<PAGE> 1
FILE NO. 333-40757
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
TO
AMENDMENT NO. 1
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 DEFINED TRUSTS
SERIES 5
B. Name of Depositor: NATIONAL FINANCIAL SERVICES CORPORATION
C. Complete address of Depositor's principal executive offices:
82 Devonshire Street N7A
Boston, MA 02109-3614
D. Name and complete address of agents for service:
National Financial Services Corporation CHAPMAN AND CUTLER
Attention: David J. Pearlman Attention: Mark J. Kneedy
82 Devonshire Street N7A 111 West Monroe Street
Boston, MA 02109-3614 Chicago, Illinois 60603
E. Title and amount of securities being registered: An indefinite number of
Units pursuant to Rule 24f-2 promulgated under the Investment Company Act
of 1940, as amended
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
THE REGISTRATION STATEMENT
/X/ Check box if it is proposed that this filing will become effective on
December 4, 1997 pursuant to Rule 487.
- - ----------------------------------------------------------------------
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE> 2
FIDELITY DEFINED TRUSTS
SERIES 5
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(C) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION
1 AS TO PROSPECTUS ON FORM S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Essential Information
) The Sponsor
3. Name and address of Trustee ) Essential Information
) Trust Administration
4. Name and address of principal ) Public Offering of Units
underwriter
5. Organization of trust ) The Trusts
6. Execution and termination of ) The Trusts
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
-I-
<PAGE> 3
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. General information regarding ) The Trusts
trust's securities and ) Tax Status
rights of security holders ) Public Offering of Units
) Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trusts
) Portfolio
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Load, fees, charges and expenses ) Prospectus Front Cover Page
) Essential Information
) Portfolio
)
) Trust Expenses
) Public Offering of Units
) Unitholders and Sponsor
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Essential Information
)
(d) Variations in fees among certain ) Public Offering of Units
classes of holders ) Unitholders
(e) Certain other fees, expenses or ) Trust Expenses
charges payable by holders ) Unitholders
(f) Certain profits to be received ) Public Offering of Units
by depositor, principal ) Public Offering of Units
underwriter, trustee or any ) Portfolio
affiliated persons )
(g) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Unitholders
-II-
<PAGE> 4
15. Receipt and handling of payments ) Public Offering of Units
from purchasers )
16. Acquisition and disposition of ) The Trusts
underlying securities ) Unitholders
) Trust Administration
17. Withdrawal or redemption ) Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Unitholders
(b) Reinvestment of distributions ) Distribution Reinvestment
(c) Reserves or special funds ) Trust Expenses
) Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Portfolio
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
-III-
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28. Certain information as to ) The Sponsor
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) The Sponsor
of Depositor )
30. Controlling persons of Depositor ) The Sponsor
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities ) Public Offering of Units
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering of Units
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
-IV-
<PAGE> 6
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices of principal ) *
underwriter )
(c) Salesmen of principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Essential Information
) Trust Expenses
) Public Offering of Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
45. Suspension of Redemption Rights ) *
46. (a) Redemption valuation ) Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering of Units
in underlying securities ) Trust Administration
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Essential Information
) Trust Expenses
50. Trustee's lien ) Trust Expenses
-V-
<PAGE> 7
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) Trust Expenses
securities )
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Tax Status
VII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent Certified
1(c) to Form S-6) ) Public Accountants
Statements of Condition
- - ----------------------------------------------
* Inapplicable, omitted, answer negative or not required
-VI-
<PAGE> 8
The investor is advised to read and retain this
Prospectus for future reference.
Units of the Trusts are not deposits or
obligations of, or guaranteed by, any bank,
and Units are not federally insured or
otherwise protected by the Federal Deposit
Insurance Corporation and involve investment
risk including loss of principal.
- - ------------------------------------
SPONSOR: NATIONAL FINANCIAL
SERVICES CORPORATION
- - ------------------------------------
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.
Fidelity
Defined Trusts
Series 5
- - -- Laddered Government Series 5,
Short Treasury Portfolio
- - -- Laddered Government Series 6,
Short/Intermediate Treasury Portfolio
- - -- Laddered Government Series 7,
Intermediate Treasury Portfolio
Prospectus
December 4, 1997
LOGO
82 Devonshire Street, Boston, MA 02109
<PAGE> 9
TABLE OF CONTENTS PAGE
<TABLE>
<S> <C>
SUMMARY................................................................................ 4
ESSENTIAL INFORMATION.................................................................. 5
THE TRUSTS............................................................................. 6
LADDERED GOVERNMENT SERIES 5, SHORT TREASURY PORTFOLIO LADDERED GOVERNMENT SERIES
6, SHORT/INTERMEDIATE TREASURY PORTFOLIO LADDERED GOVERNMENT SERIES 7, INTERMEDIATE
TREASURY PORTFOLIO..................................................................... 7
REPORT OF INDEPENDENT AUDITORS......................................................... 11
STATEMENTS OF CONDITION................................................................ 12
TRUST INFORMATION...................................................................... 13
General Information................................................................. 13
Risk Factors........................................................................ 14
Rating of Units..................................................................... 16
Retirement Plans.................................................................... 16
Tax Status.......................................................................... 17
Distribution Reinvestment........................................................... 20
Interest, Estimated Long-Term Return and Estimated Current Return................... 21
Public Offering of Units............................................................ 21
Market for Units.................................................................... 25
Redemption.......................................................................... 26
Unitholders......................................................................... 28
Investment Supervision.............................................................. 31
Trust Administration................................................................ 31
Trust Expenses...................................................................... 33
The Sponsor......................................................................... 34
Legal Opinions...................................................................... 35
Independent Auditors................................................................ 35
ESTIMATED CASH FLOWS TO UNITHOLDERS.................................................... 36
</TABLE>
THIS PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT AND EXHIBITS RELATING THERETO, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND
THE INVESTMENT COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS MADE.
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE TRUSTS, THE TRUSTEE, OR THE SPONSOR. THE TRUSTS ARE REGISTERED AS UNIT
INVESTMENT TRUSTS UNDER THE INVESTMENT COMPANY ACT OF 1940. SUCH REGISTRATION
DOES NOT IMPLY THAT THE TRUSTS OR THE UNITS HAVE BEEN GUARANTEED, SPONSORED,
RECOMMENDED OR APPROVED BY THE UNITED STATES OR ANY STATE OR ANY AGENCY OR
OFFICER THEREOF.
------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE SUCH OFFER IN SUCH STATE.
2
<PAGE> 10
LADDERED GOVERNMENT SERIES -- Laddered Government Series 5, Short Treasury
Portfolio, Laddered Government Series 6, Short/Intermediate Treasury Portfolio
and Laddered Government Series 7, Intermediate Treasury Portfolio (the "Laddered
Trusts") were each formed for the purpose of providing safety of capital as is
consistent with current income and investment flexibility through an investment
in a portfolio of U.S. Treasury Obligations with laddered maturities that are
backed by the full faith and credit of the United States Government. Interest
Income distributed by each Treasury Portfolio is exempt from state personal
income taxes in all states. Each Treasury Portfolio is available to non-resident
aliens and the income from such Trusts, provided certain conditions are met,
will be exempt from withholding for U.S. federal income tax for such foreign
investors. A FOREIGN INVESTOR MUST PROVIDE A COMPLETED W-8 FORM TO HIS/HER
FINANCIAL REPRESENTATIVE OR THE TRUSTEE TO AVOID WITHHOLDING ON HIS/HER ACCOUNT.
Units of the Laddered Trusts are rated "AAA" by Standard & Poor's, a Division of
The McGraw-Hill Companies ("Standard & Poor's").
3
<PAGE> 11
SUMMARY
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of a Trust during the
initial offering period is equal to a pro rata share of the offering prices of
the Securities in such Trust plus or minus a pro rata share of cash, if any, in
the Principal Account held or owned by such Trust, plus accrued interest and the
respective sales charge for a Trust, as indicated under "Essential Information."
The secondary market Public Offering Price per Unit will be based upon a pro
rata share of the bid prices of the Securities in each Trust plus or minus a pro
rata share of cash, if any, in the Principal Account held or owned by such
Trust, plus accrued interest plus the applicable sales charge indicated under
"Trust Information -- Public Offering of Units -- Public Offering Price." The
sales charge is reduced on a graduated scale for sales involving at least
$500,000 or 50,000 Units and will be applied on whichever basis is more
favorable to the investor. The minimum initial amount which an investor may
purchase of a Trust is $5,000.
REINVESTMENT. Certain eligible Unitholders may elect for distributions of
principal and/or interest on their Units to be automatically invested, without a
sales charge, in shares of certain mutual funds managed by Fidelity Management &
Research Company, an affiliate of the Sponsor. Please ask your financial
consultant regarding the availability of distribution investment.
ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN. As of the opening of
business on the Initial Date of Deposit, the Estimated Long-Term Return and the
Estimated Current Return, if applicable, for each Trust were as set forth in
"Essential Information." There is no assurance that either the present Estimated
Current Return or the present Estimated Long-Term Return will be realized in the
future. See "Trust Information -- Interest, Estimated Long-Term Return and
Estimated Current Return" for information regarding the calculation of each
figure.
MARKET FOR UNITS. After the initial offering period, the Sponsor, while under no
obligation to do so, intends to maintain a market for the Units and to offer to
repurchase such Units at prices which are based on the aggregate bid side
evaluation of the Securities in a Trust plus accrued interest.
RISK FACTORS. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the inability
of the issuer to pay the principal of or interest on a security when due, the
general condition of the relevant securities market, economic recession,
volatile interest rates, early call provisions and changes to the tax status of
the Securities. True value of the underlying Securities will fluctuate inversely
with changes in interest rates. The uncertain economic conditions of recent
years, together with the monetary policies and fiscal measures adopted to
attempt to deal with them, have resulted in wide fluctuations in interest rates
and, thus, in the value of fixed rate debt obligations generally and long-term
obligations in particular. The Sponsor cannot predict the degree to which such
fluctuations will continue in the future. See "Risk Factors" in each Trust
section and "Trust Information -- Risk Factors."
4
<PAGE> 12
FIDELITY DEFINED TRUSTS SERIES 5
ESSENTIAL INFORMATION
AT THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT: DECEMBER 4, 1997
SPONSOR: NATIONAL FINANCIAL SERVICES CORPORATION
EVALUATOR: MULLER DATA CORPORATION
TRUSTEE: THE CHASE MANHATTAN BANK
<TABLE>
<CAPTION>
LADDERED LADDERED LADDERED
GOVERNMENT GOVERNMENT GOVERNMENT
SERIES 5 SERIES 6 SERIES 7
---------- ---------- ----------
<S> <C> <C> <C>
Principal Amount of Securities......................... $ 500,000 $ 500,000 $ 500,000
Principal Amount of Securities per Unit (1)............ $ 10.000 $ 10.000 $ 10.000
Number of Units........................................ 50,000 50,000 50,000
Fractional Undivided Interest per Unit................. 1/50,000 1/50,000 1/50,000
Estimated Current Return based on Public Offering Price
(2).................................................. 5.41% 5.52% 5.87%
Estimated Long-Term Return (2)......................... 4.82% 5.21% 5.40%
Calculation of Public Offering Price:
Aggregate Offering Price of Securities............. $ 499,032 $ 499,326 $ 512,698
Aggregate Offering Price of Securities per Unit.... $ 9.9806 $ 9.9866 $ 10.2540
Plus Sales Charge per Unit (3)..................... $ 0.1778 $ 0.1882 $ 0.2039
Public Offering Price per Unit (3)..................... $ 10.1584 $ 10.1748 $ 10.4579
Calculation of Estimated Net Annual Interest Income per
Unit (4):
Estimated Annual Interest Income................... $ 0.57175 $ 0.58100 $ 0.63400
Less: Estimated Annual Expense..................... $ 0.02180 $ 0.01960 $ 0.02010
Estimated Net Annual Interest Income............... $ 0.54995 $ 0.56140 $ 0.61390
First Payment per Unit............................. $ 0.04736 $ 0.04834 $ 0.05286
Estimated Normal Monthly Distribution per Unit..... $ 0.04583 $ 0.04678 $ 0.05116
Minimum Principal Value of the Trust under which Trust
Agreement may be terminated (5)...................... 20% 20% 20%
Trustee's Annual Fee and Estimated Expenses per Unit
(6).................................................. $ 0.0147 $ 0.0148 $ 0.0153
Maximum Evaluator's Evaluation Fee per Evaluation...... $ 6.00 $ 6.00 $ 6.00
Maximum Sponsor's Annual Surveillance Fee per Unit..... $ 0.0010 $ 0.0010 $ 0.0010
Estimated Annual Organizational Expenses per Unit
(7).................................................. $ 0.0055 $ 0.0032 $ 0.0032
Date of Trust Agreements............................... 12/4/97 12/4/97 12/4/97
First Settlement Date.................................. 12/9/97 12/9/97 12/9/97
Mandatory Termination Date............................. 5/31/02 8/15/05 5/15/07
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as of
the close of business of the Sponsor (currently 4:15 p.m. Eastern Time) next
following receipt of an order for a sale or purchase of Units or receipt by the
Trustee of Units tendered for redemption.
5
<PAGE> 13
- - ---------------
(1) Many unit investment trusts issue a number of units such that each unit
represents approximately $1,000 principal amount of underlying securities.
The Sponsor, on the other hand, in determining the number of Units for each
Trust has elected not to follow this format but rather to provide that
number of Units which will establish as close as possible as of the Initial
Date of Deposit a Principal Amount of Securities per Unit of $10.
(2) For information concerning the calculation of Estimated Current Return and
Estimated Long-Term Return see "Trust Information -- Interest, Estimated
Long-Term Return and Estimated Current Return." The Estimated Current
Returns and Estimated Long-Term Returns set forth above will be greater for
transactions entitled to a reduced sales charge. See "Trust
Information -- Public Offering of Units -- Public Offering Price." The
returns set forth above are based on estimated per Unit cash flows.
Estimated cash flows will vary with changes in fees and expenses, with
changes in current interest rates and with principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The estimated
cash flows to Unitholders for each Trust are set forth under "Estimated Cash
Flows to Unitholders" or are available upon request at no charge from the
Sponsor.
(3) Units of each Trust will be subject to an initial sales charge as a
percentage of the Public offering Price per Unit, and in parenthesis as a
percentage of the net amount invested, of 1.75% (1.781%) for Laddered
Government Series 5, 1.85% (1.885%) for Laddered Government Series 6 and
1.95% (1.989%) for Laddered Government Series 7. The sales charge is reduced
for quantity discounts. See "Trust Information -- Public Offering of
Units -- Public Offering Price." Anyone ordering Units for settlement after
the First Settlement Date will pay accrued interest from such date to the
date of settlement (normally three business days after order) less
distributions from the Interest Account subsequent to the First Settlement
Date. For purchases settling on the First Settlement Date, no accrued
interest will be added to the Public Offering Price. The Public Offering
Price as shown reflects the value of the Securities at the opening of
business of the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales to
investors will be executed at this price.
(4) Unitholders will receive interest distributions monthly. The Record Date is
the 10th day of the month, commencing January 10, 1998 and the Distribution
Date is the 20th day of the month, commencing January 20, 1998. On January
20, 1998 Unitholders will receive the First Payment per Unit which
represents a partial payment. Thereafter, Unitholders will receive the
Estimated Normal Monthly Distribution per Unit on each Distribution Date.
Estimated Normal Monthly Distributions per Unit will vary with changes in a
Trust's fees and expenses and with the sale or redemption of Securities. The
Trustee will distribute on each Distribution Date or shortly thereafter, to
each Unitholder of record of a Trust on the preceding record Date, an amount
substantially equal to such Unitholder's pro rata share of the cash balance,
if any, in the Principal Account of such Trust computed as of the close of
business on the preceding Record Date. However, no distribution will be
required if the balance in the Principal Account is less than $1.00 per 100
Units. See "Trust Information -- Unitholders -- Distributions to
Unitholders."
(5) The minimum principal value of each Trust under which the Trust Agreement
may be terminated is 20% of the total aggregate principal amount of
Securities deposited in each Portfolio during the initial offering period.
(6) The Trustee's annual fee includes $0.07 per $1,000 principal amount of
Securities which is paid to the Sponsor in return for its providing certain
bookkeeping and administrative services to its customers. See "Trust
Information -- Trust Expenses."
