148%
Average commissions rateG
$ .0482 $ .0182
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE EFFECTS OF THE SEPARATE SALES
CHARGES AND CUSTODIAN FEES ASSESSED THROUGH FIDELITY SYSTEMATIC
INVESTMENT PLANS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS OF $.07 PER
SHARE.
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 FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H THREE MONTHS ENDED SEPTEMBER 30, 1993
I YEARS ENDED JUNE 30
J THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
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 the Plans. Investors should consult the
Plans' Prospectus for complete information regarding Creation and
Sales Charges and Custodian Fees.
Each fund's fiscal year runs from October 1 through September 30. The
tables below show each fund's performance over past fiscal years. The
charts on page present calendar year performance for each fund
compared to different measures, including a competitive funds
average.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods Past 1 Past 5 Past 10 Life of
ended year years years fund
September 30,
199 7
Destiny I 36.29% 23.50% 16.80% 19.02%*
Destiny II 34.72% 23.22% 17.21% 22.91%**
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Fiscal periods Past 1 Past 5 Past 10 Life of
ended year years years fund
September 30,
199 7
Destiny I 36.29% 187.25% 372.71% 1 1,390.24%*
Destiny II 34.72% 184.11% 389.22% 1,031.41%**
</TABLE>
* FROM JULY 10, 1970 (COMMENCEMENT OF OPERATIONS).
** FROM DECEMBER 30, 1985 (COMMENCEMENT OF OPERATIONS).
The following tables show Destiny Plans I and Destiny Plans II average
annual total returns calculated for the one, five, ten , and
fifteen years or Life of Plan ended September 30, 199 7
for a $50/month, 15 year Plan. 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. The
illustrations assume an initial $ 600 lump sum investment at the
beginning of each period shown with no subsequent Plan investments.
Because the illustrations assume lump sum investments, they do not
reflect what investors would have earned only had they made regular
monthly investments over the period. Consult the Plans' Prospectus for
more complete information on applicable charges and fees.
AVERAGE ANNUAL TOTAL RETURNS - DESTINY PLANS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal periods Past 1 Past 5 Past 10 Past 15
ended year years years years/
September 30, Life of Plan
199 7
Destiny Plans I -34.85% 19.04% 15.27% 20.62% A
Destiny Plans II -35.60% 18.78% 15.67% 21.62% B
</TABLE>
A FROM OCTOBER 1, 1982 TO SEPTEMBER 30, 1997.
B FROM DECEMBER 30, 1985 (COMMENCEMENT OF OPERATIONS) TO
SEPTEMBER 30, 1997.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment 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.
THE COMPETITIVE FUNDS AVERAGE is the Lipper Growth Funds Average
for Destiny I and Destiny II . As of September 30, 1997, the
average reflected the performance of 784 mutual funds with similar
investment objectives. This average, published by Lipper Analytical
Services, Inc., excludes the effect of sales loads.
STANDARD & POOR'S 500 INDEX (S&P 500) is a widely recognized,
unmanaged index of common stocks.
Unlike each fund's returns, the total returns of the comparative index
do not include the effect of any brokerage commissions, transaction
fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
Each 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 the
appropriate number listed on the front cover, or your investment
professional.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
YEAR-BY- Y EAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar years 1990 1991 1992 1993 1994 1995 1996
DESTINY I -3.15% 38.92% 15.15% 26.42% 4.43% 36.95% 18.55 %
Standard & Poor's 500 Index -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96 %
Lipper Growth Funds Average -4.72% 37.08% 7.86% 10.61% -2.17% 30.79% 19.24 %
Consumer Price Index 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32 %
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: -3.15
ROW: 5, COL: 1, VALUE: 38.92
ROW: 6, COL: 1, VALUE: 15.15
ROW: 7, COL: 1, VALUE: 26.42
ROW: 8, COL: 1, VALUE: 4.430000000000001
ROW: 9, COL: 1, VALUE: 36.95
ROW: 10, COL: 1, VALUE: 18.55
(LARGE SOLID BOX) DESTINY I
YEAR-BY- Y EAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar years 1990 1991 1992 1993 1994 1995 1996
DESTINY II -2.52% 41.42% 15.48% 26.81% 4.48% 35.96% 17.86 %
Standard & Poor's 500 Index -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96 %
Lipper Growth Funds Average -4.72% 37.08% 7.86% 10.61% -2.17% 30.79% 19.24 %
Consumer Price Index 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32 %
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: -2.52
Row: 5, Col: 1, Value: 41.42
Row: 6, Col: 1, Value: 15.48
Row: 7, Col: 1, Value: 26.81
Row: 8, Col: 1, Value: 4.48
Row: 9, Col: 1, Value: 35.96
Row: 10, Col: 1, Value: 17.86
(LARGE SOLID BOX) DESTINY II
THE FUNDS IN DETAIL
CHARTER
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 periodically 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 trustees serve as trustees for other Fidelity funds. The
majority of trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER 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.
FMR AND ITS AFFILIATES
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, Massachusetts 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, 1997, FMR advised funds having
approximately 33 million shareholder accounts with a total
value of more than $ 521 billion.
George A. Vanderheiden is Vice President and manager of Destiny
I and Destiny II, which he has managed since 1980 and 1985,
respectively. He also manages several other Fidelity funds. Mr.
Vanderheiden joined Fidelity in 1971.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services.
Fidelity Service Company, Inc. (FSC) performs transfer agent servicing
functions for each fund.
FMR Corp. is the ultimate parent company of 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 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
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.
INVESTMENT PRINCIPLES AND RISKS
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 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 stocks 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 earlier in
this section. 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. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
the appropriate number listed on the front cover, 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.
RESTRICTIONS: With respect to 75% of its total assets, each fund may
not purchase more than 10% of the outstanding voting securities of a
single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the
investor a fixed, variable, or floating 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 sold at
a discount from their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
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 or regional
economic difficulty.
The tables on the following pages provide 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 the fiscal year ended September
19 97 , 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.
