Twin Fidelity Destiny Funds Experience Diverging Destinies

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You Don't Have to Pay Big Fees to Make Small Investments

When it comes to Fidelity's Destiny funds, the performance bar is very high.

The only way into the funds is through a long-term contractual investment plan -- requiring a minimum 10-year commitment -- which comes with a mind-boggling 50% load on each of the first 12 months of contributions, and an additional 1.7% load on subsequent investments for the life of the plan. Once you buy in, abandoning these funds in the first few years almost surely leads to a loss.

To overcome these high charges, the $7.4 billion (FDESX Quote)Destiny I and the $5 billion (FDETX Quote)Destiny II funds need to blow the lid off the S&P 500 just for investors to break even in their first year. And the funds must consistently outperform the benchmark to keep shareholders ahead of the broader market long term. For a long time, both of them did. ...