(7) Each Trust (and therefore the Unitholders of the respective Trust) will bear
all or a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and states,
the initial audit of the Trust portfolios, legal fees and the initial fees
and expenses of the Trustee but not including the expenses incurred in the
preparation and printing of brochures and other advertising materials and
other selling expenses) as is common for mutual funds. Total organizational
expenses will be amortized over a five year period or over the life of a
Trust if the term of such Trust is less than five years. See "Trust
Information -- Trust Expenses" and "Statements of Financial Condition."
THE TRUSTS
Fidelity Defined Trusts Series 5 consists of the underlying separate unit
investment trusts set forth above. The various trusts are collectively referred
to herein as the "Fidelity Defined Trusts," the "Fidelity Advisor Defined
Trusts" or the "Trusts." Each Trust is divided into "Units" representing equal
shares of the underlying assets of such Trust. The Trusts are sometimes
collectively referred to herein as the "Laddered Trusts" or the "Treasury
Portfolios." Each of the Trusts is separate and is designated by a different
series number. Each of the Trusts was created under the laws of the State
6
<PAGE> 14
of New York pursuant to a trust indenture dated the Initial Date of Deposit (the
"Trust Agreement") between National Financial Services Corporation (the
"Sponsor") and The Chase Manhattan Bank (the "Trustee").(1)
As used herein, the terms defined below shall have the following meanings:
"Securities," "Bonds" and "U.S. Treasury Obligations" shall mean the obligations
initially deposited in the Trusts described under "Portfolio" for each Trust
(including all contracts to purchase such obligations accompanied by an
irrevocable letter of credit sufficient to perform such contracts initially
deposited in the Trusts) and any additional obligations deposited in the Trusts
following the Initial Date of Deposit.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee that
aggregate principal amount of Securities or contracts for the purchase thereof
for deposit in each Trust as set forth under "Essential Information." In
exchange for the Securities so deposited, the Trustee delivered to the Sponsor
documentation evidencing the ownership of that number of Units for each Trust as
indicated in "Essential Information." Each Trust initially consists of delivery
statements (i.e., contracts) to purchase obligations. The Sponsor has a limited
right of substitution for such Securities in the event of a failed contract. See
"Trust Information -- General Information."
Additional Units of each Trust may be issued from time to time following the
Initial Date of Deposit by depositing in such Trust additional Securities or
contracts for the purchase thereof together with irrevocable letters of credit
or cash. As additional Units are issued by a Trust as a result of the deposit of
additional Securities by the Sponsor, the aggregate value of the Securities in a
Trust will be increased and the fractional undivided interest in such Trust
represented by each Unit will be decreased. The Sponsor may continue to make
additional deposits of Securities into a Trust following the Initial Date of
Deposit, provided that such additional deposits will be in principal amounts
which will maintain the same original percentage relationship among the
principal amounts of the Securities in such Trust established on the Initial
Date of Deposit. Thus, although additional Units will be issued, each Unit will
continue to represent the same principal amount of each Security, and the
percentage relationship among the principal amount of each Security in the
respective Trust will remain the same. To the extent that any Units are redeemed
by the Trustee or additional Units are issued as a result of additional
Securities being deposited by the Sponsor, the fractional undivided interest in
a Trust represented by each unredeemed Unit will increase or decrease
accordingly, although the actual interest in such Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unitholders, which may include the Sponsor, or
until the termination of the Trust Agreement.
LADDERED GOVERNMENT SERIES 5, SHORT TREASURY PORTFOLIO,
LADDERED GOVERNMENT SERIES 6, SHORT/INTERMEDIATE TREASURY PORTFOLIO
AND LADDERED GOVERNMENT SERIES 7, INTERMEDIATE TREASURY PORTFOLIO
THE TRUST PORTFOLIOS
Laddered Government Series 5, Short Treasury Portfolio, Laddered Government
Series 6, Short/Intermediate Treasury Portfolio and Laddered Government Series
7, Intermediate Treasury Portfolio were each formed for the purpose of providing
safety of capital as is consistent with current income and investment
flexibility by staggering the return of principal over a predetermined period of
time (a strategy referred to as "laddered maturities"). The portfolio for each
- - ---------------
(1) Reference is made to the Trust Agreement, and any statements contained
herein are qualified in their entirety by the provisions of the Trust
Agreement.
7
<PAGE> 15
Trust consists of U.S. Treasury Obligations that are backed by the full faith
and credit of the United States government. Each Trust Portfolio was also formed
for the purpose of providing protection against changes in interest rates and
also passing through to Unitholders in all states the exemption from state
personal income taxes afforded to direct owners of U.S. Treasury Obligations.
The value of the Units, the estimated current return and estimated long-term
return to new purchasers will fluctuate with the value of the Securities
included in a portfolio which will generally increase or decrease inversely with
changes in interest rates.
In selecting U.S. Treasury Obligations for deposit in the Trusts the following
factors, among others, were considered by the Sponsor: (a) the types of such
obligations available; (b) the prices and yields of such obligations relative to
other comparable obligations, including the extent to which such obligations are
traded at a premium or at a discount from par; and (c) the maturities of such
obligations.
Laddered Government Series 5, Short Treasury Portfolio consists of a portfolio
of U.S. Treasury Obligations with differing maturities, designed to return
approximately 20% of the principal amount of the Trust semi-annually, commencing
in 1999. Laddered Government Series 5, Short Treasury Portfolio has a dollar
weighted average maturity of 2.4 years.
Laddered Government Series 6, Short/Intermediate Treasury Portfolio consists of
a portfolio of U.S. Treasury Obligations with differing maturities, designed to
return approximately 20% of the principal amount of the Trust annually,
commencing in 2000. Laddered Government Series 6, Short/Intermediate Treasury
Portfolio has a dollar weighted average maturity of 4.7 years.
Laddered Government Series 7, Intermediate Treasury Portfolio consists of a
portfolio of U.S. Treasury Obligations with differing maturities, designed to
return approximately 20% of the principal amount of the Trust semi-annually,
commencing in 2004. Laddered Government Series 7, Intermediate Treasury
Portfolio has a dollar weighted average maturity of 7.4 years.
TAX STATUS
The Laddered Trusts may be appropriate investments for investors who desire to
participate in a portfolio of taxable, fixed income securities offering the
safety of capital provided by a portfolio backed by the full faith and credit of
the United States. In addition, many investors may benefit from the exemption
from state and local personal income taxes that will pass through each Laddered
Trust to Unitholders in all states. Each Laddered Trust has been created as a
grantor trust for federal tax reasons: For additional information concerning
each Laddered Trust's status as a grantor trust see "Trust Information -- Tax
Status."
RISK FACTORS
The Securities are direct obligations of the United States and are backed by its
full faith and credit although the Units of the Laddered Trusts are not so
backed. The Securities are not rated but in the opinion of the Sponsor have
credit characteristics comparable to those of securities rated "AAA" by
nationally recognized rating agencies.
An investment in Units of a Laddered Trust should be made with an understanding
of the risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the Securities and hence the Units will
decline with increases in interest rates. The high inflation of prior years,
together with the fiscal measures adopted to attempt to deal with it, have
resulted in wide fluctuations in interest rates and, therefor, in the value of
fixed rate debt obligations generally. The Sponsor cannot predict whether such
fluctuations will continue in the future. For a
8
<PAGE> 16
discussion of other considerations associated with an investment in Units, see
"Trust Information -- General Information" and "Trust Information -- Risk
Factors -- General."
LADDERED GOVERNMENT SERIES 5, SHORT TREASURY
PORTFOLIO AS OF THE OPENING OF BUSINESS
ON THE INITIAL DATE OF DEPOSIT: DECEMBER 4, 1997
<TABLE>
<CAPTION>
COSTS OF
AGGREGATE BONDS TO
PRINCIPAL DESCRIPTION COUPON MATURITY TRUST(1)
- - --------- ------------------------- ------ --------- --------------
<C> <S> <C> <C> <C>
$100,000 U.S. Treasury Note 6.250% 5/31/99 $100,820
100,000 U.S. Treasury Note 5.875% 11/15/99 100,289
85,000 U.S. Treasury Note 6.250% 5/31/00 85,989
15,000 U.S. Treasury STRIPs(2) 0.000% 5/15/00 13,066
100,000 U.S. Treasury Note 5.625% 11/30/00 99,633
85,000 U.S. Treasury Note 6.500% 5/31/01 86,913
15,000 U.S. Treasury STRIPs(2) 0.000% 5/15/01 12,322
- - -------- --------
$500,000 $499,032
======== ========
</TABLE>
LADDERED GOVERNMENT SERIES 6, SHORT/INTERMEDIATE
TREASURY PORTFOLIO AS OF THE OPENING OF BUSINESS
ON THE INITIAL DATE OF DEPOSIT: DECEMBER 4, 1997
<TABLE>
<CAPTION>
COSTS OF
AGGREGATE BONDS TO
PRINCIPAL DESCRIPTION COUPON MATURITY TRUST(1)
- - --------- ------------------------- ------ -------- --------------
<C> <S> <C> <C> <C>
$100,000 U.S. Treasury Note 6.000% 8/15/00 $100,633
100,000 U.S. Treasury Note 6.500% 8/31/01 102,352
80,000 U.S. Treasury Note 6.250% 8/31/02 81,475
20,000 U.S. Treasury STRIPs(2) 0.000% 8/15/02 15,308
100,000 U.S. Treasury Note 5.750% 8/15/03 99,703
80,000 U.S. Treasury Note 7.250% 8/15/04 86,250
20,000 U.S. Treasury STRIPs(2) 0.000% 8/15/04 13,605
- - -------- --------
$500,000 $499,326
======== ========
</TABLE>
9
<PAGE> 17
LADDERED GOVERNMENT SERIES 7, INTERMEDIATE TREASURY
PORTFOLIO AS OF THE OPENING OF BUSINESS
ON THE INITIAL DATE OF DEPOSIT: DECEMBER 4, 1997
<TABLE>
<CAPTION>
COSTS OF
AGGREGATE BONDS TO
PRINCIPAL DESCRIPTION COUPON MATURITY TRUST(1)
- - --------- ------------------------- ------ -------- --------------
<C> <S> <C> <C> <C>
$100,000 U.S. Treasury Note 7.250% $107,609
5/15/04
100,000 U.S. Treasury Note 7.875% 111,500
11/15/04
80,000 U.S. Treasury Note 6.500% 83,087
5/15/05
20,000 U.S. Treasury STRIPs(2) 0.000% 12,981
5/15/05
100,000 U.S. Treasury Note 5.875% 100,039
11/15/05
80,000 U.S. Treasury Note 6.875% 85,275
5/15/06
20,000 U.S. Treasury STRIPs(2) 0.000% 12,207
5/15/06
- - -------- --------
$500,000 $512,698
======== ========
</TABLE>
- - ---------------
(1) Some Securities may be represented by contracts to purchase such Securities.
During the initial offering period, evaluations of Securities are made on
the basis of current offering side evaluations of the Securities. The
aggregate offering price is greater than the aggregate bid price of the
Securities, which is the basis on which Redemption Prices will be determined
for purposes of redemption of Units after the initial offering period. Other
information regarding the Securities in the Trusts, at the opening of
business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
BID
COST OF ANNUAL SIDE
SECURITIES PROFIT OR INTEREST VALUE
TO (LOSS) TO INCOME OF
TRUST SPONSOR SPONSOR TO TRUST SECURITIES
-------------------------------------------- ---------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Laddered Government Series 5................ $498,784 $(263) $ 28,588 $498,886
Laddered Government Series 6................ $498,659 $ 156 $ 29,050 $499,088
Laddered Government Series 7................ $511,686 $ 501 $ 31,700 $512,443
</TABLE>
The Profit or (Loss) to Sponsor reflects portfolio hedging transaction costs,
hedging gains or losses, and certain other carrying costs.
(2) This Security has been purchased at a deep discount from the par value
because there is no stated interest income thereon. Securities which pay no
interest are normally described as "zero coupon" bonds. Over the life of
Securities purchased at a deep discount the value of such Securities will
increase such that upon maturity the holders of such securities will receive
100% of the principal amount thereof.
10
<PAGE> 18
REPORT OF INDEPENDENT AUDITORS
UNITHOLDERS
FIDELITY DEFINED TRUSTS SERIES 5
We have audited the accompanying statements of condition and the related
portfolios of Fidelity Defined Trusts Series 5 (Laddered Government Series 5,
Short Treasury Portfolio, Laddered Government Series 6, Short/Intermediate
Treasury Portfolio and Laddered Government Series 7, Intermediate Treasury
Portfolio) as of the opening of business, December 4, 1997. The statements of
condition and portfolios are the responsibility of the Trustee and the Sponsor.
Our responsibility is to express an opinion on such 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 at December 4, 1997 and a letter of credit
deposited to purchase Securities by correspondence with The Chase Manhattan
Bank, the Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by that the Trustee and the Sponsor, as well
as evaluating the overall financial statement presentation. We believe 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 Defined Trusts Series
5 (Laddered Government Series 5, Short Treasury Portfolio, Laddered Government
Series 6, Short/Intermediate Treasury Portfolio, and Laddered Government Series
7, Intermediate Treasury Portfolio) as of the opening of business, December 4,
1997, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
December 4, 1997
11
<PAGE> 19
FIDELITY DEFINED TRUSTS SERIES 5
STATEMENTS OF CONDITION AT THE OPENING OF BUSINESS ON DECEMBER 4, 1997, THE
INITIAL DATE OF DEPOSIT
<TABLE>
<CAPTION>
LADDERED LADDERED LADDERED
GOVERNMENT GOVERNMENT GOVERNMENT
SERIES 5 SERIES 6 SERIES 7
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT IN SECURITIES
Contracts to purchase Securities(1)................ $499,032 $499,326 $512,698
Organizational costs(3)............................ 41,450 40,575 40,575
Accrued interest to Initial Date of Deposit on
underlying Securities(1)(3)...................... 558 8,284 1,664
-------- -------- --------
Total......................................... $541,040 $548,185 $554,937
======== ======== ========
Number of Units.................................... 50,000 50,000 50,000
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities --
Accrued organizational costs(2).................. $ 41,450 $ 40,575 $ 40,575
Accrued interest payable to Sponsor(1)(3)........ 558 8,284 1,664
Interest of Unitholders --
Cost to investors(4)............................. 507,920 508,738 522,894
Less: Gross underwriting commission(4)........... (8,888) (9,412) (10,196)
-------- -------- --------
Net interest to Unitholders(1)(3)(4)............. $499,032 $499,326 $512,698
-------- -------- --------
Total......................................... $541,040 $548,185 $554,937
======== ======== ========
</TABLE>
- - ---------------
NOTES:
(1) The aggregate value of the Securities listed in each "Portfolio" and their
cost to such Trust are the same. The value of the Securities is determined
by Muller Data Corporation on the bases set forth under "Trust
Information -- Public Offering of Units -- Public Offering Price" based on
prices as of the opening of business on December 4, 1997. The contracts to
purchase Securities are collateralized by an irrevocable letter of credit of
$1,539,000 which has been deposited with the Trustee.
(2) Each Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs which will be deferred and amortized over five years or
over the life of the Trust if the term of such Trust is less than five
years. Organizational costs have been estimated based on a projected size of
$25,000,000 for each Trust. To the extent a Trust is larger or smaller, the
estimate will vary.
(3) The Trustee will advance to each Trust the amount of net interest accrued to
the First Settlement Date for distribution to the Sponsor as the Unitholder
of Record.
(4) The aggregate public offering price includes a sales charge for each Trust
as set forth under "Essential Information," assuming all single transactions
involve less than 50,000 Units. For single transactions involving 50,000 or
more Units, the sales charge is reduced (see "Trust Information -- Public
Offering of Units -- Public Offering Price"), resulting in an equal
reduction in both the Cost to investors and the Gross underwriting
commission while the Net interest to Unitholders remains unchanged.
12
<PAGE> 20
TRUST INFORMATION
GENERAL INFORMATION
Because certain of the Securities in certain of the Trusts may from time to time
under certain circumstances be sold or redeemed or will mature in accordance
with their terms and because the proceeds from such events will be distributed
to Unitholders and will not be reinvested, no assurance can be given that a
Trust will retain for any length of time its present size and composition.
Neither the Sponsor nor the Trustee shall be liable in anyway for any default,
failure or defect in any Security. In the event of a failure to deliver any
Security that has been purchased for a Trust under a contract, including those
securities purchased on a "when, as and if issued" basis ("Failed Securities"),
the Sponsor is authorized under the Trust Agreement to direct the Trustee to
acquire other securities ("Replacement Securities") to make up the original
corpus of such Trust.