DESTINY II
FISCAL YEAR ENDED SEPTEMBER 1997 MOODY'S
DEBT HOLDINGS, BY RATING INVESTORS SERVICE STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
RATING AVERAGE RATING AVERAGE
OF TOTAL INVESTMENTS OF TOTAL INVESTMENTS
INVESTMENT GRADE
HIGHEST QUALITY AAA 14.4 % AAA 14.4 %
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 0.0 % C 0.0 %
IN DEFAULT, IN ARREARS -- D 0.0 %
REFER TO THE FUND'S SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR
S&P TO DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY. SECURITIES
NOT RATED BY MOODY'S OR S&P AMOUNTED
TO 0.00% OF THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY INCLUDE
SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS, AS WELL AS UNRATED
SECURITIES. UNRATED LOWER-QUALITY SECURITIES AMOUNTED TO 0.00%
OF THE FUND'S INVESTMENTS.
DESTINY I
FISCAL YEAR ENDED SEPTEMBER 1997 MOODY'S
DEBT HOLDINGS, BY RATING INVESTORS SERVICE STANDARD &
POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
RATING AVERAGE RATING AVERAGE
OF TOTAL INVESTMENTS OF TOTAL INVESTMENTS
INVESTMENT GRADE
HIGHEST QUALITY AAA 14.2% AAA 14.2 %
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 0.0 % C 0.0%
IN DEFAULT, IN ARREARS -- D 0.0%
REFER TO THE FUND'S SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR
S&P TO DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY. SECURITIES
NOT RATED BY MOODY'S OR S&P
AMOUNTED TO 0.00% OF THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY
INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS, AS WELL
AS UNRATED SECURITIES. UNRATED LOWER-QUALITY SECURITIES AMOUNTED
TO 0.00% OF THE FUND'S INVESTMENTS.
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 Investors Service (Moody's) or rated in the
equivalent categories by Standard & Poor's ( S&P ) , or is
unrated but judged to be of equivalent quality by FMR. Each fund
currently intends to limit its investment 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 debt securities may be unwilling to pay interest and
repay principal 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
than U.S. investments.
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, purchasing indexed securities, and selling securities
short.
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 S: A fund may not purchase a security if, as
a result, more than 10% of its assets would be invested in illiquid
securities.
OTHER INSTRUMENTS may include real estate-related instruments.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
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. This limitation does not
apply to U.S. Government securities.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does 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.
RESTRICTIONS: 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 a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: 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 a single issuer. These limitations do
not apply to U.S. Government securities.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
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 a fund's total
assets.
BREAKDOWN OF EXPENSES
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.
MANAGEMENT FEE
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 fund 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 1997, the group fee rate was 0.2950 %. The
individual fund fee rate is 0.17 % for Destiny I and
0.30 % for Destiny II.
The basic fee rate for the fiscal year ended September 1997 was
0.4650% for Destiny I and 0.5950% for Destiny II.
The performance adjustment rate is calculated monthly by comparing
each fund's performance to that of the S&P 500 over the performance
period.
The performance period is 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 +0.24% of the
average net assets up to and including $100,000,000 and +0.20% of
the average net assets in excess of $100,000,000 over the
performance period.
The total management fee rates for Destiny I and Destiny II for the
fiscal year ended September 19 97 were 0.36 % and 0.50 %,
respectively.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers 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 199 7 , FMR, on behalf of
Destiny I and Destiny II, paid FMR U.K. and FMR Far East fees equal
to 0.01 % and 0.01 %, respectively, of each fund's average
net assets.
OTHER EXPENSES
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 net asset
value per share (NAV) and dividends for each fund, maintains the
funds' general accounting records, and administers each fund's
securities lending program. For the fiscal year ended September
19 97, Destiny I and Destiny II paid FSC fees equal to
0.00 % and 0.01 %, respectively, 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 0.03 %, respectively, of
its average net assets for pricing and bookkeeping services.These
amounts are before expense reductions, if any.
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 that fund's custodian or transfer agent fees.
The portfolio turnover rates for Destiny I and Destiny II for the
fiscal year ended September 19 9 7 were 32 % and
35 %, respectively. These rates vary from year to year.
YOUR ACCOUNT
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE , of each fund is the
fund's net asset value per share (NAV).
Each fund has an agreement with FDC under which each fund issues
shares at NAV to State Street Bank and Trust Company (State Street) as
Custodian for the Plans. EACH FUND WILL NOT OFFER ITS SHARES PUBLICLY
EXCEPT THROUGH THE PLANS. Generally, State Street will hold directly
all shares of each fund unless a Planholder owns fund shares directly
after completing or terminating a Plan. The Plans' offering terms,
including the Plans' Creation and Sales Charges, are reflected in the
Prospectus of Fidelity Systematic Investment Plans: Destiny Plans I
and Destiny Plans II.
S hares will be purchased at the next NAV calculated
after an order is received and accepted. Each fund's NAV
is normally calculated each business day at 4:00 p.m. Eastern
time.
Share certificates are not available for fund shares.
HOW TO SELL SHARES
THE FOLLOWING DISCUSSION RELATES ONLY TO THOSE SHAREHOLDERS WHO
HAVE COMPLETED OR TERMINATED A PLAN AND HOLD SHARES OF A FUND
DIRECTLY. Planholders should consult the section entitled
"Cancellation and Refund Rights" of their Plan's Prospectus for a
discussion of 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.
THE PRICE TO SELL ONE SHARE of each fund is the fund's NAV.
Your shares will be sold at the next NAV calculated after your
order is received and accepted. Each fund's NAV is normally calculated
each business day at 4:00 p.m. Eastern time.
If you have certificates for your shares, you must submit them to FSC
in order to sell your shares, and you should call the appropriate
number listed on the front cover for specific instructions. The
funds currently do not issue share certificates.
For more information, see "Systematic Withdrawal Program" of the
Destiny Plans' prospectus.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner, or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, signed certificates (if applicable), and
(small solid bullet) Any other applicable requirements listed in the
following table.
