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Author: cgiorgi Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75617  
Subject: Re: Fedelity Destiny Datasheet Date: 7/9/1998 5:14 AM
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Fidelity Destiny I
Average Annual Total Returns (without sales charges)
+43.86 % One Year
+23.32 % Five Year
+20.84% Ten Year
+19.26% Life of Fund

Vanguard Index 500

1 year 28.86%
3 year 30.43%
5 year 23.74%
10 year 18.37%

So what your saying is that the hypothetical investor who invested in Fidelity Destiny I beat the Index over the 10 year period before accounting for sales charges. However, here in the real world, we as investors have to account for sales charges, so like 90% of all actively managed mutual funds, over the 10 year period Fidelity Destiny I underperforms the Index. By the way, these returns are not adjusted for taxes, I don't know what either funds tax-adjusted return is, although I can just about guarantee that Vanguard Index 500 has a higher tax adjusted return since it rarely accrues capital gains.
One other thing, if mutual fund outflows are such a problem, why don't all mutual fund companies come up with restrictive contracts like this. I don;t see T. Rowe Price or Vanguard rushing out to set up contractual mutual funds. I don't simply don't buy the book answer of "we are trying to take care of the individual investor." A mutual fund company's raison d'etre is to make money. If it didn't make money it wouldn't exist. This contractual plan is simply another way of making money.
One last thing, are you honestly sure that you want to keep your money locked up in the same mutual fund for 10 years? If this was Coca-Cola, I would say yes, go to sleep for the next 10 years, and you'll be wealthy, but a mutual fund? Old George Vanderheiden could die tomorrow, and thn what? Will the next manager be as competent as George was, or will Destiny I investors be treated to some no-name 25 year old nephew of Ned Johnson who is looking to earn his spurs in the mutual fund world? If you can honestly say yes after this, then go right ahead, it's your money.
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