Securities in certain of the Trusts may have been purchased on a "when, as and
if issued" or delayed delivery basis with delivery expected to take place after
the First Settlement Date. See "Notes to Portfolios" for each Trust.
Accordingly, the delivery of such Securities may be delayed or may not occur.
Interest on these Securities begins accruing to the benefit of Unitholders on
their respective dates of delivery. Unitholders of a Trust will be "at risk"
with respect to any "when, as and if issued" or "delayed delivery" Securities
included in their respective Trust portfolio (i.e., may derive either gain or
loss from fluctuations in the evaluation of such Securities) from the date they
commit for Units.
Replacement Securities must be purchased within 20 days after delivery of the
notice that a contract to deliver a Security will not be honored and the
purchase price may not exceed the amount of funds reserved for the purchase of
the Failed Securities. The Replacement Securities (i) must be payable in United
States currency, (ii) must be purchased at a price that results in a yield to
maturity and a current return at least equal to that of the Failed Securities as
of the Initial Date of Deposit, (iii) shall not be "when, as and if issued" or
restricted securities, (iv) must satisfy any rating criteria for Securities
originally included in such Trust, and (v) must not cause the Units of such
Trust to cease to be rated AAA by the appropriate rating agency if the Units
were so rated on the Initial Date of Deposit. Whenever a Replacement Security is
acquired for a Trust, the Trustee shall, within five days thereafter, notify all
Unitholders of the Trust of the acquisition of the Replacement Security and
shall, on the next monthly distribution date which is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to the Trust of the Failed Security exceeded the cost of the Replacement
Security. Once all of the Securities in a Trust are acquired, the Trustee will
have no power to vary the investments of such Trust, i.e., the Trustee will have
no managerial power to take advantage of market variations to improve a
Unitholder's investment.
If the right of limited substitution described in the preceding paragraphs is
not utilized to acquire Replacement Securities, the Sponsor will refund the
sales charge attributable to such Failed Securities to all Unitholders of the
applicable Trust and the Trustee will distribute the principal and accrued
interest attributable to such Failed Securities not more than 30 days after the
date on which the Trustee would have been required to purchase a Replacement
Security. Unitholders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other securities at
a yield equal to or in excess of the yield which such proceeds would have earned
for Unitholders of such Trusts.
Whether or not a Replacement Security is acquired, an amount equal to the
accrued interest (at the coupon rate of the Failed Securities) will be paid to
Unitholders of a Trust to the date the Sponsor removes the Failed Securities
from such Trust if the Sponsor determines not to purchase a Replacement Security
or to the date of substitution if a Replacement Security is purchased. All such
interest paid to Unitholders which accrued after the date of settlement for a
purchase of Units will be paid by the Sponsor. In the event a Replacement
Security could not be acquired by a Trust,
13
<PAGE> 21
the net annual interest income per Unit for such Trust would be reduced and the
Estimated Current Return and Estimated Long-Term Return might be lowered.
Subsequent to the Initial Date of Deposit, a Security may cease to be rated or
its rating may be reduced below any minimum required as of the initial Date of
Deposit. Neither event requires the elimination of such investment from a Trust,
but may be considered in the Sponsor's determination to direct the Trustee to
dispose of such Security. See "Trust Information -- Investment Supervision."
The Sponsor may not alter the portfolio of a Trust except upon the occurrence of
certain extraordinary circumstances. See "Trust Information -- Investment
Supervision." Certain of the Securities may be subject to optional call or
mandatory redemption pursuant to sinking fund provisions, in each case prior to
their stated maturity. A bond subject to optional call is one which is subject
to redemption or refunding prior to maturity at the option of the issuer, often
at a premium over par. A refunding is a method by which a bond issue is
redeemed, at or before maturity, by the proceeds of a new bond issue. A bond
subject to sinking fund redemption is one which is subject to partial call from
time to time at par with proceeds from a fund accumulated for the scheduled
retirement of a portion of an issue prior to maturity. Special or extraordinary
redemption provisions may provide for redemption at par of all or a portion of
an issue upon the occurrence of certain circumstances, which may be prior to the
optional call dates shown under "Portfolio" for each Trust. Redemption pursuant
to optional call provisions is more likely to occur, and redemption pursuant to
special or extraordinary redemption provisions may occur, when the Securities
have an offering side evaluation which represents a premium over par, that is,
when they are able to be refinanced at a lower cost. The proceeds from any such
call or redemption pursuant to sinking fund provisions, as well as proceeds from
the sale of Securities and from Securities which mature in accordance with their
terms from a Trust, unless utilized to pay for Units tendered for redemption,
will be distributed to Unitholders of such Trust and will not be used to
purchase additional Securities for such Trust. Accordingly, any such call,
redemption, sale or maturity will reduce the size and diversity of a Trust and
the net annual interest income of such Trust and may reduce the Estimated
Current Return and the Estimated Long-Term Return. See "Trust
Information -- Interest, Estimated Long-Term Return and Estimated Current
Return." The call, redemption, sale or maturity of Securities also may have tax
consequences to a Unitholder. See "Trust Information -- Tax Status." Information
with respect to the call provisions and maturity dates of the Securities is
contained under "Portfolio" for each Trust.
Each Unit of a Trust represents an undivided fractional interest in the
Securities deposited therein, in the ratio shown under "Essential Information."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple or fraction thereof, subject to each
Trust's minimum investment requirement of one Unit. Fractions of Units will be
computed to three decimal points. To the extent that Units of a Trust are
redeemed, the principal amount of Securities in such Trust will be reduced and
the undivided fractional interest represented by each outstanding Unit of such
Trust will increase. See "Trust Information -- Redemption."
RISK FACTORS
U.S. Treasury Obligations. U.S. Treasury Obligations are direct obligations of
the United States and are backed by its full faith and credit although the Units
are not so backed. The U.S. Treasury Obligations are not rated but in the
opinion of the Sponsor have credit characteristics comparable to those of
securities rated "AAA" by nationally recognized rating agencies.
An investment in Units of a Trust which contains U.S. Treasury Obligations
should be made with an understanding of the risks which an investment in fixed
rate debt obligations may entail, including the risk that the value of the
Securities and hence the Units will decline with increases in interest rates.
The high inflation of prior years, together
14
<PAGE> 22
with the fiscal measures adopted to attempt to deal with it, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate debt
obligations generally. The Sponsor cannot predict whether such fluctuations will
continue in the future.
General. Certain of the Securities in certain of the Trusts may have been
acquired at a market discount from par value at maturity. The coupon interest
rates on such securities at the time they were purchased and deposited in the
Trusts were lower than the current market interest rates for newly issued bonds
of comparable rating and type. If such interest rates for newly issued
comparable securities increase, the market discount of previously issued
securities will become greater, and if such interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should also note
that the value of securities purchased at a market discount will increase in
value faster than securities purchased at a market premium if interest rates
decrease. Conversely, if interest rates increase, the value of securities
purchased at a market discount will decrease faster than securities purchased at
a market premium. In addition, if interest rates rise, the prepayment risk of
higher yielding, premium securities and the prepayment benefit for lower
yielding, discount securities will be reduced. See "Trust Information -- Tax
Status." Market discount attributable to interest rate changes does not indicate
a lack of market confidence in the issue. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any of the
Securities.
Certain of the Securities in the Trusts may have been acquired at a market
premium from par value at maturity. The coupon interest rates on such securities
at the time they were purchased and deposited in the Trusts were higher than the
current market interest rates for newly issued securities of comparable rating
and type. If such interest rates for newly issued and otherwise comparable
securities decrease, the market premium of previously issued securities will be
increased, and if such interest rates for newly issued comparable securities
increase, the market premium of previously issued securities will be reduced,
other things being equal. The current returns of securities trading at a market
premium are initially higher than the current returns of comparable securities
of a similar type issued at currently prevailing interest rates because premium
securities tend to decrease in market value as they approach maturity. Because
part of the purchase price is thus returned not at maturity but through current
income payments, early redemption of a premium bond at par or early prepayments
of principal will result in a reduction in yield. Redemption pursuant to call
provisions generally will, and redemption pursuant to sinking fund provisions
may, occur at times when the redeemed Securities have an offering side valuation
which represents a premium over par or, for original issue discount Securities,
a premium over the accreted value. To the extent that the Securities were
deposited in the Trusts at a price higher than the price at which they are
redeemed, this will represent a loss of capital when compared to the original
Public Offering Price of the Units. Because premium securities generally pay a
higher rate of interest than securities priced at or below par, the effect of
the redemption of premium securities would be to reduce Estimated Net Annual
Unit Income by a greater percentage than the par amount of such securities bears
to the total par amount of Securities in a Trust. Although the actual impact of
any such redemptions that may occur will depend upon the specific Securities
that are redeemed, it can be anticipated that the Estimated Net Annual Interest
Income will be significantly reduced after the dates on which such Securities
are eligible for redemption. See "Portfolio" for each Trust for the earliest
scheduled call date and the initial redemption price for each Security.
Certain of the Securities in certain of the Trusts may be "zero coupon" bonds,
i.e., an original issue discount bond that does not provide for the payment of
current interest. Zero coupon bonds are purchased at a deep discount because the
buyer receives only the right to receive a final payment at the maturity of the
bond and does not receive any periodic interest payments. The effect of owning
deep discount bonds which do not make current interest payments (such as the
zero coupon bonds) is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount earned during the life of such
obligation. This implicit reinvestment of earnings at the same rate eliminates
15
<PAGE> 23
the risk of being unable to reinvest the income on such obligation at a rate as
high as the implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the future. For
this reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently. A Trust may be
required to sell zero coupon bonds prior to maturity (at their current market
price which is likely to be less than their par value) in the event that all the
Securities in the portfolio other than the zero coupon bonds are called or
redeemed in order to pay expenses of a Trust or in case a Trust is terminated.
For the Federal tax consequences of original issue discount securities such as
the zero coupon bonds, see "Trust Information -- Tax Status."
Litigation. To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Security which might
reasonably be expected to have a material adverse effect on the Trusts. At any
time after the Initial Date of Deposit, litigation may be instituted on a
variety of grounds with respect to the Securities. The Sponsor is unable to
predict whether any such litigation may be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trusts.
RATING OF UNITS
Standard & Poor's has rated the Units of the Treasury Portfolios "AAA." This is
the highest rating assigned by Standard & Poor's. Capacity to pay interest and
repay principal is very strong. Standard & Poor's has been compensated by the
Sponsor for its services in rating Units of the Trusts.
A Standard & Poor's rating (as described by Standard & Poor's) on the units of
an investment trust (hereinafter referred to collectively as "units" or "trust")
is a current assessment of creditworthiness with respect to the investments held
by such trust. This assessment takes into consideration the financial capacity
of the issuers and of any guarantors, insurers, lessees, or mortgagors with
respect to such investments. The assessment, however, does not take into account
the extent to which trust expenses or portfolio asset sales for less than the
trust's purchase price will reduce payment to the Unitholder of the interest and
principal required to be paid on the portfolio assets. In addition, the rating
is not a recommendation to purchase, sell, or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a particular
investor. Trusts rated "AAA" are composed exclusively of assets that are rated
"AAA" by Standard & Poor's or have, in the opinion of Standard & Poor's, credit
characteristics comparable to assets rated "AAA," or certain short-term
investments. Standard & Poor's defines its "AAA" rating for such assets as the
highest rating assigned by Standard & Poor's to a debt obligation. Capacity to
pay interest and repay principal is very strong.
RETIREMENT PLANS
Units of the Trusts may be suitable for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other qualified retirement plans.
Generally, capital gains and income received under each of the foregoing plans
are deferred from federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special income averaging or tax-deferred rollover treatment. Investors
considering placing an investment in a Trust on account of any such plan should
review specific tax laws related thereto and should consult their attorneys or
tax adviser. The Trusts will waive the $5,000 minimum investment requirement for
qualified retirement plans. The minimum investment is $250 for tax-deferred
plans such as IRA accounts. Fees and charges with respect to such plans may
vary. Consult your financial adviser regarding eligibility requirements.
16
<PAGE> 24
TAX STATUS
The following discussion applies to the Laddered Trusts, each of which are
organized as grantor trusts for federal tax purposes. The summary is limited to
investors who hold the Units as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Internal Revenue Code of
1986 (the "Code"). Unitholders should consult their tax advisers in determining
the Federal, state, local and any other tax consequences of the purchase,
ownership and disposition of Units in the Trusts. In the opinion of Chapman and
Cutler, special counsel for the Sponsor, under existing law:
1. Each Trust is not an association taxable as a corporation for federal
income tax purposes.
2. Each Unitholder will be considered the owner of a pro rata portion of
each of the Trust assets for federal income tax purposes under Subpart E,
Subchapter J of Chapter 1 of the Code and the income of each Trust will be
treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his or her pro rata share of
income derived from each Trust asset when such income is considered to be
received by a Trust.
3. Each Unitholder will have a taxable event when a Security is disposed of
(whether by sale, exchange, liquidation, redemption, or otherwise) or when
the Unitholder redeems or sells his or her Units. Unitholders must reduce
the tax basis of their Units for their share of accrued interest received
by a Trust, if any, on Securities delivered after the Unitholders pay for
their Units to the extent that such interest accrued on such Securities
before the date such Trust acquired ownership of the Securities (and the
amount of this reduction may not exceed the amount of accrued interest paid
to the seller) and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of such
Units. A Unitholders's tax basis in his or her Units will equal his or her
tax basis in his or her pro rata portion of all the assets of the Trust.
Such basis is determined (before adjustments described below) by
apportioning the tax basis for the Units among each of the Trust's assets,
according to the value as of the valuation date nearest the date of
acquisition of the Units. It should be noted that certain legislative
proposals have been made which could affect the calculation of basis for
Unitholders holding securities that are substantially identical to the
Securities. Unitholders should consult their own tax advisers with regard
to the calculation of basis. Gain or loss upon the sale or redemption of
Units is measured by comparing the proceeds of such sale or redemption with
the adjusted basis of the Units. If the Trustee disposes of Securities,
gain or loss is recognized to the Unitholder (subject to various
nonrecognition provisions of the Code). The amount of any such gain or loss
is measured by comparing the Unitholders pro rata share of the total
proceeds from such disposition with his basis for his fractional interest
in the asset disposed of. The basis of each Unit and of each Security which
was issued with original issue discount must be increased by the amount of
accrued original issue discount and the basis of each Unit and of each
Security which was purchased by a Trust at a premium must be reduced by the
annual amortization of bond premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. The tax basis reduction
requirements of the Code relating to amortization of bond premium may,
under some circumstances, result in the Unitholder realizing a taxable gain
when his or her Units are sold or redeemed for an amount equal to or less
than his or her original cost.
A Trust may contain certain "zero coupon" Securities (the "Stripped
Treasury Securities") that are treated as bonds issued at an original issue
discount as of the date a Unitholder purchases his or her Units. Because
the Stripped Treasury Securities represent interest in "stripped" U.S.
Treasury bonds, a Unitholder's tax basis for his or her pro rata portion of
each Stripped Treasury Security held by a Trust (determined at the time he
acquires his Units, in the manner described above) shall be treated as its
"purchase price" by the Unitholder. Original issue
17
<PAGE> 25
discount is effectively treated as interest for federal income tax
purposes, and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its stated
redemption price at maturity. A Unitholder will be required to include in
gross income for each taxable year the sum of his daily portions of
original issue discount attributable to the Stripped Treasury Securities
held by a Trust as such original issue discount accrues and will, in
general, be subject to federal income tax with respect to the total amount
of such original issue discount that accrues for such year even though the
income is not distributed to the Unitholders during such year to the extent
it is not less than a de minimis amount as determined under the Treasury
Regulation relating to stripped bonds. To the extent that the amount of
such discount is less than the respective de minimis amount, such discount
is generally treated as zero. In general, original issue discount accrues
daily under a constant interest rate method which takes into account the
semi-annual compounding of accrued interest. In the case of the Stripped
Treasury Securities, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should consult
their tax advisers regarding the Federal income tax consequences and
accretion of original issue discount.