Mail your letter to the following address:
Fidelity Investments
P.O. Box 77 0 0 02
Cincinnati , OH 45277 -0 086
Unless otherwise instructed, Fidelity will send a check to the record
address.
TYPE OF REGISTRATION* SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE All accounts
(small solid bullet) Maximum check request: $100,000.
(small solid bullet) You may exchange to other Fidelity
funds if both accounts are registered
with the same name(s), address, and
taxpayer ID number.
(small solid bullet) Call the appropriate number listed on
the front cover .
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail or in Person
(mail_graphic)
(hand_graphic) Individual, Joint Tenants, Sole (small solid bullet) The letter of instruction must be signed
Proprietorship, Custodial (Uniform by all person(s) required to sign for the
Gifts/Transfers to Minors Act), General account exactly as it is registered,
Partners accompanied by signature guarantee(s).
Corporations, Associations (small solid bullet) The letter of instruction and a corporate
resolution must be signed by all
person(s) required to sign for the
account, accompanied by signature
Trusts guarantee(s).
(small solid bullet) The letter of instruction must be signed
by the Trustee(s), accompanied by
signature guarantee(s). (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.)
</TABLE>
* IF YOU DO NOT FALL INTO ANY OF THE ABOVE REGISTRATION CATEGORIES
(E.G., EXECUTORS, ADMINISTRATORS, CONSERVATORS OR GUARDIANS), PLEASE
CALL THE APPROPRIATE NUMBER LISTED ON THE FRONT COVER FOR
FURTHER INSTRUCTIONS.
INVESTOR 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 entitled
"Rights and Privileges of Planholders" in their Plan's Prospectus
for a discussion of distribution options and other pertinent
information.
For accounts not associated with the Plans, Fidelity provides a
variety of services to help you manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that F idelity sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your
account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses may be mailed, even if you have more than one account in
a fund. Call FDC at the appropriate number listed on the front
cover, or your investment professional if you need additional
copies of financial reports and prospectuses.
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.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your shares and buy shares of other
Fidelity funds, including the Fidelity Advisor F unds, by
telephone or in writing. The shares you exchange will carry credit for
any front-end sales charge you previously paid in connection with the
purchase of Plan shares .
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page .
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, 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.
DISTRIBUTION OPTIONS
THE FOLLOWING DISTRIBUTION OPTIONS ARE APPLICABLE ONLY TO THOSE
SHAREHOLDERS WHO HAVE COMPLETED OR TERMI NATED A PLAN AND HOLD
S HARES OF A FUND DIRECTLY. Planholders should consult the section
entitled " Rights and Privileges of Planholders " in their Plan's
Prospectus for a discussion of distribution options and other
pertinent information.
You can choose from three distribution options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your Plan's application, you
will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the fund, but you
will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
For retirement accounts, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
When a fund deducts a distribution from its NAV, the reinvestment
price is the fund's NAV at the close of business that day.
Distribution checks will be mailed within seven days.
TAXES
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
gains are distributed as dividends and taxed as ordinary
income ; capital gain distributions are taxed as long-term capital
gains.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of 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, Fidelity 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 when a fund has realized but
not yet distributed income or capital gains, 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, each 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 a fund and i t s investments , and these
taxes generally will reduce a fund ' s distributions.
However, if you meet certain holding period requirements with
respect to your fund shares, an offsetting tax credit may be
available to you. If you do not meet such holding period
requirements, you may still be entitled to a deduction for certain
foreign taxes. In either case , your tax statement will show more
taxable income or capital gains than were actually distributed
by the fund, but will also show the amount of the available
offsetting credit or deduction .
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.
TRANSACTION DETAILS
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.
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.
Each fund's assets are valued primarily on the basis of market
quotations. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued on the basis of amortized cost. This method minimizes the
effect of changes in a security's market value. 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. In addition, 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
may be valued by another method that the Board of Trustees
believes accurately reflects fair value.
Planholders who have redeemed shares under "Cancellation and Refund
Rights" (discussed in the Plans' Prospectus), 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, refer to the section entitled "Rights and Privileges of
Planholders" in your Plan's Prospectus, or contact your investment
professional.
WHEN YOU SIGN YOUR PLAN'S APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR
ELECTRONICALLY . Fidelity will not be responsible for
any losses resulting from unauthorized transactions if it
follow s reasonable security procedures designed to
verify the identity of the investor . Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption.
You should verify the accuracy of your confirmation
statements immediately after you rece ive them . If you do
not want the ability to redeem and exchange by telephone, call the
appropriate number listed on the front cover for instructions.
Additional documentation may be required from corporations,
associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be refused if,
in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received and accepted.
Note the following:
(small solid bullet) 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.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
EXCHANGE RESTRICTIONS
THE EXCHANGE PRIVILEGE IS AVAILABLE ONLY TO THOSE SHAREHOLDERS
WHO HAVE COMPLETED OR TERMINATED A PLAN AND HOLD SHARES OF
A FUND DIRECTLY. As a shareholder, you have the privilege of
exchanging shares of a fund for shares of other Fidelity funds ,
including the Fidelity Advisor Funds . However, you should
note the following:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales
charge, you pay the difference between that fund's sales charge and
any sales charge you have previously paid in connection with the
shares you are exchanging. For example, if you had already paid a
sales charge of 2% on your shares and you exchange them into a fund
with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) 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 a 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.
(small solid bullet) The exchange limit may be modified for
accounts in certain institutional retirement plans to conform to plan
exchange limits and Department of Labor regulations. See your plan
materials for further information.
(small solid bullet) Each fund 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.
(small solid bullet) 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.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
fees of up to 1.00% on purchases, administrative fees of up to
$7.50, and t r ading fees of up to 1.50% on exchanges.
Check each fund's prospectus for details.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is
unlawful to make such offer.
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
SPONSOR
FIDELITY DISTRIBUTORS CORPORATION
82 Devonshire Street
Boston, Massachusetts 02109
FIDELITY INVESTMENTS INSTITUTIONAL
SERVICES COMPANY, 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
FIDELITY SERVICE CO MPANY, INC .