4. The Unitholder's aliquot share of the total proceeds received on the
disposition of, or principal paid with respect to, a Security held by a
Trust will constitute ordinary income (which will be treated as interest
income for most purposes) to the extent it does not exceed the accrued
market discount on such Security that has not previously been included in
taxable income by such Unitholder. A Unitholder may generally elect to
include market discount in income as such discount accrues. In general,
market discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a Security over the Unitholder's
initial tax basis for such pro rata portion, determined at the time such
Unitholder acquires his Units. However, market discount with respect to any
Security will generally be considered zero if it amounts to less than .25%
of the obligation's stated redemption price at maturity times the number of
years to maturity. The market discount rules do not apply to Stripped
Treasury Securities because they are stripped debt instruments subject to
special original issue discount rules as discussed above. If a Unitholder
sells his or her Units, gain, if any, will constitute ordinary income to
the extent of the aggregate of the accrued market discount on the
Unitholder's pro rata portion of each Security that is held by a Trust that
has not previously been included in taxable income by such Unitholder. In
general, market discount accrues on a ratable basis unless the Unitholder
elects to accrue such discount on a constant interest rate basis. However,
a Unitholder should consult their own tax adviser regarding the accrual of
market discount. The deduction by a Unitholder for any interest expense
incurred to purchase or carry Units will be reduced by the amount of any
accrued market discount that has not yet been included in taxable income by
such Unitholder. In general, the portion of any interest expense which is
not currently deductible would be ultimately deductible when the accrued
market discount is included in income. Unitholders should consult their own
tax advisers regarding whether an election should be made to include market
discount in income as it accrues and as to the amount of interest expense
which may not be currently deductible.
Limitations on Deductibility of Trust Expenses by Unitholders. Each Unitholder's
pro rata share of each expense paid by a Trust is deductible by the Unitholder
to the same extent as though the expense had been paid directly by the
Unitholder, subject to the following limitation. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized deductions,
such as investment expenses, tax return preparation fees and employee business
expenses, may be deductible by an individual only to the extent they exceed 2%
of such individual's adjusted gross income. Unitholders may be required to treat
certain expenses of a Trust as miscellaneous itemized deductions subject to this
limitation.
Computation of the Unitholder's Tax Basis. The tax basis of a Unitholder with
respect to his or her interest in a Security is increased by the amount of
original issue discount (and market discount, if the Unitholder elects to
include
18
<PAGE> 26
market discount, if any, on the Securities held by a Trust in income as it
accrues) thereon properly included in the Unitholder's gross income as
determined for Federal income tax purposes and reduced by the amount of any
amortized 'premium which the Unitholder has properly elected to amortize under
Section 171 of the Code. A Unitholder's tax basis in his or her Units will equal
his tax or her basis in his pro rata portion of all of the assets of a Trust.
Recognition of Taxable Gain or Loss upon Disposition of Obligations by a Trust
or Disposition of Unit. A Unitholder will recognize taxable capital gain (or
loss) when all or part of his or her pro rata interest in a Security is disposed
of by a Trust or if the Unitholder disposes of a Unit. Any gain recognized on a
sale or exchange and not constituting a realization of accrued "market
discount," and any loss, will generally be capital gain or loss except in the
case of a dealer or financial institution. As previously discussed, gain
realized on the disposition of the interest of a Unitholder in any Security
deemed to have been acquired with market discount will be treated as ordinary
income to the extent the gain does not exceed the amount of accrued market
discount not previously taken into income. Any capital gain or loss arising from
the disposition of a Security by a Trust or the disposition of Units by a
Unitholder will be short-term capital gain (or loss) unless the Unitholder has
held his Units for more than one year in which case such capital gain or loss
will be long-term. For taxpayers other than corporations, net capital gain
(which is defined as net long-term capital gain over net short-term capital loss
for the taxable year) is subject to a maximum marginal stated tax rate of either
28% or 20%, depending upon the holding periods of the capital assets. Capital
loss is long-term if the holding period for the asset is more than one year, and
is short-term if the holding period for the asset is one year or less.
Generally, capital gains realized from assets held for more than one year but
not more than 18 months are taxed at a maximum marginal stated tax rate of 28%
and capital gains realized from assets (with certain exclusions) held for more
than 18 months are taxed at a maximum marginal stated tax rate of 20% (10% in
the case of certain taxpayers in the lowest tax bracket). Further, capital gains
realized from assets held for one year or less are taxed at the same rates as
ordinary income. Legislation is currently pending that provides the appropriate
methodology that should be applied in netting the realized capital gains and
losses. Such legislation is proposed to be effective retroactively for tax years
ending after May 6, 1997. However, it should be noted that legislative proposals
are introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. The tax cost
reduction requirements of the Code relating to amortization of bond premium may,
under some circumstances, result in the Unitholder's realizing taxable gain when
his Units are sold or redeemed for an amount equal to or less than his original
cost.
If the Unitholder disposes of a Unit, he or she is deemed thereby to have
disposed of his or her entire pro rata interest in all Trust assets, including
his pro rata portion of all of the Securities represented by the Unit. This may
result in a portion of the gain, if any, on such sale being taxable as ordinary
income under the market discount rules (assuming no election was made by the
Unitholder to include market discount in income as it accrues) as previously
discussed.
The 1997 Act includes provisions that treat certain transactions designed to
reduce or eliminate risk of loss and opportunities for gain (e.g., short sales,
offsetting notional principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain (but not
loss) and for purposes of determining the holding period. Unitholders should
consult their own tax advisors with regard to any such constructive sales rules.
In addition, please note that capital gains may be recharacterized as ordinary
income in the case of certain financial transactions that are "conversion
transactions" effective for transactions entered into after April 30, 1993.
Unitholders and prospective investors should consult with their tax advisers
regarding the potential effect of this provision on their investment in Units.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an investor
other than a U.S. citizen or resident of a U.S. corporation, partnership, estate
or trust) will not be subject to United States federal income taxes, including
withholding taxes, on interest income (including any original issue discount)
on, or any gain from the sale or other
19
<PAGE> 27
disposition of, his or her pro rata interest in any Security or the sale of his
Units provided that (i) the interest income or gain is not effectively connected
to the conduct by the foreign investor of a trade or business within the United
States, (ii) with respect to any gain, the foreign investor (if an individual)
is not present in the United States for 183 days or more during his taxable
year, (iii) the foreign investor provides all certification which may be
required of his or her status (foreign investors may contact the Sponsor to
obtain a Form W-8 which must be filed with the Trustee and refiled every three
calendar years thereafter) and (iv) further provided that the exemption from
withholding for U.S. federal income taxes for interest on any U.S. Securities
shall apply to the extent the Securities were issued after July 18, 1984.
Foreign investors should consult their tax advisers with respect to United
States tax consequences of ownership of Units.
In the opinion of Carter, Ledyard & Milburn, special counsel to the Trusts for
New York tax matters each Trust is not an association taxable as a corporation
and the income of each Trust will be treated as the income of the Unitholders
under the existing income tax laws of the State and City of New York.
General. Each Unitholder (other than a foreign investor who has properly
provided the certifications described above) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by a
Trust to such Unitholder will be subject to back-up withholding.
The foregoing discussion relates only to United States federal income taxes and
applies only to the Laddered Government Series which are described in this
Prospectus; Unitholders may be subject to state and local taxation in other
jurisdictions (including a foreign investor's country of residence). Unitholders
should consult their tax advisers regarding potential state, local, or foreign
taxation with respect to the Units and the tax treatment of Securities acquired
at an original issue discount or market discount and premium, if any.
DISTRIBUTION REINVESTMENT
Certain Unitholders of the Trusts may elect to have distributions of principal
(including capital gains, if any) or interest or both automatically invested
without charge in shares of certain mutual funds which are registered in such
Unitholder's state of residence and are advised by Fidelity Management &
Research Company, an affiliate of the Sponsor (the "Fidelity Funds"). Ask your
financial consultant regarding the availability of distribution reinvestment.
If individuals indicate they wish to participate in the Reinvestment Program but
do not designate a reinvestment fund, the Trustee will contact such individuals
to determine which reinvestment fund they wish to elect. Since the portfolio
securities and investment objectives of the Fidelity Funds generally will differ
significantly from that of the Trusts, Unitholders should carefully consider the
consequences before selecting such Fidelity Funds for reinvestment. Detailed
information with respect to the investment objectives and the management of the
Fidelity Funds is contained in their respective prospectuses, which can be
obtained from the Sponsor upon request. An investor should read the prospectus
of the reinvestment fund selected prior to making the election to reinvest.
Unitholders who desire to have such distributions automatically reinvested
should inform their investment professional at the time of purchase or should
file with the Trustee a written notice of election.
Unitholders who are receiving distributions in cash may elect to participate in
distribution reinvestment by filing with the Trustee an election to have such
distributions reinvested without charge. Such election, and any changes thereof,
must be received by the Trustee at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such Record Date.
Any such election shall remain in effect until a subsequent notice is received
by the Trustee. See "Trust Information Unitholders -- Distributions to
Unitholders."
20
<PAGE> 28
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the initial Date of Deposit, the Estimated
Long-Term Return and the Estimated Current Return, if applicable, for each Trust
were as set forth in "Essential Information." Estimated Current Return is
calculated by dividing the estimated net annual interest income per Unit by the
Public Offering Price. The estimated net annual interest income per Unit will
vary with changes in fees and expenses of the Trustee, the Sponsor and the
Evaluator and with principal prepayment, redemption, maturity, exchange or sale
of the Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and accrued interest; therefore,
there is no assurance that the present Estimated Current Return will be realized
in the future. Estimated Long-Term Return is calculated using a formula which
(i) takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements or average lives of all of the Securities in a Trust and (ii) takes
into account a compounding factor and the expenses and sales charge associated
with each Trust Unit. Since the market values and estimated retirements of the
Securities and the expenses of a Trust will change, there is no assurance that
the present Estimated Long-Term Return will be realized in the future. Estimated
Current Return and Estimated Long-Term Return are expected to differ because the
calculation of Estimated Long-Term Return reflects the estimated date and amount
of principal returned while Estimated Current Return calculations include only
net annual interest income and Public Offering Price.
In order to acquire certain of the Securities contracted for by a Trust, it may
be necessary for the Sponsor or Trustee to pay on the dates for delivery of such
Securities amounts covering accrued interest on such Securities which exceed the
amount which will be made available in the letter of credit furnished by the
Sponsor on the Initial Date of Deposit. The Trustee has agreed to pay any
amounts necessary to cover any such excess and will be reimbursed therefor,
without interest, when funds become available from interest payments on the
Securities deposited in that Trust.
PUBLIC OFFERING OF UNITS
Public Offering Price. Units of a Trust are offered at the Public Offering Price
thereof. During the initial offering period, the Public Offering Price per Unit
is equal to the aggregate of the offering side evaluations of the Securities in
such Trust, plus or minus a pro rata share of cash, if any, in the Principal
Account held or owned by such Trust plus accrued interest and the applicable
sales charge referred to in the tables below divided by the number of
outstanding Units of such Trust. Such price determination as of the opening of
business on the Initial Date of Deposit was made on the basis of an evaluation
of the Securities in each Trust prepared by Muller Data Corporation, a firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Public Offering Price for secondary market
transactions, on the other hand, is based on the aggregate bid side evaluations
of the Securities in a Trust, plus or minus cash, if any, in the Principal
Account held or owned by such Trust, plus accrued interest and a sales charge
based upon the dollar weighted average maturity of such Trust.
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<PAGE> 29
The applicable sales charge per Unit for each Trust during the initial offering
period will be as set forth in the following table:
<TABLE>
<CAPTION>
AMOUNT INVESTED
------------------------
LESS THAN $500,000 $500,000 TO $999,999 $1,000,000 AND UP
------------------------ ------------------------ ------------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT OFFERING NET AMOUNT
TRUST PRICE INVESTED PRICE INVESTED PRICE INVESTED
- - -------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Laddered Government
Series 5.......... 1.750% 1.781% 1.500% 1.523% 1.250% 1.266%
Laddered Government
Series 6.......... 1.850% 1.885% 1.550% 1.574% 1.300% 1.317%
Laddered Government
Series 7.......... 1.950% 1.989% 1.600% 1.626% 1.350% 1.368%
</TABLE>
As indicated above, in connection with secondary market transactions, the sales
charge is based upon the dollar weighted average maturity of a Trust and is
determined in accordance with the tables set forth below. For purposes of this
computation, Securities will be deemed to mature on their expressed maturity
dates unless: (a) the Securities have been called for redemption or funds or
securities have been placed in escrow to redeem them on an earlier call date, in
which case such call date will be deemed to be the date upon which they mature;
or (b) such Securities are subject to a "mandatory tender," in which case such
mandatory tender will be deemed to be the date upon which they mature. The
effect of this method of sales charge computation will be that different sales
charge rates will be applied to a Trust based upon the dollar weighted average
maturity of such Trust's portfolio, in accordance with the following schedules.
In connection with secondary market transactions, the sales charge per Unit for
each Trust will be set forth in the following table:
<TABLE>
<CAPTION>
AMOUNT INVESTED
------------------------
LESS THAN $500,000 $500,000 TO $999,999 $1,000,000 AND UP
------------------------ ------------------------ ------------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF
DOLLAR WEIGHTED OFFERING NET AMOUNT OFFERING NET AMOUNT OFFERING NET AMOUNT
AVERAGE MATURITY PRICE INVESTED PRICE INVESTED PRICE INVESTED
- - -------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Less than 2 years... 1.250% 1.266% 1.000% 1.010% 0.750% 0.756%
2 to 3 years........ 1.500% 1.523% 1.250% 1.266% 1.000% 1.010%
3 to 5 years........ 1.750% 1.781% 1.500% 1.523% 1.250% 1.266%
</TABLE>
The reduced sales charges resulting from quantity discounts as shown on the
tables above will apply to all purchases of Units on any one day by the same
purchaser from the same broker or dealer and for this purpose purchases of Units
of a Trust will be aggregated with concurrent purchases of Units of any other
unit investment trust that may be offered by the Sponsor. Additionally, Units
purchased in the name of a spouse or child (under 21) of such purchaser will be
deemed to be additional purchases by such purchaser. The reduced sales charges
will also be applicable to a trust or other fiduciary purchasing for a single
trust estate or single fiduciary account. The Sponsor intends to permit
officers, directors and employees of the Sponsor and at the discretion of the
Sponsor registered representatives of selling firms to purchase Units of a Trust
without a sales charge, although a transaction processing fee may be imposed on
such trades. In addition, investors who purchase Units through registered
brokers or dealers who charge periodic fees for financial planning, investment
advisory or asset management services, or provide such services in connection
with the establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed may purchase Units in the primary or secondary market at
the Public Offering Price less the concession the Sponsor typically would allow
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<PAGE> 30
such broker-dealer. See "Trust Information -- Public Offering of Units -- Public
Distribution of Units" below. In addition, investors who purchase Units of a
Trust for deposit in a Fidelity-sponsored 401k or other retirement plan may
purchase such Units at the Public Offering Price less the concession the Sponsor
typically allows dealers and other selling agents.
Had Units of a Trust been available for sale at the opening of business on the
Initial Date of Deposit, the Public Offering Price would have been as shown
under "Essential Information." The Public Offering Price per Unit of a Trust on
the date of this Prospectus or on any subsequent date will vary from the amount
stated under "Essential Information" in accordance with fluctuations in the
prices of the underlying Securities and the amount of accrued interest on the
Units. The aggregate bid and offering side evaluations of the Securities shall
be determined (i) on the basis of current bid or offering prices of the
Securities, (ii) if bid or offering prices are not available for any particular
Security, on the basis of current bid or offering prices for comparable bonds,
(iii) by determining the value of Securities on the bid or offer side of the
market by appraisal, or (iv) by any combination of the above.
The foregoing evaluations and computations shall be made as of the evaluation
time stated under "Essential Information," on each business day commencing with
the Initial Date of Deposit of the Securities, effective for all sales made
during the preceding 24-hour period.
The interest on the Securities deposited in a Trust, less the related estimated
fees and expenses, is estimated to accrue in the annual amounts per Unit set
forth under "Essential Information." The amount of net interest income which
accrues per Unit may change as Securities mature or are redeemed, exchanged or
sold, or as the expenses of a Trust change or the number of outstanding Units of
a Trust changes.
Although payment is normally made three business days following the order for
purchase, payments may be made prior thereto. A person will become the owner of
Units on the First Settlement Date or any date of settlement thereafter provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. If a Unitholder desires to
have certificates representing Units purchased, such certificates (if available)
will be delivered as soon as possible following his written request therefor.
For information with respect to redemption of Units purchased, for which
certificates requested have not been received, see "Trust
Information -- Redemption" below.
Accrued Interest. Accrued interest is the accumulation of unpaid interest on a
security from the last day on which interest thereon was paid. Interest on
Securities generally is paid semi-annually, although a Trust accrues such
interest daily. Because of this, a Trust always has an amount of interest earned
but not yet collected by the Trustee. For this reason, with respect to sales
settling subsequent to the First Settlement Date, the Public Offering Price of
Units will have added to it the proportionate share of accrued interest to the
date of settlement. Unitholders will receive on the next distribution date of a
Trust the amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise have
to be paid in addition to the Public Offering Price on the sale of Units to the
public, the Trustee will advance the amount of accrued interest as of the First
Settlement Date and the same will be distributed to the Sponsor as the
Unitholder of record as of the First Settlement Date. Consequently, the amount
of accrued interest to be added to the Public Offering Price of Units will
include only accrued interest from the First Settlement Date to the date of
settlement, less any distributions from the Interest Account subsequent to the
First Settlement Date.
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trusts and distributed to Unitholders. Therefore, there
will always
23
<PAGE> 31
remain an item of accrued interest that is added to the value of the Units. If a
Unitholder sells or redeems all or a portion of his or her Units, he or she will
be entitled to receive their proportionate share of the accrued interest from
the purchaser of their Units. Since the Trustee has the use of the funds held in
the Interest Account for distributions to Unitholders and since such Account is
non-interest-bearing to Unitholders, the Trustee benefits thereby.
Comparison of Public Offering Price and Redemption Price. While the Public
Offering Price of Units during the initial offering period will be determined on
the basis of the current offering prices of the Securities in a Trust, the
redemption price per Unit (as well as the secondary market Public Offering Price
per Unit) (see "Trust Information -- Redemption") will be determined on the
basis of the current bid prices of the Securities. Under current market
conditions, the bid prices for U.S. Treasury Obligations are expected to be
approximately 1/8 to 1/4 of 1% lower than the offer price of such obligations.
In the past, bid prices on securities similar to those in the Trusts have been
lower than the offering prices thereof by as much as 1% or more of principal
amount in the case of inactively traded bonds or as little as 1/8 of 1% in the
case of actively traded bonds, but the difference between such offering and bid
prices may be expected to average approximately 1/2 of 1% of principal amount.
For this reason, among others (including fluctuations in the market prices of
the Securities and the fact that the Public Offering Price includes a sales
charge), the amount realized by a Unitholder upon any redemption of Units may be
less than the price paid for such Units.
Public Distribution of Units. The Sponsor intends to qualify the Units for sale
in a number of states. Units will be sold through dealers who are members of the
National Association of Securities Dealers, Inc. and through others. Sales may
be made to or through dealers and others at prices which represent discounts or
agency commissions from the Public Offering Price as set forth below. Certain
commercial banks are making Units of the Trusts available to their customers on
an agency basis. A portion of the sales charge paid by their customers is
retained by or remitted to the banks in the amount shown in the tables below.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as dealers
pursuant to state law. The Sponsor reserves the right to change the discounts
and agency commissions set forth below from time to time. In addition to such
discounts and agency commissions, the Sponsor may, from time to time, pay or
allow an additional discount or agency commission, in the form of cash or other
compensation, to dealers and others employing registered representatives who
sell, during a specified time period, a minimum dollar amount of Units of a
Trust and other unit investment trusts created by the Sponsor. The difference
between the discount or agency commission and the sales charge will be retained
by the Sponsor.
The primary market concessions and agency commissions for each Trust are as
follows:
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF TRANSACTION
----------------------------------------
LESS THAN $500,000 TO $1,000,000
SERIES $500,000 $999,999 AND UP
- - ----------------------------------------------------- --------- ----------- ----------
<S> <C> <C> <C>
Laddered Government Series 5, Short Treasury
Portfolio.......................................... 1.10% .90% .70%
Laddered Government Series 6, Short/Intermediate
Treasury Portfolio................................. 1.15% .95% .75%
Laddered Government Series 7, Intermediate Treasury
Portfolio.......................................... 1.20% 1.00% .80%
</TABLE>
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<PAGE> 32
The secondary market concessions and agency commissions for each Trust are as
follows:
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF TRANSACTION
----------------------------------------
LESS THAN $500,000 TO $1,000,000
AVERAGE MATURITY $500,000 $999,999 AND UP
- - ----------------------------------------------------- --------- ----------- ----------
<S> <C> <C> <C>
Less than 2 years.................................... .750% .500% .400%
2 to 3 years......................................... 1.00% .750% .600%
3 to 5 years......................................... 1.10% 1.00% .750%
</TABLE>
The Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
From time to time, the Sponsor may implement programs under which dealers of a
Trust may receive nominal awards from the Sponsor for each of their registered
representatives who have sold a minimum number of Fidelity-sponsored unit
investment trust units during a specified time period. In addition, at various
times the Sponsor may implement other programs under which the sales force of a
dealer may be eligible to win other nominal awards for certain sales efforts, or
under which the Sponsor will reallow to any such dealer that sponsors sales
contest or recognition programs conforming to the criteria established by the
Sponsor, or participates in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
person at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying dealers or others for certain services or
activities which are primarily intended to result in sales of Units of the
Trusts. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of a Trust. These programs will not change the price Unitholders
pay for their Units or the amount that a Trust will receive from the Units sold.
Profits of Sponsor. The Sponsor will receive gross sales charges equal to the
percentage of the Public Offering Price of the Units as stated under "Public
Offering Price" and will pay a fixed portion of such sales charges to dealers
and agents. In addition, the Sponsor may realize a profit or a loss resulting
from the difference between the purchase prices of the Securities to the Sponsor
and the cost of such Securities to a Trust, which is based on the offering side
evaluation of the Securities. See "Portfolio" for each Trust. The Sponsor may
also realize profits or losses with respect to Securities deposited in a Trust
which were acquired from underwriting syndicates of which the Sponsor was a
member. An underwriter or underwriting syndicate purchases securities from the
issuer on a negotiated or competitive bid basis, as principal, with the motive
of marketing such securities to investors at a profit. The Sponsor may realize
additional profits or losses during the initial offering period on unsold Units
as a result of changes in the daily evaluation of the Securities in a Trust.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, and certain of the dealers may, maintain a market for Units of the
Trusts offered hereby and to continuously offer to purchase said Units at
prices, determined by the Evaluator, based on the aggregate bid prices of the
underlying Securities in such Trusts, together with accrued interest to the
expected dates of settlement. To the extent that a market is maintained during
the initial offering period, the prices at which Units will be repurchased will
be based upon the aggregate offering side evaluation of the Securities in the
Trusts. The aggregate bid prices of the underlying Securities in each Trust are
expected to be less than the related aggregate offering prices (which is the
evaluation method used during the initial public offering period). Accordingly,
Unitholders who wish to dispose of their Units should inquire of their bank or
broker as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof.
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<PAGE> 33
The offering price of any Units resold by the Sponsor will be in accord with
that described in the currently effective Prospectus describing such Units. Any
profit or loss resulting from the resale of such Units will belong to the
Sponsor. The Sponsor may suspend or discontinue purchases of Units of any Trust
if the supply of Units exceeds demand, or for other business reasons.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary market as described
above may cause Units to be redeemed by the Trustee by making a written request
to the Trustee, and, in the case of Units evidenced by a certificate, by
tendering such certificate to the Trustee, properly endorsed or accompanied by a
written instrument or instruments of transfer in a form satisfactory to the
Trustee. Unitholders must sign the request, and such certificate or transfer
instrument, exactly as their names appear on the records of the Trustee and on
any certificate representing the Units to be redeemed. If the amount of the
redemption is $25,000 or less and the proceeds are payable to the Unitholder(s)
of record at the address of record, no signature guarantee is necessary for
redemptions by individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other guarantee
program in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. A certificate should only be sent by registered or certified mail for
the protection of the Unitholder. Since tender of the certificate is required
for redemption when one has been issued, Units represented by a certificate
cannot be redeemed until the certificate representing such Units has been
received by the purchasers.
Redemption shall be made by the Trustee on the third business day following the
day on which a tender for redemption is received (the "Redemption Date") by
payment of cash equivalent to the Redemption Price for such Trust (determined as
set forth below under "Computation of Redemption Price"), multiplied by the
number of Units being redeemed. Any Units redeemed shall be cancelled and any
undivided fractional interest in the Trust extinguished. The price received upon
redemption might be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the Trust at the time of redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing a tax return. Under normal circumstances, the
Trustee obtains the Unitholder's tax identification number from the selling
broker. However, any time a Unitholder elects to tender Units for redemption,
such Unitholder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing interest shall be withdrawn from the
Interest Account for such Trust, to the extent that funds are available for such
purpose, then from the Principal Account. All other amounts paid on redemption
shall be withdrawn from the Principal Account for such Trust. The Trustee is
empowered to sell Securities from a Trust in order to make funds available for
the redemption of Units of such Trust.
Securities will be sold by the Trustee so as to maintain, as closely as
practicable, the original percentage relationship between the principal amounts
of the Securities in such Trust. The Securities to be sold for purposes of
redeeming Units will be selected from a list supplied by the Sponsor. The
Securities will be chosen for this list by the Sponsor on the basis of such
market and credit factors as it may determine are in the best interests of such
Trusts. Provision is
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made under the related Trust Agreement for the Sponsor to specify minimum face
amounts in which blocks of Securities are to be sold in order to obtain the best
price available. While such minimum amounts may vary from time to time in
accordance with market conditions, it is anticipated that the minimum face
amounts which would be specified would range from $25,000 to $100,000. Sales may
be required at a time when the Securities would not otherwise be sold and might
result in lower prices than might otherwise be realized. Moreover, due to the
minimum principal amount in which U.S. Treasury Obligations may be required to
be sold, the proceeds of such sales may exceed the amount necessary for payment
of Units redeemed. To the extent not used to meet other redemption requests in
such Trusts, such excess proceeds will be distributed pro rata to all remaining
Unitholders of record of such Trusts. To the extent Securities are sold, the
size and diversity of a Trust will be reduced. See "Trust
Information -- Investment Supervision."
If the Sponsor elects not to purchase Units tendered for redemption, the Trustee
is irrevocably authorized in its discretion, in lieu of redeeming such Units, to
sell such Units in the over-the-counter market for the account of tendering
Unitholders at prices which will return to the Unitholders amounts in cash, net
after brokerage commissions, transfer taxes and other charges, equal to or in
excess of the Redemption Price for such Units. In the event of any such sale,
the Trustee shall pay the net proceeds thereof to the Unitholders on the day
they would otherwise be entitled to receive payment of the Redemption Price.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or during which (as determined by the Securities
and Exchange Commission) trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a result of which
disposal by the Trustee of Securities is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the underlying
Securities in accordance with the Trust Agreements; or (3) for such other period
as the Securities and Exchange Commission may by order permit. The Trustee is
not liable to any person in any way for any loss or damage which may result from
any such suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of each Trust is
computed by the Evaluator as of the evaluation time stated under "Essential
Information" next occurring after the tendering of a Unit for redemption and on
any other business day desired by it, by:
A. adding: (1) the cash on hand in the Trust other than cash deposited in
the Trust to purchase Securities not applied to the purchase of such
Securities; (2) the aggregate value of each issue of the Securities
(including "when issued" contracts, if any) held in the Trust as determined
by the Evaluator on the basis of bid prices therefor; (3) interest accrued
and unpaid on the Securities in the Trust as of the date of computation;
and (4) unamortized organization expenses;
B. deducting therefrom: (1) amounts representing any applicable taxes or
governmental charges payable out of the Trust and for which no deductions
have been previously made for the purpose of additions to the Reserve
Account described under "Trust Information -- Trust Expenses"; (2) an
amount representing estimated accrued expenses of the Trust, including but
not limited to fees and expenses of the Trustee (including legal and
auditing fees and any insurance costs), the Evaluator, the Sponsor and bond
counsel, if any; (3) cash held for distribution to Unitholders of record,
or required for redemption of Units tendered, as of the business day prior
to the evaluation being made; and (4) other liabilities incurred by the
Trust; and
C. finally dividing the results of such computation by the number of Units
of the Trust outstanding as of the date thereof.
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UNITHOLDERS
Ownership of Units. Ownership of Units of a Trust will not be evidenced by
certificates unless a Unitholder, the Unitholder's registered broker/dealer or
the clearing agent for such broker/dealer makes a written request to the
Trustee. Certificates, if issued, will be so noted on the confirmation statement
sent to the Unitholder and broker.
Units are transferable by making a written request to the Trustee and, in the
case of Units evidenced by a certificate, by presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. Such requests should be sent by
registered or certified mail for the protection of the Unitholder. Unitholders
must sign such written request, and such certificate or transfer instrument,
exactly as their names appear on the records of the Trustee and on any
certificate representing the Units to be transferred. Such signatures must be
guaranteed as provided in "Trust Information -- Redemption."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple or fraction thereof, subject to each
Trust's minimum investment requirement and any minimum requirement established
by the Sponsor from time to time. Any certificate issued will be numbered
serially for identification, issued in fully registered form and will be
transferable only on the books of the Trustee. The Trustee may require a
Unitholder to pay a reasonable fee, to be determined in the sole discretion of
the Trustee, for each certificate reissued or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer or
interchange. The Trustee at the present time does not intend to charge for the
normal transfer or interchange of certificates. Destroyed, stolen, mutilated or
lost certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity (generally amounting to 3% of the market value of the Units),
affidavit of loss, evidence of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest received by each Trust, including any
portion of the proceeds from a disposition of Securities which represents
accrued interest, is credited by the Trustee to the Interest Account for such
Trust. All other receipts are credited by the Trustee to a separate Principal
Account for the Trust. The Trustee normally has no cash for distribution to
Unitholders until it receives interest payments on the Securities in the Trust.
Since interest usually is paid semi-annually, during the initial months of the
Trusts the Interest Account of each Trust, consisting of accrued but uncollected
interest and collected interest (cash), will be predominantly the uncollected
accrued interest that is not available for distribution. On the dates set forth
under "Essential Information" for each Trust, the Trustee will commence
distributions, in part from funds advanced by the Trustee.
Thereafter, assuming the Trust retains its original size and composition, after
deduction of the fees and expenses of the Trustee, the Sponsor and Evaluator and
reimbursements (without interest) to the Trustee for any amounts advanced to a
Trust, the Trustee will normally make distributions from the Income Account on
each Interest Distribution Date (the twentieth of the month) or shortly
thereafter to Unitholders of record of such Trust on the preceding Record Date
(which is the tenth day of each month).
Unitholders of the Trusts will receive an amount substantially equal to
one-twelfth of such holders' pro rata share of the estimated net annual interest
income to the Interest Account of such Trust. Since interest on Securities in
the Trusts is payable at varying intervals, usually in semi-annual installments,
and distributions of income are made to Unitholders at different intervals from
receipt of interest, the interest accruing to a Trust may not be equal to the
amount of money received and available for distribution from the Interest
Account. Therefore, on each Distribution Date the amount of interest actually
deposited in the Interest Account of a Trust and available for distribution
maybe more or less than the interest distribution made. In order to eliminate
fluctuations in interest distributions resulting from such variances, the
Trustee is authorized by the Trust Agreement to advance such amounts as may be
necessary to provide interest distributions of approximately equal amounts. The
Trustee will be reimbursed, without interest, for
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any such advances from funds available in the Interest Account for such Trust.
However, interest earned at any point in time will be greater than the amount
actually received by the Trustee and distributed to the Unitholders. Therefore,
there will always remain an item of accrued interest that is added to the daily
value of the Units. If Unitholders of a Trust sell or redeem all or a portion of
their Units, they will be paid their proportionate share of the accrued interest
of such Trust to, but not including, the third business day after the date of a
sale or to the date of tender in the case of a redemption.
Because the period of time between the First Settlement Date and the first
Interest Distribution Date may be longer or shorter than a full period, the
first distribution may be a partial distribution.
Unitholders of a Treasury Portfolio which contains Stripped Treasury Securities
should note that Stripped Treasury Securities are sold at a deep discount
because the buyer of those securities obtains only the right to receive a future
fixed payment on the security and not any rights to periodic interest payments
thereon. Purchasers of these Securities acquire, in effect, discount obligations
that are economically identical to the "zero-coupon bonds" that have been issued
by corporations. Zero coupon bonds are debt obligations which do not make any
periodic payments of interest prior to maturity and accordingly are issued at a
deep discount. Under generally accepted accounting principles, a holder of a
security purchased at a discount normally must report as an item of income for
financial accounting purposes the portion of the discount attributable to the
applicable reporting period. The calculation of this attributable income would
be made on the "interest" method which generally will result in a lesser amount
of includable income in earlier periods and a corresponding larger amount in
later periods. For federal income tax purposes, the inclusion will be on a basis
that reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is similar to
the "interest" method described above, the "interest" method may differ to the
extent that generally accepted accounting principles permit or require the
inclusion of interest on the basis of a compounding period other than the
semi-annual period. See "Trust Information -- Tax Status."