P.O. Box 770002
Cincinnati, OH 45277-0002
Nationwide: 1-800-433-0734
AUDITORS
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
I.DES-PRO-119 7
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. 64 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 this 19th day of November 1997.
FIDELITY DISTRIBUTORS CORPORATION
By /s/
Martha Willis, 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) (Title) (Date)
/s/Martha Willis President November 19, 1997
Martha Willis
/s/Caron Ketchum Treasurer November 19, 1997
Caron Ketchum
/s/Edward C. Johnson 3d Director November 19, 1997
Edward C. Johnson 3d
/s/James C. Curvey Director November 19, 1997
James C. Curvey
/s/Michael Mlinac Director November 19, 1997
Michael Mlinac
EXHIBITS
A. (1) Custodian Agreement, as amended and restated, dated September
16, 1994, between Fidelity Distributors Corporation and State Street
Bank and Trust Company is incorporated herein by reference to Exhibit
1.A.(1) of Post-Effective Amendment No. 62.
(2) None.
(3) (a) Not applicable.
(b) Plan Dealer Agreement is incorporated herein by reference to
Exhibit 1.A.(3)(b) of Post-Effective Amendment No. 62.
(c) Dealer Commission and Service Fee Schedule is incorporated
herein by reference to Exhibit 1.A.(3)(c) of Post-Effective Amendment
No. 62.
(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) of
Post-Effective Amendment No. 50.
(7) The Consolidated Financial Statements of Seaboard Surety
Company, for the fiscal year ended December 31, 1996, 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 incorporated herein by reference to Exhibit 1.A.(8)(a)
of Post-Effective Amendment No. 62.
Franchise Agreement dated December 30, 1985 between Fidelity
Distributors Corporation and Fidelity Destiny Portfolios, on behalf of
Destiny II, is incorporated herein by reference to Exhibit 1.A.(8)(b)
of Post-Effective Amendment No. 62.
(9) None.
(10) Not applicable.
B. (1) Not applicable.
(2) Audited Financial Statements, for the fiscal year ended
September 30, 1997, are filed herein as part
of the Prospectus.
C. Not applicable.
EXHIBIT
SEABOARD SURETY COMPANY
Statutory Financial Statements
December 31, 1996 and 1995
The Board of Directors
Seaboard Surety Company:
We have audited the accompanying statutory statements of admitted
assets, liabilities, capital stock and surplus of Seaboard Surety
Company (a wholly-owned subsidiary of St. Paul Fire and Marine
Insurance Company) as of December 31, 1996 and 1995, and the related
statutory statements of income, capital stock and surplus, and cash
flows for the years then ended. These financial statements are the
responsibility of the company's 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
audits 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.
As described more fully in Note 2 to the financial statements, the
company prepared these financial statements using accounting practices
prescribed or permitted by the Insurance Department of the State of
New York, which practices differ from generally accepted accounting
principles. The effects on the financial statements of the variances
between the statutory basis of accounting and generally accepted
accounting principles also are described in Note 2.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting
principles, the financial position of Seaboard Surety Company as of
December 31, 1996 and 1995, or the results of its operations or its
cash flows for the years then ended.
Also, in our opinion, the financial statements referred to above
present fairly, in all material respects, the admitted assets,
liabilities, and capital stock and surplus of Seaboard Surety Company
as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended, on the basis of
accounting described in Note 2.
May 16, 1997
Admitted Assets
1996 1995
Cash and invested assets:
Bonds $275,760 $274,862
Affiliated common stock 10,849 10,509
Cash and short-term investments 7,052 10,842
Total cash and invested assets 293,661 296,213
Agents' balances and uncollected premiums, net (227) (1,599)
Reinsurance recoverable (payable) 5,045 (2,386)
Interest income due and accrued 4,461 4,506
Receivable from affiliates 4,529 --
Other assets 600 1,416
Total admitted assets $308,069 $298,150
Liabilities, Capital Stock and Surplus
Liabilities:
Losses $ 59,899 $ 59,805
Loss adjustment expenses 15,443 13,472
Total loss and loss adjustment expenses 75,342 73,277
Contingent commissions (634) 490
Other expenses 2,728 2,116
Taxes, licenses and fees 749 360
Federal and foreign income taxes 2,512 3,082
Unearned premiums 75,275 69,409
Policyholder dividends 2,265 2,523
Provision for reinsurance 2,399 1,916
Excess of statutory reserves over statement reserves 19 712
Payable to affiliates -- 3,366
Other liabilities 3,407 1,945
Total liabilities 164,062 159,196
Capital stock and surplus:
Capital stock 5,000 5,000
Paid-in surplus 17,484 17,484
Unassigned surplus 121,523 116,470
Total capital stock and surplus 144,007 138,954
Total liabilities, capital stock and surplus $308,069 $298,150
See notes to statutory financial statements.
1996 1995
Underwriting gain:
Premiums earned $67,726 $61,499
Losses incurred $14,699 $15,392
Loss adjustment expenses incurred 6,987 7,376
Underwriting expenses incurred 40,436 36,155
Total underwriting deductions 62,122 58,923
Net underwriting gain 5,604 2,576
Investment income:
Net investment income earned 19,988 18,886
Net realized capital losses (568) (10)
Net investment gain 19,420 18,876
Other expense (390) (75)
Net income before dividends to policyholders and
federal and foreign income taxes 24,634 21,377
Dividends to policyholders 1,184 1,128
Net income before federal and foreign income
taxes 23,450 20,249
Federal and foreign income taxes incurred 7,356 4,934
Net income $16,094 $15,315
See notes to statutory financial statements.
1996 1995
Capital stock and surplus at beginning of year $138,954 $126,809
Gains (losses) in surplus:
Net income 16,094 15,315
Change in net unrealized capital gains 340 280
Change in non-admitted assets 1,436 (871)
Change in provision for reinsurance (483) 2,308
Change in excess of statutory reserves over
statement reserves 693 94
Dividends to stockholder (13,895) (5,270)
Other surplus changes 868 289
Total change in surplus 5,053 12,145
Capital stock and surplus at end of year $144,007 $138,954
See notes to statutory financial statements.