Persons who purchase Units between a Record Date and a Distribution Date will
receive their first distribution on the second Distribution Date following their
purchase of Units.
The Trustee will distribute on each Distribution Date or shortly thereafter, to
each Unitholder of record of a Trust on the preceding Record Date, an amount
substantially equal to such Unitholder's pro rata share of the cash balance, if
any, in the Principal Account of such Trust computed as of the close of business
on the preceding Record Date. However, no distribution will be required if the
balance in the Principal Account is less than $1.00 per 100 Units. The Trustee
will make a distribution to Unitholders of all principal relating to maturing
U.S. Treasury Obligations in a Trust, as set forth above.
Statements to Unitholders. With each distribution, the Trustee will furnish or
cause to be furnished to each Unitholder a statement of the amount of interest
and the amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit.
The accounts of each Trust are required to be audited annually, at the Trust's
expense, by independent auditors designated by the Sponsor, unless the Sponsor
determines that such an audit would not be in the best interest of the
Unitholders of such Trust. The accountants' report will be furnished by the
Trustee to any Unitholder of such Trust upon written request. Within a
reasonable period of time after the end of each calendar year, the Trustee shall
furnish
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to each person who at any time during the calendar year was a Unitholder of a
Trust a statement, covering the calendar year, setting forth for the applicable
Trust:
A. As to the Interest Account:
1. The amount of interest received on the Securities;
2. The amount paid for purchases of Replacement Securities;
3. The amount paid from the Interest Account representing accrued interest of
any Units redeemed;
4. The deductions from the Interest Account for applicable taxes, if any,
fees and expenses (including auditing fees) of the Trustee, the Sponsor, the
Evaluator, and, if any, of bond counsel;
5. Any amounts credited by the Trustee to the Reserve Account;
6. The net amount remaining after such payments and deductions, expressed
both as a total dollar amount and a dollar amount per Unit outstanding on the
last business day of such calendar year; and
B. As to the Principal Account:
1. The dates of the sale, maturity, liquidation or redemption of any of the
Securities and the net proceeds received therefrom excluding any portion
credited to the Interest Account;
2. The amount paid from the Principal Account representing the principal of
any Units redeemed;
3. The amount paid for purchases of Replacement Securities;
4. The deductions from the Principal Account for payment of applicable taxes,
if any, fees and expenses (including auditing fees) of the Trustee, the
Sponsor, the Evaluator, and, if any, of bond counsel;
5. Any amounts credited by the Trustee to the Reserve Account;
6. The net amount remaining after distributions of principal and deductions,
expressed both as a dollar amount and as a dollar amount per Unit outstanding
on the last business day of the calendar year; and
C. The following information:
1. A list of the Securities as of the last business day of such calendar
year;
2. The number of Units outstanding on the last business day of such calendar
year;
3. The Redemption Price based on the last evaluation made during such
calendar year; and
4. The amount actually distributed during such calendar year from the
Interest and Principal Accounts separately stated, expressed both as total
dollar amounts and as dollar amounts per Unit outstanding on the Record Dates
for each such distribution.
Rights of Unitholders. A Unitholder may at any time prior to the termination of
a Trust tender Units to the Trustee for redemption. The death or incapacity of
any Unitholder will not operate to terminate a Trust or entitle legal
representatives or heirs to claim an accounting or to bring any action or
proceeding in any court for partition or winding up of a Trust. No Unitholder
shall have the right to control the operation and management of any Trust in any
manner, except to vote with respect to the amendment of the Trust Agreement or
termination of any Trust.
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INVESTMENT SUPERVISION
The Sponsor may not alter the portfolios of the Trusts by the purchase, sale or
substitution of Securities, except in the circumstances noted herein. Thus, with
the exception of the redemption or maturity of Securities in accordance with
their terms, the assets of the Trusts will remain unchanged under normal
circumstances.
The Sponsor may direct the Trustee to dispose of Securities the value of which
has been affected by certain adverse events, including institution of certain
legal proceedings or the occurrence of other market factors, including advance
refunding, so that in the opinion of the Sponsor, the retention of such
Securities in a Trust would be detrimental to the interest of the Unitholders.
The proceeds from any such sales, exclusive of any portion which represents
accrued interest, will be credited to the Principal Account of such Trust for
distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of Securities to issue new obligations in exchange or substitution for
any of such Securities pursuant to a refunding financing plan, except that the
Sponsor may instruct the Trustee to accept or reject such an offer or to take
any other action with respect thereto as the Sponsor may deem proper if (i) the
issuer is in default with respect to such Securities or (ii) in the written
opinion of the Sponsor, the issuer will probably default with respect to such
Securities in the reasonably foreseeable future. Any obligation so received in
exchange or substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Securities originally
deposited thereunder. Within five days after deposit of obligations in exchange
or substitution for underlying Securities, the Trustee is required to give
notice thereof to each Unitholder, identifying the Securities eliminated and the
Securities substituted therefor. The Trustee may sell Securities, designated by
the Sponsor, from a Trust for the purpose of redeeming Units of such Trust
tendered for redemption and the payment of expenses.
TRUST ADMINISTRATION
The Trustee. The Trustee is The Chase Manhattan Bank whose principal executive
office is located at 270 Park Avenue, New York, New York 10017, and its unit
investment trust office is located at 4 New York Plaza, New York, New York
10004-2413. Unitholders who have questions regarding the Trusts may call the
Customer Service Help Line at 1-800-887-6926. The Trustee is subject to
supervision by the Superintendent of Banks of the State of New York, the Federal
Deposit Insurance Corporation and the Board of Governors of the Federal Reserve
System.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting the portfolio of any Trust. For information relating to the
responsibilities of the Trust under the Trust Agreement, reference is made to
the material set forth under "Trust Information -- Unitholders."
In accordance with the Trust Agreement, the Trustee shall keep records of all
transactions at its office. Such records shall include the name and address of,
and the number of Units held by, every Unitholder of each Trust. Such books and
records shall be open to inspection by any Unitholder of such Trust at all
reasonable times during usual business hours. The Trustee shall make such annual
or other reports as may from time to time be required under any applicable state
or federal statute, rule or regulation. The Trustee shall keep a certified copy
or duplicate original of the Trust Agreement on file in its office available for
inspection at all reasonable times during usual business hours by any
Unitholder, together with a current list of the Securities held in each Trust.
Pursuant to the Trust Agreement, the Trustee may employ one or more agents for
the purpose of custody and safeguarding of Securities comprising the Trusts.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its duties created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor.
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The Trustee or successor trustee must mail a copy of the notice of resignation
to all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. If the Trustee becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities or shall
fail to meet standards for its performance established by the Sponsor, the
Sponsor may remove the Trustee and appoint a successor trustee as provided in
the Trust Agreement. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original Trustee shall vest in the successor trustee. The
Trustee shall be a corporation organized under the laws of the United States, or
any state thereof, which is authorized under such laws to exercise trust powers.
The Trustee shall have at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
The Evaluator. Muller Data Corporation serves as Evaluator. The Evaluator may
resign or be removed by the Trustee in which event the Trustee is to use its
best efforts to appoint a satisfactory successor evaluator. Such resignation or
removal shall become effective upon acceptance of appointment by the successor
evaluator. If upon resignation of the Evaluator no successor has accepted
appointment within 30 days after notice of resignation, the Evaluator may apply
to a court of competent jurisdiction for the appointment of a successor. Notice
of such resignation or removal and appointment shall be mailed by the Trustee to
each Unitholder.
Amendment and Termination. The Trust Agreement may be amended by the Trustee and
the Sponsor without the consent of any of the Unitholders: (i) to cure any
ambiguity or to correct or supplement any provision which maybe defective or
inconsistent; (ii) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or
(iii) to make such provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreement with respect to the Trusts may also be amended
in any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the holders of Units representing 66 2/3% of
the Units then outstanding of such Trust, provided that no such amendment or
waiver will reduce the interest of any Unitholder thereof without the consent of
such Unitholder or reduce the percentage of Units required to consent to any
such amendment or waiver without the consent of all Unitholders of such Trust.
In no event shall the Trust Agreement be amended to increase the number of Units
of a Trust issuable thereunder or to permit, except in accordance with the
provisions of such Trust Agreement, the acquisition of any Securities in
addition to or in substitution for those initially deposited in a Trust. The
Trustee shall promptly notify Unitholders of the substance of any such
amendment.
The Trust Agreement provides that the Trusts shall terminate upon the maturity,
redemption or other disposition of the last of the Securities held in a Trust.
If the value of a Trust shall be less than the applicable minimum value stated
under "Essential Information," the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate the Trust. A Trust may be terminated
at any time by the Unitholders representing 66 2/3% of the Units thereof then
outstanding. In the event of termination of a Trust, written notice thereof will
be sent by the Trustee to all Unitholders of such Trust. Within a reasonable
period after termination, the Trustee will sell any Securities remaining in such
Trust and, after paying all expenses and charges incurred by the Trust, will
distribute to Unitholders thereof (upon surrender for cancellation of
certificates for Units, if issued) their pro rata share of the balances
remaining in the Interest and Principal Accounts of such Trust.
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Limitations on Liability
The Sponsor: The Sponsor is liable for the performance of its obligations
arising from its responsibilities under the Trust Agreement, but will be under
no liability to the Unitholders for taking any action or refraining from any
action in good faith pursuant to the Trust Agreement or for errors in judgment,
except in cases of its own gross negligence, bad faith or willful misconduct.
The Sponsor shall not be liable or responsible in any way for depreciation or
loss incurred by reason of the sale of any Securities.
The Trustee: The Trust Agreement provides that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of monies, Securities or
certificates except by reason of its own gross negligence, bad faith or willful
misconduct, nor shall the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee of any
Securities. In the event that the Sponsor shall fail to act, the Trustee may act
and shall not be liable for any such action taken by it in good faith. The
Trustee shall not be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon. In addition, the Trust Agreement contains other customary provisions
limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof. The
Trust Agreement provides that the determinations made by the Evaluator shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the Trustee
or Unitholders for errors in judgment, but shall be liable only for its gross
negligence, lack of good faith or willful misconduct.
TRUST EXPENSES
The Sponsor will charge the Trusts a surveillance fee for services performed for
the Trusts in an amount not to exceed that amount set forth in "Essential
Information," but in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which the Sponsor
both acts as sponsor and provides portfolio surveillance, exceed the aggregate
cost to the Sponsor for providing such services. Such fee shall be based on the
total number of Units of the related Trust outstanding as of the December Record
Date preceding any annual period. The Sponsor will receive a portion of the
sales commissions paid in connection with the purchase of Units and will share
in profits, if any, related to the deposit of Securities in the Trusts.
The Trustee receives for its services fees set forth under "Essential
Information." The Trustee fee, which is calculated monthly, is based on the
largest aggregate principal amount of Securities in a Trust at any time during
the period. In no event shall the Trustee be paid less than $2,000 per Trust in
any one year. Funds that are available for future distributions, redemptions and
payment of expenses are held in accounts which are non-interest bearing to
Unitholders and are available for use by the Trustee pursuant to normal trust
procedures; however, the Trustee is also authorized by the Trust Agreements to
make from time to time certain non-interest bearing advances to the Trusts.
The Trustee's fee is payable on or before each Distribution Date. The Trustee
has agreed to pay the Sponsor that portion of the Trustee's annual fee as set
forth under "Essential Information" in return for the Sponsor providing certain
bookkeeping and administrative services to its own customers.
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For evaluation of Securities in each Trust, the Evaluator shall receive a fee,
payable monthly, calculated on the basis of that annual rate set forth under
"Essential Information," based upon the largest aggregate principal amount of
Securities in such Trust at any time during such monthly period.
The Trustee's and Evaluator's fees are deducted first from the Interest Account
of a Trust to the extent funds are available and then from the Principal
Account. Such fees maybe increased without approval of Unitholders by amounts
not exceeding a proportionate increase in the Consumer Price Index entitled "All
Services Less Rent of Shelter," published by the United States Department of
Labor, or any equivalent index substituted therefor. In addition, the Trustee's
fee may be periodically adjusted in response to fluctuations in short-term
interest rates (reflecting the cost to the Trustee of advancing funds to a Trust
to meet scheduled distributions).
Expenses incurred in establishing the Trusts, including the cost of the initial
preparation of documents relating to the Trusts, federal and state registration
fees, the initial fees and expenses of the Trustee, legal expenses and any other
non-material out-of-pocket expenses, will be paid by the Trusts and amortized
over the lesser of five years or the life of the Trusts. The following
additional charges are or may be incurred by the Trusts: (i) fees for the
Trustee's extraordinary services; (ii) expenses of the Trustee (including legal
and auditing expenses (not to exceed $.50 per 100 Units), but not including any
fees and expenses charged by any agent for custody and safeguarding of
Securities) and of bond counsel, if any; (iii) various governmental charges;
(iv) expenses and costs of any action taken by the trustee to protect a Trust or
the rights and interests of the Unitholders; (v) indemnification of the Trustee
for any loss, liability or expense incurred by it in the administration of a
Trust not resulting from gross negligence, bad faith or willful misconduct on
its part; (vi) indemnification of the Sponsor for any loss, liability or expense
incurred in acting in that capacity without gross negligence, bad faith or
willful misconduct; and (vii) expenditures incurred in contacting Unitholders
upon termination of the Trusts. The fees and expenses set forth herein are
payable out of the appropriate Trust and, when owing to the Trustee, are secured
by a lien on such Trust. Fees or charges relating to a Trust shall be allocated
to each Trust in the same ratio as the principal amount of such Trust bears to
the total principal amount of all Trusts. Fees or charges relating solely to a
particular Trust shall be charged only to such Trust.
Fees and expenses of the Trusts shall be deducted from the Interest Account
thereof, or, to the extent funds are not available in such Account, from the
Principal Account. The Trustee may withdraw from the Principal Account or the
Interest Account of any Trust such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of the Trust. Amounts so withdrawn shall be
credited to a separate account maintained for a Trust known as the Reserve
Account and shall not be considered a part of the Trust when determining the
value of the Units until such time as the Trustee shall return all or any part
of such amounts to the appropriate account.
THE SPONSOR
NFSC is a registered broker and dealer and a member of The New York Stock
Exchange, Inc., and various other national and regional exchanges. As a
securities broker and dealer, NFSC is engaged in various securities trading,
brokerage and clearing activities serving a diverse group of domestic
corporations, institutional and individual investors, and brokers and dealers.
NFSC is a wholly owned subsidiary of Fidelity Global Brokerage Group, Inc. NFSC
was incorporated in Massachusetts, June 3, 1981. Fidelity Global Brokerage
Group, Inc. is a wholly owned subsidiary of FMR Corp. ("FMR"), Edward C. Johnson
3d owns approximately 12% and Abigail P. Johnson owns approximately 24.5% of the
issued and outstanding shares of the Voting Common Stock of FMR. Members of the
Edward C. Johnson 3d family and trusts for their benefit control up to 49% of
the voting shares of FMR.
34
<PAGE> 42
Fidelity Management & Research Company, a subsidiary of FMR, is the management
arm of Fidelity Investments, which was established in 1946. It provides a number
of mutual funds and other clients with investment research and portfolio
management services. It maintains a large staff of experienced investment
personnel and a full complement of related support facilities. It is now
America's largest mutual fund manager and as of September 30, 1997, it manages
more than $521 billion in assets in over 33 million individual shareholder
accounts.
If at any time the Sponsor shall fail to perform any of its duties under the
Trust Agreement or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the Securities and Exchange
Commission, or (b) terminate the Trust Agreement and liquidate the Trusts as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreement.
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to these Trusts. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations with respect to the Trusts. More comprehensive financial information
can be obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to federal
tax law have been passed upon by Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, as special counsel to the Sponsor. Carter, Ledyard &
Milburn has acted as special counsel to the Trusts with respect to certain New
York State and City tax matters affecting the Trusts.
INDEPENDENT AUDITORS
The statements of condition and the related portfolios at the Initial Date of
Deposit included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as set forth in their report in the Prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
35
<PAGE> 43
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the estimated distributions per 100 Units of interest
and principal to Unitholders. The tables assume no changes in Trust expenses, no
redemptions or sales of the underlying Securities prior to maturity and the
receipt of all principal due upon maturity. To the extent the foregoing
assumptions change, actual distributions will vary.
FIDELITY DEFINED TRUSTS
LADDERED GOVERNMENT SERIES 5
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
- - ----------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
January 1998 $4.736 $ 4.736
February 1998-May 1999 4.583 4.583
June 1999 4.243 $200.000 204.243
July 1999-November 1999 3.564 3.564
December 1999 3.246 200.000 203.246
January 2000-May 2000 2.608 2.608
June 2000 2.321 200.000 202.321
July 2000-November 2000 1.746 1.746
December 2000 1.456 200.000 201.456
January 2001-May 2001 0.877 0.877
June 2001 0.570 200.000 200.570
</TABLE>
FIDELITY DEFINED TRUSTS
LADDERED GOVERNMENT SERIES 6
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
- - ----------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
January 1998 $4.834 $ 4.834
February 1998-August 2000 4.678 4.678
September 2000 4.345 $200.000 204.345
October 2000-August 2001 3.702 3.702
September 2001 3.341 200.000 203.341
October 2001-August 2002 2.641 2.641
September 2002 2.364 200.000 202.364
October 2002-December 2002 1.831 1.831
January 2003-August 2003 1.858 1.858
September 2003 1.539 200.000 201.539
October 2003-August 2004 0.923 0.923
September 2004 0.601 200.000 200.601
</TABLE>
36
<PAGE> 44
FIDELITY DEFINED TRUSTS
LADDERED GOVERNMENT SERIES 7
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
- - ----------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
January 1998 $5.286 $ 5.286
February 1998-December 2002 5.116 5.116
January 2003-May 2004 5.143 5.143
June 2004 4.740 $200.000 204.740
July 2004-November 2004 3.958 3.958
December 2004 3.521 200.000 203.521
January 2005-May 2005 2.670 2.670
June 2005 2.381 200.000 202.381
July 2005-November 2005 1.827 1.827
December 2005 1.501 200.000 201.501
January 2006-May 2006 0.872 0.872
June 2006 0.566 200.000 200.566
</TABLE>
37
<PAGE> 45
I.ADVDT.PROS5-1297
<PAGE> 46
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants, rating services
and legal counsel
The following exhibits:
1.1 Form of Trust Agreement for Fidelity Defined Trusts, Series 5 among
National Financial Services Corporation as Depositor and Portfolio
Supervisor, Muller Data Corporation as Evaluator and The Chase Manhattan
Bank as Trustee.
1.1.1 Form of Standard Terms and Conditions of Trust for Fidelity Defined
Trusts, Series 1 and certain subsequent series among National Financial
Services Corporation as Depositor, Evaluator and Portfolio Supervisor
and The Chase Manhattan Bank as Trustee (incorporated by reference to
Amendment No. 2 to the Registration on Form S-6 (File No. 33-62243)
filed on behalf of Fidelity Defined Trusts, Series 1).
1.4 Copy of Articles of Incorporation of National Financial Services
Corporation, Depositor (incorporated by reference to Amendment No. 2 to
the Registration on Form S-6 (File No. 33-62243) filed on behalf of
Fidelity Defined Trusts, Series 1).
1.5 Copy of By-Laws of National Financial Services Corporation, Depositor
(incorporated by reference to Amendment No. 2 to the Registration on
Form S-6 (File No. 33-62243) filed on behalf of Fidelity Defined Trusts,
Series 1).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1.1 filed
herewith on page 2 and incorporated herein by reference).
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of securities being
registered.
3.3 Opinion of Counsel as to New York income tax status of securities being
registered.
3.4 Opinion of Counsel as to advancement of funds by Trustee.
4.1 Consent of Rating Agency.
4.2 Consent of Independent Certified Public Accountants.
4.3 Consent of Evaluator
6.1 List of Directors and Officers of National Financial Services
Corporation, Depositor (incorporated by reference to Amendment No. 2 to
the Registration on Form S-6 (File No. 33-62243) filed on behalf of
Fidelity Defined Trusts, Series 1).
7.1 Powers of Attorney executed by the Directors and Officers of National
Financial Services Corporation, Sponsor, listed on page S-3 of this
Registration Statement (incorporated by reference to the initial
Registration Statement on Form S-6 [File No. 33-62243] filed on behalf
of Fidelity Defined Trusts, Series 1 and the initial Registration
Statement on Form S-6 [File No. 333-40757] filed on behalf of Fidelity
Defined Trusts, Series 5).
Ex-27 Financial Data Schedules.
S-1
<PAGE> 47
SIGNATURES
The Registrant, Fidelity Defined Trusts, Series 5, hereby identifies
Fidelity Defined Trusts, Series 1 and Fidelity Defined Trusts, Series 2, for
purposes of the representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not
differ materially in type or quality from those deposited in such previous
series;
(2) that, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those
contained in the registration statements for such previous series as to
which the effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Fidelity Defined Trusts, Series 5 has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Boston and State of Massachusetts on the 4th day
of December, 1997.
FIDELITY DEFINED TRUSTS, SERIES 5
(Registrant)
By: NATIONAL FINANCIAL SERVICES CORPORATION
(Depositor)
David J. Pearlman
----------------------------------------
David J. Pearlman
Assistant Clerk
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 December 4, 1997.
Signature Title
Norman R. Malo President and Chief Operating Officer
James H. Messenger Director and Chief Executive Officer
Timothy M. McKenna Director
John J. Mulherin Director
Kenneth A. Rathgeber Director
Kenneth Klipper Vice President and Chief Financial Officer
David J. Pearlman
----------------------------------
(Attorney-in-fact)*
- - -------------------------------
*An executed copy of the related powers of attorney were filed as Exhibit 7.1 to
either the initial Registration Statement for Fidelity Defined Trusts, Series 1
as filed on August 29, 1995 (File No. 33-62243) or the initial Registration
Statement for Fidelity Defined Trusts, Series 5 as filed on November 21, 1997
(File No. 333-40757) and the same are hereby incorporated herein by this
reference.
S-2
<PAGE> 1
Exhibit 99
Memorandum
File No. 333-40757
The Prospectus and the Indenture filed with Amendment No. 1 to the
Registration Statement on Form S-6 have been revised to reflect information
regarding the execution of the Indenture and the deposit of securities on
December 4, 1997 and to set forth certain statistical data based thereon. In
addition, there are a number of other changes described below.
THE PROSPECTUS
Pages 5-6 The following information for each Trust appears:
The total number of units of each Trust.
The Public Offering Price at the opening of business on
the Initial Date of Deposit.
The initial annual fee of the Trustee.
The first and second distributions and record dates.
The estimated long-term returns and estimated current
returns (if applicable) to Unitholders as of the opening
of business on the Initial Date of Deposit.
Estimated net annual unit income.
Pages 7-10 The following information for each Trust appears on the pages
indicated:
Summary data regarding the composition of the portfolio
of each Trust.
The portfolio for each Trust.
Page 11 The Report of Independent Certified Public Accountants has been
completed.
Page 12 The Statements of Condition have been completed.
Page 36 Estimated Cash Flows to Unit holders have been completed.
THE TRUST AGREEMENT AND STANDARD TERMS AND CONDITIONS OF TRUST
The Trust Agreement has been conformed to reflect the execution
thereof.
CHAPMAN AND CUTLER
December 4, 1997
<PAGE> 1
Exhibit 99.A1
FIDELITY DEFINED TRUSTS, SERIES 5
TRUST AGREEMENT
Dated: December 4, 1997
This Trust Agreement among National Financial Services Corporation, as
Depositor and Portfolio Supervisor, Muller Data Corporation as Evaluator, and
The Chase Manhattan Bank, as Trustee, sets forth certain provisions in full and
incorporates other provisions by reference to the document entitled "Standard
Terms and Conditions of Trust for Fidelity Defined Trusts Series 1 effective
January 3, 1996" (herein called the "Standard Terms and Conditions of Trust"),
and such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references herein
to Articles and Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, the Trustee, the Evaluator and Portfolio Supervisor
agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities defined in Section 1.01(5) listed in Schedule A
hereto have been deposited in trust under this Trust Agreement.
<PAGE> 2
(b) The fractional undivided interest in and ownership of the Trust
Fund represented by each Unit for a Trust is the amount set forth under the
caption "Essential Information - Fractional Undivided Interest per Unit" in
the Prospectus.
(c) The number of units in a Trust referred to in Section 2.03 is set
forth under the caption "Essential Information - Number of Units" in the
Prospectus.
(d) The "First Settlement Date" for each Trust is the date set forth
under "Essential Information-First Settlement Date" in the Prospectus.
(e) The Trustee's compensation shall be computed according to the
following schedule, determined on the basis of the largest principal amount
of Securities held by the Trust during the period for which the
compensation is computed; provided , however, that until the Depositor
informs the Trustee that no further deposits of additional Securities will
be made pursuant to Section 2.01(b), such compensation shall be computed on
the basis of the principal amount of Securities held as of the Record Date
preceding the date on which the compensation is paid (or the Initial Date
of Deposit, as appropriate):
Rate per $1,000 principal amount of Securities
<TABLE>
<CAPTION>
Laddered Gov't Laddered Gov't Laddered Gov't
Series 5, Series 6, Series 7,
Short Treasury Short/Inter- Intermediate Treasury
Portfolio mediate Portfolio
Treasury
Portfolio
<S> <C> <C>
$1.28 $1.29 $1.34
</TABLE>
(f) Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust, Muller Data Corporation shall replace National
Financial Services Corporation as Evaluator.
(g) The second and third sentences of Section 4.03 of the Standard
Terms and Conditions of Trust are hereby deleted.
(h) Section 1.01.(2) of the Standard Terms and Conditions of Trust
shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or any
successor trustee appointed as hereinafter provided."
-2-
<PAGE> 3
All references to The Chase Manhattan Bank, N.A. in the Standard Terms and
Conditions of Trust shall be amended to refer to The Chase Manhattan Bank.
(i) The fourth sentence of Section 2.01(b) of the Standard Terms
and Conditions of Trust shall be amended to read:
The Depositor, in each case, shall ensure that each deposit of
additional Securities pursuant to this Section shall be, as
nearly as is practicable, in the identical ratio as the
percentage ratio for such Securities as is specified in the
Prospectus for the Trust (provided, however, than any deposit of
additional Securities into a Trust which has not nor will elect
to be taxed as a Regulated Investment Company made after the 90th
day following the Date of Deposit shall be in identical ratio as
the percentage ratio for such Trust) and the Depositor shall
ensure that such Securities are identical to those deposited on
the Date of Deposit.
(j) A new clause (viii) shall be added to subparagraph (1) of
Section 3.14(a) of the Standard Terms and Conditions of Trust as
follows:
"and (viii) if the Trust has not nor will elect to be taxed as a
Regulated Investment Company, be deposited within 110 days
following the Date of Deposit."
(k) The second paragraph of Section 5.02 of the Standard Terms
and Conditions of Trust shall be deleted and the following sentence
shall be added at the end of Section 4.01:
"The Evaluator shall make an evaluation of the Securities
deposited in each Trust as of the evaluation time specified in
the Prospectus on the Date of Deposit (or on the preceding
business day if so specified in the Prospectus). Such evaluation
shall be made on the same basis as set forth in this Section 4.01
and shall be based on the offering prices of said Securities."
(l) The Trustee shall reimburse the Depositor from the Trustee's
commission the Depositor's cost of providing to its customers who are
Unitholders bookkeeping and administrative services with respect to
such Unitholders' Units of a kind customarily performed by the
Trustee, not to exceed that annual amount per $1,000 principal amount
of Securities specified in the prospectus (such maximum annual amount
to be pro rated for any calendar year in which the Depositor provides
services during less than the whole of such year). Such reimbursement
shall be computed in the same manner as the Trustee's compensation and
shall be paid at or shortly after the end of each calendar year
against a statement submitted to Trustee, which shall
-3-
<PAGE> 4
constitute the Depositor's certification that the amounts claimed as
due do not exceed the amount payable in accordance with this
paragraph, and the Trustee shall have no liability for payments made
in reliance upon such certification.
-4-
<PAGE> 5
IN WITNESS WHEREOF, National Financial Services Corporation, Muller Data
Corporation and The Chase Manhattan Bank have each caused this Trust Agreement
to be executed and the respective corporate seal to be hereto affixed and
attested by authorized officers; all as of the day, month and year first above
written.
NATIONAL FINANCIAL SERVICES
CORPORATION, Depositor
By /s/ David J. Pearlman
-----------------------------------
THE CHASE MANHATTAN BANK, Trustee
By /s/ James P. Donovan, Jr.
-----------------------------------
MULLER DATA CORPORATION, Evaluator
By /s/ Ron Valinoti
-----------------------------------
NATIONAL FINANCIAL SERVICES
CORPORATION, Portfolio Supervisor
By /s/ David J. Pearlman
-----------------------------------
-5-
<PAGE> 6
SCHEDULE A TO THE TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
FIDELITY DEFINED TRUSTS, SERIES 5
(Note: Incorporated herein and made a part hereof is the "Portfolio"
as set forth for each Trust in the Prospectus.)
-6-
<PAGE> 1
Exhibit 99.2A
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
December 4, 1997
National Financial Services Corporation
82 Devonshire Street N7A
Boston, Massachusetts 02109-3614
Re: Fidelity Defined Trusts, Series 5
Gentlemen:
We have served as counsel for National Financial Services Corporation, as
Sponsor and Depositor (the "Depositor") of Fidelity Defined Trusts, Series 5
(the "Fund") in connection with the preparation, execution and delivery of a
Trust Agreement dated December 4, 1997 and a Standard Terms and Conditions of
Trust dated January 3, 1996 (collectively, the "Indenture") each of which are
between National Financial Services Corporation, as Depositor and Portfolio
Supervisor, Muller Data Corporation, as Evaluator and The Chase Manhattan Bank,
as Trustee, pursuant to which the Depositor has delivered to and deposited the
Securities listed in Schedule A to the Trust Agreement with the Trustee and
pursuant to which the Trustee has issued to or on the order of the Depositor a
certificate or certificates representing units of fractional undivided interest
in and ownership of the Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Indenture and the execution and
issuance of certificates evidencing the Units in the Fund have been duly
authorized; and
2. the certificates evidencing the Units in the Fund when duly
executed and delivered by the Depositor and the Trustee in accordance with
the aforementioned Indenture, will constitute valid and binding obligations
of the Fund and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-40757) relating to the Units referred to
above, to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
MJK/cjw
<PAGE> 1
Exhibit 99.2B
Carter, Ledyard & Milburn
2 WALL STREET
NEW YORK, NEW YORK 10005
December 4, 1997
The Chase Manhattan Bank,
as Trustee of
Fidelity Defined Trusts, Series 5
4 New York Plaza
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: Fidelity Defined Trusts, Series 5:
Laddered Government Series 5, Short Treasury Portfolio, Laddered
Government series 6, Short/Intermediate Treasury Portfolio and
Laddered Government Series 7, Intermediate Treasury Portfolio
-------------------------------------------------------------------
Dear Sirs:
We are acting as counsel for The Chase Manhatten Bank ("Chase") in
connection with the execution and delivery of a Standard Terms and Conditions of
Trust and a related Trust Agreement each dated as of today (collectively, the
"Indenture") and between National Financial Services Corporation, as Depositor
and Portfolio Supervisor (the "Depositor"), Muller Data Corporation, as
Evaluator (the "Evaluator") and Chase, as Trustee (the "Trustee"), establishing
Fidelity Defined Trusts, Series 5, which comprises Laddered Government Series 5,
Short Treasury Portfolio, Laddered Government Series 6, Short/Intermediate
Treasury Portfolio, and Laddered Government Series 7, Intermediate Treasury
Portfolio (each, a "Trust"), and the execution by Chase, as Trustee under the
Indenture, of a certificate or certificates evidencing ownership of a number of
units constituting the entire interest in the respective Trust (such certificate
or certificates and such aggregate units being herein called "Certificates" and
"Units"), each of which Units represents an undivided interest in the Trust,
which consists of United States Treasury Obligations (including confirmations of
contracts for the purchase of certain obligations not yet delivered and cash,
cash equivalents or an irrevocable letter of credit in the amount required for
such purchase upon the receipt of such obligations), such obligations being
defined in the Indenture as Securities and referenced in the schedules to the
Indenture.
We have examined the Indenture, the Closing Memorandum delivered today by
the parties to the Indenture (the "Closing Memorandum"), the form of Certificate
and
<PAGE> 2
-2-
such other documents as we have deemed necessary in order to render this
opinion. Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation having the
powers of a trust company under the laws of the State of New York.