1996 1995
Net cash provided from operations:
Premiums collected, net of reinsurance $ 73,630 $ 66,416
Loss and loss adjustment expenses paid (26,070) (6,161)
Underwriting expenses paid (40,549) (37,476)
Net cash provided from underwriting 7,011 22,779
Net investment income 19,836 18,294
Other expenses, including dividends to
policyholders (1,733) (939)
Income taxes paid (7,926) (196)
Net cash provided from operations 17,188 39,938
Net cash provided from (applied to) investments:
Proceeds from investments sold, matured or repaid:
Bonds 43,525 11,150
Change in receivable for securities 68 (82)
Total investment proceeds 43,593 11,068
Cost of investments acquired:
Bonds 44,805 48,975
Change in payable for securities -- 3,811
Total investments acquired 44,805 52,786
Net cash applied to investments (1,212) (41,718)
Net cash provided from (applied to) financing and miscellaneous:
Cash provided:
Net transfers from affiliates -- 5,471
Other sources 2,024 902
Total cash provided 2,024 6,373
Cash applied:
Dividends to stockholder 13,895 5,270
Net transfers to affiliates 7,895 --
Other applications -- 1,606
Total cash applied 21,790 6,876
Net cash applied to financing and
miscellaneous (19,766) (503)
Net decrease in cash and short-term
investments (3,790) (2,283)
Cash and short-term investments:
Beginning of year 10,842 13,125
End of year $ 7,052 $ 10,842
See notes to statutory financial statements.
(1) Affiliation
Seaboard Surety Company (the company) is a wholly-owned subsidiary of
St. Paul Fire and Marine Insurance Company (Fire and Marine), which is
a wholly-owned subsidiary of The St. Paul Companies, Inc. (SPC).
Fire and Marine and SPC provide certain investment, administrative and
data processing services to the company. The company provides certain
underwriting, reinsurance, claim adjusting and premium collection
services to Fire and Marine and two of its affiliated insurers under a
management agreement to conduct surety business on their behalf. The
cost of providing these services is charged to the respective
companies based on usage or estimates of the time spent for the
benefit of each company.
(2) Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying statutory financial statements have been prepared in
conformity with accounting practices prescribed or permitted by the
Insurance Department of the State of New York, which vary in some
respects from generally accepted accounting principles (GAAP). The
company has no material permitted statutory accounting practices.
The more significant differences between statutory accounting
practices and GAAP are as follows:
a) Acquisition costs, such as commissions, premium taxes and other
underwriting expenses are expensed when incurred, rather than deferred
and amortized to expense evenly over the policy term.
b) Certain assets are designated as "non-admitted assets" and charged
directly to unassigned surplus. The company's non-admitted assets
consisted primarily of agents' balances and uncollected premiums over
90 days past due.
c) Deferred federal income taxes are not provided for the temporary
differences related to assets and liabilities that are recognized in
different years for tax purposes than for financial reporting
purposes.
d) On certain lines of insurance, statutory loss and loss expense
reserves are required in excess of amounts considered adequate by the
company and have been provided and charged directly to unassigned
surplus.
e) A provision is made for unearned premiums and losses recoverable
in excess of funds held on business reinsured with unauthorized
reinsurers and for past due paid loss recoverables from reinsurers.
This provision for reinsurance is charged directly to unassigned
surplus.
f) Ceded reinsurance recoverables for unpaid losses, loss adjustment
expenses and unearned premiums are netted against the related
reserves, rather than recorded as assets.
g) Bonds are carried primarily at amortized cost. For GAAP, bonds
classified as "available-for-sale" are carried at estimated market
value with unrealized gains and losses recorded in shareholder's
equity.
h) The equity in the earnings or losses of unconsolidated affiliates
valued using the equity method is recorded as net unrealized capital
gains or losses in unassigned surplus, rather than in net income.
i) The translation adjustment for assets and liabilities denominated
in a foreign currency is recorded as a liability, rather than as an
adjustment to the respective assets and liabilities.
(2) Summary of Significant Accounting Policies (Continued)
Basis of Financial Statement Presentation (Continued)
j) The transition obligation for postretirement benefits other than
pension that relates to services rendered prior to January 1, 1992 is
amortized to expense over 20 years. For GAAP, the company fully
recognized the transition obligation expense in 1992.
Under GAAP, for the years ended December 31, 1996 and 1995, the
company had net income of $20,110,472 and $12,748,993, respectively.
The company's GAAP stockholder's equity amounted to $183,514,088 and
$181,224,571 at December 31, 1996 and 1995, respectively.
Description of Business
The company underwrites contract surety, miscellaneous surety and
various specialty casualty lines of business throughout the United
States. A substantial portion of the premium volume is dependent upon
the activity in the construction industry. Coverage is provided
through brokers and independent agents. During 1996, there was one
producer group that accounted for a substantial amount (approximately
15%) 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.
Use of Estimates
In preparing the statutory financial statements, the company's
management is required to make estimates and assumptions that affect
the reported financial statement balances as well as the disclosure of
contingent assets and liabilities. Actual results could differ from
those estimates. The most significant estimate reflected in the
accompanying statutory financial statements is the estimate of loss
and loss adjustment expense reserves.
Investments
Bonds are carried at the values specified by the National Association
of Insurance Commissioners (NAIC), which primarily reflect amortized
cost. If the NAIC specifies a value lower than amortized cost, the
difference between this value and amortized cost is recorded directly
to unassigned surplus as an unrealized capital loss. The amortization
of premiums or discounts is recorded in investment income.
Short-term investments are carried at amortized cost, which
approximates market.
The company's common stock investment in Seaboard Surety Company of
Canada is carried on the equity method at its underlying net asset
value.
Net realized capital gains or losses from the sales of bonds are
determined on a specific identification basis.
(2) Summary of Significant Accounting Policies (Continued)
Premiums Earned
Insurance premiums are earned evenly over the policy terms. Premiums
not yet recognized as revenues are recorded as unearned premiums.
Loss and Loss Adjustment Expense Reserves
Loss and loss adjustment expense (LAE) reserves reflect estimates of
the total losses and loss adjustment expenses that will ultimately
have to be paid under insurance and reinsurance policies. These
reserves include claims that have been reported but not settled and
losses that have been incurred but not yet reported (IBNR). Loss
reserves are established on an undiscounted basis after reductions for
reinsurance recoverable and estimates of salvage and subrogation.
For reported losses, reserves are established on a "case" basis
within the parameters of coverage provided in the related policy. For
IBNR losses, reserves are estimated using established actuarial
methods. Case and IBNR loss reserve estimates reflect such variables
as past loss experience, social trends in damage awards, changes in
judicial interpretation of legal liability and policy coverages, and
inflation. The company takes into account not only monetary increases
in the cost of what is insured, but also changes in societal factors
that influence jury verdicts and case law and, in turn, claim costs.
Some of the coverages offered involve claims that may not ultimately
be settled for many years after they are incurred, so subjective
judgments as to the ultimate exposure to losses are an integral and
necessary component of the loss reserving process. Reserves are
continually reviewed using a variety of statistical and actuarial
techniques to analyze current claim costs, frequency and severity
data, and prevailing economic, social and legal factors. Reserves
established in prior years are adjusted as loss experience develops
and new information becomes available. Adjustments to previously
estimated reserves are reflected in financial results in the periods
in which they are made. The company's management believes that the
reserves established for losses and loss adjustment expenses are
adequate to cover their eventual costs.
Foreign Currency Translation
Assets, liabilities, revenues and expenses denominated in foreign
currency are included in the accompanying financial statements at the
foreign currency amounts. The net assets denominated in foreign
currency are translated at year-end exchange rates and the adjustment
into U.S. dollars is reflected as a liability in the accompanying
financial statements. The change in the liability is charged or
credited directly to unassigned surplus. Foreign exchange gains and
losses resulting from foreign currency transactions are recorded in
other expense in the statement of income.
Reclassifications
Some figures were reclassified in the 1995 financial statements to
conform with the 1996 presentation. This had no effect on net income
or capital stock and surplus as previously reported for 1995.
(3) Bonds
The following presents the admitted asset value, gross unrealized
appreciation and depreciation, and estimated market value of
investments in bonds:
December 31, 1996
(In thousands)
Gross Gross
Admitted Unrealized Unrealized Estimated
Asset Value Appreciation Depreciation Market Value
U.S. government $ 47,378 $ 1,406 $ (342) $ 48,442
States and
political
subdivisions 135,163 8,035 (89) 143,109
Foreign
governments 6,508 164 (80) 6,592
Corporate
securities 28,694 783 (243) 29,234
Mortgage-backed
securities 58,017 1,947 (491) 59,473
Total bonds $275,760 $12,335 $(1,245) $286,850
December 31, 1995
(In thousands)
Gross Gross
Admitted Unrealized Unrealized Estimated
Asset Value Appreciation Depreciation Market Value
U.S. government $ 53,718 $ 3,450 $ (37) $ 57,131
States and
political
subdivisions 121,279 10,233 -- 131,512
Foreign
governments 3,669 229 -- 3,898
Corporate
securities 41,893 2,280 (40) 44,133
Mortgage-backed
securities 54,303 2,804 (105) 57,002
Total bonds $274,862 $18,996 $(182) $293,676
The company's gross realized capital gains on sales and redemptions
of bonds were $76,348 and $4,641 in 1996 and 1995, respectively. The
company's gross realized capital losses were $645,225 and $14,428 in
1996 and 1995, respectively.
(3) Bonds (Continued)
The following presents a summary of proceeds from the sales and
maturities of bonds:
Year Ended December 31,
1996 1995
(In thousands)
Sales $17,340 $ 1,080
Maturities and redemptions 26,185 10,070
Total sales and maturities $43,525 $11,150
Presented below is a breakdown of the bond portfolio by years to
maturity. For certain bonds, the period of time until maturity may
differ from that shown below as a result of calls and prepayments.
December 31, 1996
(In thousands)
Admitted Estimated
Asset Value Market Value
One year or less $ 1,649 $ 1,703
Over one year through five years 14,852 15,250
Over five years through ten years 90,271 95,562
Over ten years 110,971 114,862
Mortgage-backed securities with various
maturities 58,017 59,473
Total bonds $275,760 $286,850
Bonds carried at $8,349,247 were on deposit at December 31, 1996 with
regulatory authorities as required by law.
(4) Agents' Balances and Uncollected Premiums, Net
Agents' balances and uncollected premiums, net consist of the
following:
December 31,
1996 1995
(In thousands)
Agents' balances and uncollected
premiums before reinsurance $ 3,693 $4,726
Ceded reinsurance balances receivable
(payable):
Affiliated 279 (1,282)
Unaffiliated (4,199) (5,043)
Agents' balances and uncollected
premiums, net $ (227) $(1,599)
(5) Loss and Loss Adjustment Expense (LAE) Reserves
The accompanying table presents a reconciliation of beginning and
ending loss and LAE reserves for the last two years.
Year Ended December 31,
1996 1995
(In thousands)
Loss and LAE reserves at beginning of year $ 73,277 $60,722
Provision for losses and LAE for claims incurred:
Current year 27,594 24,605
Prior years (5,908) (1,837)
Total incurred 21,686 22,768
Loss and LAE payments for claims incurred:
Current year (4,725) (1,450)
Prior years (14,896) (8,763)
Total paid (19,621) (10,213)
Loss and LAE reserves at end of year $ 75,342 $73,277
In 1996, the current year provision for loss and LAE incurred were
$27.6 million, an increase of $3.0 million over 1995. This increase
was primarily related to loss results within the specialty liability
lines of business. Prior year reserves decreased $5.9 million in 1996
compared to $1.8 million in 1995 due to favorable development in the
contract surety line of business.
The reconciliation also shows that losses paid on claims incurred in
prior years were $6.1 million greater in 1996 than in 1995. This was
the result of a large level of salvage and subrogation recoveries in
1995. In 1996 and 1995, the majority of paid losses and loss
adjustment expenses were related to claims in prior years, which is
typical for the company's lines of business.
The loss and LAE reserves of $75.3 million and $73.3 million as of
December 31, 1996 and 1995 were reduced by estimated salvage and
subrogation of $16.8 million and $18.9 million, respectively.
(6) Environmental and Asbestos Claims
The company has minimal potential exposure to environmental and
asbestos claims through its discontinued participation in assumed
reinsurance pools. Primarily all of the identified exposures are for
environmental claims. Since the company has no exposure on a direct
basis, its gross and net losses are the same. The company's
environmental and asbestos related losses associated with its pool
participation for the two most recent calendar years were as follows:
Year Ended December 31,
1996 1995
(In thousands)
Losses and Loss Adjustment Expenses (LAE):
Loss and LAE reserves at beginning of
year $2,900 $2,900
Incurred losses and LAE 1,100 1,100
Calendar year payments for losses
and LAE (900) (1,100)
Loss and LAE reserves at end of year $3,100 $2,900
These amounts include incurred but not reported loss and loss
adjustment expense reserves in the amount of $1.7 million on a gross
and net basis at December 31, 1996.
Total environmental and asbestos loss and loss expense reserves of
$3.1 million at December 31, 1996, represented approximately 4% of
total loss and loss expense reserves of $75.3 million.
(7) Reinsurance
The company enters into both assumed and ceded reinsurance
transactions and has various ceded reinsurance agreements in force on
all lines of business to protect itself from potential losses in
excess of what management feels are reasonable retentions of risk.
Reinsurance may be placed or accepted on an individual policy basis or
on an entire line of business.
Reinsurance amounts included in the company's financial statements
are shown in the following table:
Year Ended December 31,
1996 1995
(In thousands)
Assumed reinsurance:
Written premiums $ 1,000 $ 442
Earned premiums 730 233
Ceded reinsurance:
Written premiums 27,813 36,256
Earned premiums 32,898 42,195
Losses and loss adjustment expenses
incurred 9,228 (1,784)
Recoverables at year-end:
Loss and loss adjustment expense
reserves 50,914 59,771
Unearned premiums 20,554 25,639
(7) Reinsurance (Continued)
The largest unaffiliated portion (approximately 12%) of the company's
total reinsurance recoverables and ceded unearned premiums was with
Employers Reinsurance Corporation at December 31, 1996. This company
is rated "A++" by A.M. Best Company, "Aaa" by Moody's Investors
Service and "AAA" by Standard & Poor's for its property-liability
insurance claims-paying ability.
The company expects the companies to whom it has ceded reinsurance to
honor their obligations; accordingly, reserves for losses and loss
adjustment expenses and unearned premiums have been reduced by the
amounts shown in the preceding table. In the event these companies
are unable to honor their obligations, the company would be liable for
these amounts.
Intercompany Reinsurance
The company ceded approximately 8% of its direct premiums written in
1996 and 9% in 1995 to Fire and Marine under various intercompany
reinsurance agreements. The underwriting results related to these
agreements are as follows:
Year Ended December 31,
1996 1995
(In thousands)
Ceded underwriting results:
Premiums written $8,087 $8,808
Premiums earned $8,852 $9,604
Losses and loss adjustment expenses 1,689 (1,607)
Underwriting expenses 3,322 3,373
Underwriting gain ceded to Fire and Marine $3,841 $7,838
(8) Federal and Foreign Income Taxes
Income Taxes Incurred
Fire and Marine, the company and other affiliated companies are
included in the consolidated federal income tax return filed by SPC.
Under the intercompany tax allocation policy, the company computes its
current federal income taxes as if the company were filing a separate
federal tax return and settles such amounts with SPC.
Year Ended December 31,
1996 1995
(In thousands)
Federal income taxes $6,805 $4,740
Foreign income taxes 551 194
Total income taxes incurred $7,356 $4,934
(8) Federal and Foreign Income Taxes (Continued)
Effective Federal Tax Rate
The total federal income taxes incurred differed from the statutory
tax rate of 35% applied to net income before federal and foreign
income taxes for the following reasons:
Year Ended December 31,
1996 1995
(In thousands)
Federal income tax incurred at
statutory rate $8,207 $7,087
Increase (decrease) attributable to:
Non-taxable investment income (2,366) (1,985)
Unearned premiums 411 204
Foreign tax credit (774) (296)
Other, net 1,327 (270)
Federal income taxes incurred $ 6,805 $4,740
IRS Examinations
The Internal Revenue Service has examined SPC's consolidated returns
through 1992 and is currently examining the years 1993 and 1994. The
company believes that any additional taxes assessed as a result of
these examinations would not materially affect its net income,
liquidity or surplus.
(9) Retirement Plans
Pension Plan
SPC maintains a non-contributory, funded defined benefit pension plan
(SPC Plan) that provides pension benefits to substantially all company
employees. Pension benefits vest after five years of service.
Contributions to the plan are to provide for current service cost and
any unfunded projected benefit obligation over a specified period of
time. It is the funding policy of SPC to contribute amounts
sufficient to meet the minimum funding requirements of the Employee
Retirement Income Security Act, and any additional amounts which 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
adjusted by its estimated funding status. SPC pension cost and the
accrued pension liability is determined in accordance with Statement
of Financial Accounting Standards (SFAS) No. 87, "Employers'
Accounting for Pensions".
(9) Retirement Plans (Continued)
Pension Plan (Continued)
The key components of the SPC Plan for 1996 and 1995 are summarized
as follows:
Year Ended December 31,
1996 1995
(In thousands)
Funded status:
Vested accumulated benefit obligation $256,636 $243,474
Projected benefit obligation 355,423 352,566
Plan assets at fair value 386,618 329,007
Assumptions:
Discount rate 7.25% 6.75%
Rate of increase in compensation 4.00% 3.75%
Expected rate of return on plan assets 9.00% 9.00%
The SPC Plan net periodic pension cost allocated to the company was
$43,306 and $194,890 in 1996 and 1995, respectively. The company's
portion of the SPC Plan net accrued pension liability is recorded as
an asset by the company due to prepayment of their cost. The amounts
recorded were $2,338,745 and $1,879,390 at December 31, 1996 and 1995,
respectively.
The SPC Plan assets are invested primarily in equities and fixed
maturities, and included 380,172 shares of SPC common stock with a
market value of $22.3 million and $21.1 million at December 31, 1996
and 1995, respectively.
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 U.S.-based
employees. In 1996 and 1995, the company recorded expense related to
this plan of $351,207 and $448,740, respectively.
(9) Retirement Plans (Continued)
Preferred Stock Ownership Plan
The company participates in a Savings Plus Preferred Stock Ownership
Plan (PSOP) maintained by SPC. The PSOP allocates preferred shares
semi-annually to those employees participating in 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. Each share is currently
convertible into four shares of SPC common stock. In 1996 and 1995,
the company recorded expense related to this plan of $409,182 and
$438,172, respectively.
Postretirement Benefits Other Than Pension
In addition to providing pension benefits, SPC provides certain
health care and life insurance benefits for retired employees and
their eligible dependents. Most 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. The benefits are
generally provided through the SPC Employee Benefits Trust, to which
periodic contributions are made to cover benefits paid during the
year.
The company's postretirement benefits cost and the accrued
postretirement benefits liability is determined in accordance with
SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions". The company accrues postretirement benefits
expense during the period of the employee's service. The company
accrues postretirement benefits expense and the related postretirement
benefits liability as if the company had sponsored its own
freestanding plan. The transition obligation for benefits relating to
services rendered prior to the 1992 implementation date is being
amortized to expense over 20 years.
The company's net periodic postretirement benefits cost was $552,535
and $505,524 for 1996 and 1995, respectively.
The key components of the company's portion of the funded status of
the SPC Plan are summarized as follows:
Year Ended December 31,
1996 1995
(In thousands)
Funded status:
Accumulated postretirement benefits obligation $3,986 $3,970
Plan assets at fair value -- --
Assumptions:
Discount rate 7.50% 7.00%
Rate of increase in compensation 4.00% 3.75%
Expected rate of return on plan assets 9.00% 8.00%
A health care inflation rate of 7.5% was assumed to change to 7% in
1997, decrease annually to 5% in 2002 and then remain at that level.
A 1% increase in the health care cost trend rate assumption would not
have had a material impact on the accumulated postretirement benefits
obligation or expense for the year.
(10) Capital Stock and Surplus
The number of authorized, issued and outstanding shares of common
stock is 500,000. All authorized shares have a par value of $10.
The maximum amount of dividends that can be paid by New York
domiciled insurance companies to stockholders during a twelve month
period without prior approval of the New York Superintendent of
Insurance is restricted to the lesser of adjusted net investment
income or 10% of capital stock and surplus. Capital stock and surplus
for Seaboard Surety Company at December 31, 1996 was $144,007,129 and
adjusted net investment income was $44,775,727. The maximum dividend
payment which may be made in 1997 without prior approval is
$14,400,713. Dividends are paid as determined by the board of
directors. Dividends on common stock amounted to $13,895,395 in 1996
and $5,270,000 in 1995.
(11) Commitments and Contingencies
Lease Commitments
The company carries on portions of its business activities in rented
premises. It also enters into leases for equipment, such as office
machines and computers. The total rent expense was $4,319,149 in 1996
and $4,178,908 in 1995.
Certain leases for rented premises and equipment are noncancelable
and the company would remain responsible for payment even if it
stopped using the space or equipment. On December 31, 1996, the
minimum annual rents for which the company would be liable under these
types of leases are as follows: $3,718,000 in 1997; $3,181,000 in
1998; $3,191,000 in 1999; $2,361,000 in 2000; $2,266,000 in 2001; and
$8,688,000 in later years.
Legal Matters
In the ordinary course of conducting business, the company has been
named as a defendant in various lawsuits. Some of these lawsuits
attempt to establish liability under insurance contracts issued by the
company. Plaintiffs in these lawsuits are asking for money damages or
to have the court direct the activities of the company in certain
ways. 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 its surplus.
(12) Collateral Held
During the normal course of business, the company receives collateral
from principals for certain surety bonds issued. The collateral is
held until the company has been discharged from all liability under
these surety bonds and has received payment for all amounts due. As
of December 31, 1996 the collateral held for surety bonds which is not
reflected on the accompanying financial statements amounted to $77.6
million.
(13) Subsequent Event
In 1996, the company received approval from the New York Insurance
Department to implement a new intercompany reinsurance agreement with
Fire and Marine effective January 1, 1997. The agreement terminates
various existing intercompany reinsurance agreements and retroactively
implements a 100% reinsurance arrangement. The ceded reinsurance
agreements with external reinsurers applicable to the company's
business will remain in effect, but with Fire and Marine replacing the
company as the ceding company. The company's December 31, 1996, total
insurance liabilities, net of related assets, totaled $143.5 million.
In 1997, the company transferred long term bonds and cash totaling
$143.5 million to Fire and Marine in connection with the transfer of
these net liabilities.
CONSENT 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 hereby consent to the inclusion in this Post-Effective Amendment
No. 64 to Registration Statement No. 2-34100 on Form S-6 of our report
dated November 11, 1997, 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 11, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of Fidelity Distributors
Corporation:
We hereby consent to the inclusion in this Post-Effective Amendment
No. 64 to Registration Statement No. 2-34100 on Form S-6 of our report
dated January 29, 1997, on our audit of the statement of financial
condition of Fidelity Distributors Corporation as of December 31,
1996.
/S/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 11, 1997