2. The Indenture has been duly executed and delivered by Chase and,
assuming due execution and delivery by the Depositor, constitutes the valid
and legally binding obligation of Chase.
3. The Certificates are in proper form for execution and delivery by
Chase, as Trustee.
4. Chase, as Trustee, has duly executed and delivered to or upon the
order of the Depositor a Certificate or Certificates evidencing ownership
of the Units, registered in the name of the Depositor. Upon receipt of
confirmation of the effectiveness of the registration statement for the
sale of the Units filed with the Securities and Exchange Commission under
the Securities Act of 1993, the Trustee may deliver such other
Certificates, in such names and denominations as the Depositor may request,
to or upon the order of the Depositor as provided in the Closing
Memorandum.
5. Chase, as Trustee, may lawfully advance to the Trust amounts as may
be necessary to provide periodic interest distributions of approximately
equal amounts, and may be reimbursed, without interest, for any such
advances form funds in the interest account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered, among other
things, whether the Securities have been duly authorized and delivered.
Very truly yours,
Carter, Ledyard & Milburn
SFl:dbc
<PAGE> 1
EXHIBIT 99.C1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated December 4, 1997, accompanying the
financial statements of the Fidelity Defined Trusts Series 5 (Laddered
Government Series 5, Short Treasury Portfolio, Laddered Government Series 6,
Short/Intermediate Treasury Portfolio and Laddered Government Series 7,
Intermediate Treasury Portfolio) included herein and to the reference to our
Firm as experts under the heading "Independent Auditors" in the prospectus which
is a part of this registration statement.
DELOITTE & TOUCHE LLP
December 4, 1997
New York, New York
<PAGE> 1
Exhibit 99.C2
MULLER DATA CORPORATION
395 HUDSON STREET
NEW YORK, NEW YORK 10014-3622
December 4, 1997
Fidelity Capital Markets
164 Northern Avenue
Boston, MA 02110
Re: Fidelity Defined Trusts, Series 5
----------------------------------------------
Gentlemen:
We have examined Registration Statement File No. 333-40757 for the above
captioned trusts. We hereby acknowledge that Muller Data Corporation is
currently acting as the evaluator for the trust. We hereby consent to the use in
the Registration Statement of the reference to Muller Data Corporation as
evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely
Mario S. Buscemi
-------------------------
Chief Operating Officer
MSB:tg
<PAGE> 1
Exhibit 99.C3
Standard & Poor's
25 Broadway
New York, NY 10004-1064
December 4, 1997
Chapman & Cutler
111 West Monroe Street
Chicago, IL 60603
Re: Fidelity Defined Trusts Series 5 consisting of Laddered Government
Series 5, Short Treasury Portfolio; Laddered Government Series 6,
Short/Intermediate Treasury Portfolio and
Laddered Government Series 7, Intermediate Treasury Portfolio
Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned Trust, SEC 333-40757, we have reviewed the information presented
to us and have assigned a "AAA" rating to the units of the Trust and a "AAA"
rating to the securities contained in the Trust. The ratings are direct
reflections of the portfolios of the Trust, which will be composed solely of U.
S. Treasury Debt Obligations fully guaranteed as to principal and interest by
the full faith and credit of the United States.
You have permission to use the name of Standard & Poor's and the
above-assigned ratings in connection with your dissemination of information
relating to these units, provided that it is understood that the ratings are not
"market" ratings nor recommendations to buy, hold, or sell the units of the
trusts or the securities contained in the Trust. Further, it should be
understood the rating on the units does not take into account the extent to
which Trust expenses or portfolio asset sales for less than the Trust's purchase
price will reduce payment to the unit holders of the interest and principal
required to be paid on the portfolio assets. Standard & Poor's reserves the
right to advise its own clients, subscribers, and the public of the ratings.
Standard & Poor's relies on the sponsor and its counsel, accountants, and other
experts for the accuracy and completeness of the information submitted in
connection with the ratings. Standard & Poor's does not independently verify the
truth or accuracy of any such information.
This letter evidences our consent to the use of the name of Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. in
connection with the rating assigned to the units in the registration statement
or prospectus relating to the units or the Trust. However, this letter should
not be construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc. in connection with the
ratings assigned to the securities contained in the Trust. You
<PAGE> 2
-2-
are hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Please be certain to send us a copy of your final prospectus as soon as it
becomes available. Should we not receive it within a reasonable time after the
closing or should it not conform to the representations made to us, we reserve
the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. If we
can be of further help, please do not hesitate to call upon us.
Sincerely,
Sanford B. Bragg
<PAGE> 1
Exhibit 99.C4A
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
December 4, 1997
National Financial Services Corporation
82 Devonshire Street N7A
Boston, Massachusetts 02109-3614
The Chase Manhattan Bank
4 New York Plaza
New York, New York 10004-2413
Re: Fidelity Defined Trusts, Series 5
Gentlemen:
We have acted as counsel for National Financial Services Corporation,
Depositor of Fidelity Defined Trusts, Series 5 (the "Fund"), in connection with
the issuance of units of fractional undivided interests in Laddered Government
Series 5, Short Treasury Portfolio, Laddered Government Series 6,
Short/Intermediate Treasury Portfolio and Laddered Government Series 7,
Intermediate Treasury Portfolio (the "Trusts") of said Fund, under a Trust
Agreement dated December 17, 1996 and a Standard Terms and Conditions of Trust
dated January 3, 1996 (collectively, the "Indenture") between National Financial
Services Corporation, as Depositor and Portfolio Supervisor, Muller Data
Corporation, as Evaluator and The Chase Manhattan Bank, as Trustee.
In this connection, we have examined the Registration Statement, the form
of Prospectus proposed to be filed with the Securities and Exchange Commission,
the Indenture and such other instruments and documents as we have deemed
pertinent. The opinions expressed herein assume that each Trust will be
administered, and investments by a Trust from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the Indenture. Each Trust
holds Treasury Obligations and may include "stripped" U.S. Treasury bonds (the
"Stripped Treasury Securities") (collectively "the Securities") as such term is
defined in the Prospectus.
Based upon the foregoing and upon an investigation of such matters of law
as we consider to be applicable, we are of the opinion that, under existing
Federal income tax law:
<PAGE> 2
-2-
(i) Each Trust is not an association taxable as a corporation but will be
governed by the provisions of Subchapter J (relating to Trusts) of Chapter 1,
Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered the owner of a pro rata portion of
each Security in each Trust and will be considered to have received the interest
on his pro rata portion of each Security when interest on such Security is
received by the respective Trust. Each Unitholder will also be required to
include in taxable income for federal income tax purposes, original issue
discount with respect to his interest in any Security held by each Trust which
was issued with original issue discount at the same time and in the same manner
as though the Unitholder were the direct owner of such interest. Original issue
discount will be treated as zero with respect to the Securities if it is "de
minimis" within the meaning of Section 1273 of the Code and, based upon a
Treasury Regulation (the "Regulation") which was issued on December 28, 1992
regarding the stripped bond rules of the Code, original issue discount with
respect to a Stripped Treasury Security will be treated as zero if it is "de
minimis" as determined thereunder.
(iii) Each Unitholder will be considered the owner of a pro rata portion of
each asset in each Trust. The total cost to a Unitholder of his Units, including
sales charges, is allocated among his pro rata portion of each asset held by
each Trust (in proportion to the fair market values thereof on the valuation
date closest to the date the Unitholder purchases Units) in order to determine
his initial tax basis for his pro rata portion of each asset held by each Trust.
The Stripped Treasury Securities are treated as bonds that were originally
issued at an original issue discount. Because the Stripped Treasury Securities
represent interests in "stripped" U.S. Treasury bonds, a Unitholder's initial
cost for his pro rata portion of each Stripped Treasury Security held by the
Trust (determined at the time he acquires his Units, in the manner described
above) shall be treated as its "purchase price" by the Unitholder. Under the
special rules relating to stripped bonds, original issue discount applicable to
the Stripped Treasury Securities is effectively treated as interest for Federal
income tax purposes and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its stated
redemption price at maturity. A Unitholder will be required to include in gross
income for each taxable year the sum of his daily portions of original issue
discount attributable to the Stripped Treasury Securities held by a Trust as
such original issue discount accrues and will in general be subject to Federal
income tax with respect to the total amount of such original issue discount that
accrues for such year even though the income is not distributed to the
Unitholders during such year to the extent it is greater than or equal to the
"de minimis" amount described below. To the extent the amount of such discount
is less than the respective "de minimis" amount, such discount shall be treated
as zero. In general, original issue discount accrues daily under a constant
interest rate method which takes into account the semi-annual compounding of
accrued interest. In the case of Stripped Treasury Securities this method will
generally result in an
<PAGE> 3
-3-
increasing amount of income to the Unitholders each year. A Unitholder's tax
basis for his pro rata portion of each asset held by a Trust may be subject to
adjustment as discussed in paragraph (v) hereof.
(iv) The Unitholder's aliquot share of the total proceeds received on the
disposition of, or principal paid with respect to, a Security held by a Trust
will constitute ordinary income (which will be treated as interest income for
most purposes) to the extent it does not exceed the accrued market discount on
such Security that has not previously been included in taxable income by such
Unitholder. A Unitholder may generally elect to include market discount in
income as such discount accrues. In general, market discount is the excess, if
any, of the Unitholder's pro rata portion of the outstanding principal balance
of a Security over the Unitholder's initial tax basis for such pro rata portion,
determined at the time such Unitholder acquires his Units. However, market
discount with respect to any Security will generally be considered zero if it
amounts to less than 0.25% of the obligation's stated redemption price at
maturity times the number of years to maturity. The market discount rules do not
apply to Stripped Treasury Securities because they are stripped debt instruments
subject to special original issue discount rules as discussed above. If a
Unitholder sells his Units, gain, if any, will constitute ordinary income to the
extent of the aggregate of the accrued market discount on the Unitholder's pro
rata portion of each Security that is held by a Trust that has not previously
been included in taxable income by such Unitholder. In general, market discount
accrues on a ratable basis unless the Unitholder elects to accrue such discount
on a constant interest rate basis. However, no opinion is expressed herein
regarding the precise manner in which market discount accrues. The deduction by
a Unitholder for any interest expense incurred to purchase or carry Units will
be reduced by the amount of any accrued market discount that has not yet been
included in taxable income by such Unitholder. In general, the portion of any
interest expense which is not currently deducible would be ultimately deductible
when the accrued market discount is included in income.
(v) As discussed in paragraph (iv) hereof, if a Unitholder sells his Units,
gain, if any, will constitute ordinary income to the extent of the aggregate of
the accrued market discount (which has not previously been included in such
Unitholder' taxable income) with respect to a Unitholder's pro rata portion of
each Security held by a Trust. Any other gains (or losses) will be capital gains
(or losses) except in the case of a dealer or a financial institution, and will
be long-term if the Unitholder has held his Units for more than one year. A
Unitholder will recognize taxable gains ( or losses) (a) upon redemption or sale
of his Units, (b) if the Trustee disposes of an asset or (c) upon receipt by the
Trustee of payments of principal on the Securities. The amount of any such gain
(or loss) is measured by comparing the Unitholder's pro rata share of the total
proceeds from the transaction with his adjusted tax basis in his Units or his
pro rata interest in the asset as the case may be, and then reducing such gain,
if any, to the extent characterized as ordinary income resulting from accrued
market discount as discussed above. A Unitholder's tax basis in his Units and
his pro rata
<PAGE> 4
-4-
portion of each of the underlying assets of a Trust may be adjusted to reflect
the accrual of market discount (if the Unitholder has elected to include such
discount in income as it accrues), original issue discount and amortized bond
premium, if any. The tax basis reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for an
amount equal to his original cost. In addition, Unitholders must reduce the tax
basis of their Units and their pro rata portion of the underlying assets of each
Trust for their share of accrued interest received by such Trust, if any, on
Securities delivered after the Unitholders pay for their Units to the extent
that such interest accrued on such Securities before the date the Trust acquired
ownership of the Securities (and the amount of this reduction may exceed the
amount of accrued interest paid to the Seller) and, consequently, such
Unitholders may have an increase in taxable gain or reduction in capital loss
upon the disposition of such Units or such Securities.
(vi) The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions subject to
this limitation under present law include fees of the Trustee and the Evaluator
but does not include amortizable bond premium on Securities held by a Trust.
The Code provides a complex set of rules governing the accrual of original
issue discount, including special rules relating to "stripped" debt instruments
such as the Stripped Treasury Securities. These rules provide that original
issue discount generally accrues on the basis of a constant compound interest
rate over the term of the security. Special rules apply if the purchase price of
a Treasury Obligation exceeds its original issue price plus the amount of
original issued discount which would have previously accrued, based upon its
issue price (its "adjusted issue price"). Similarly, these special rules would
apply to a Unitholder if the tax basis of his pro rata portion of a Treasury
Obligation issued with original issue discount exceeds his pro rata portion of
its adjusted issue price. In addition, as discussed above, the Regulation
provides that the amount of original issue discount on a stripped bond is
considered zero if the actual amount of original issue discount on such stripped
bond as determined under Section 1286 of the Code is less that a "de minimis"
amount, which, the Regulation provides, is the product of (i) 0.25 percent of
the stated redemption price at maturity and (ii) the number of full years from
the date the stripped bond is purchased (determined separately for each new
purchaser thereof) to the final maturity date of the bond.
The "Revenue Reconciliation Act of 1993" (the "1993 Tax Act") raised tax
rates on ordinary income above the rates at which capital gains are subject to
tax in certain circumstances. Because some or all capital gain are taxed at a
comparatively lower rate under the Tax Act, the Tax Act includes a provision
that recharacterizes capital
<PAGE> 5
-5-
gains a ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after April
30, 1993.
A Unitholder who is a foreign investor (i.e., an investor other than a U.S.
citizen or resident or a U.S. corporation, partnership, estate or trust) will
not be subject to United States Federal income taxes, including withholding
taxes on interest income (including any original issue discount) on, or any gain
from the sale or other disposition of his pro rata interest in any Security held
by a Trust or the sale of his Units provided that all of the following
conditions are met:
(i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United States;
(ii) with respect to any gain, the foreign investor (if an individual) is
not present in the United States for 183 days or more during his or her taxable
year;
(iii) the Security was issued after July 18, 1984; and
(iv) the foreign investor provides all certification which may be required
of his status and of the matters contained in clauses (i) and (ii) above.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state of local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-40757) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
MJK/cjw
<PAGE> 1
Exhibit 99.C4B
Carter, Ledyard & Milburn
2 WALL STREET
NEW YORK, NEW YORK 10005
December 4, 1997
The Chase Manhattan Bank,
as Trustee of
Fidelity Defined Trusts, Series 5
4 New York Plaza
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: Fidelity Defined Trusts, Series 5:
Laddered Government Series 5, Short Treasury Portfolio, Laddered
Government Series 6, Short/Intermediate Treasury Portfolio and
Laddered Government Series 7, IntermediateTreasury Portfolio
- - -------------------------------------------------------------------------------
Dear Sirs:
We are acting as special counsel with respect to New York tax matters for
Fidelity Defined Trusts, Series 5, with respect to three trusts thereunder,
Laddered Government Series 5, Short Treasury Portfolio, Laddered Government
Series 6, Short/Intermediate Treasury Portfolio and Laddered Government Series
7, Intermediate Treasury Portfolio (each, a "Trust"), which will be established
under a certain Standard Terms and Conditions of Trust and a related Trust
Agreement each dated as of today (collectively, the "Indenture") between
National Financial Services Corporation, as Depositor and Portfolio Supervisor
(the "Depositor"), Muller Data Corporation, as Evaluator (the "Evaluator") and
The Chase Manhattan Bank, as Trustee (the "Trustee"). Pursuant to the terms of
the Indenture, units of fractional undivided interest in the Trust (the "Units")
will be issued in the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or certified copies, or
copies otherwise identified to our satisfaction, of such documents as we have
deemed necessary or appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today and addressed to
the Trustee, of Chapman and Cutler, counsel for the Depositor , with respect to
the matters of law set forth therein.
<PAGE> 2
-2-
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as a
corporation under New York law, and accordingly will not be subject to the
New York State franchise tax of the New York general corporation tax.
2. Under the income tax laws of the State and City of New York, the
income of the Trust will be considered the income of the holders of the
Units.
We consent to the filing of this opinion as an exhibit to the Registration
Statement (No. 333-40757) filed with the Securities and Exchange Commission with
respect to the registration of the sale of the Units and to the references to
our name under the captions "Tax Status" and "Legal Opinions" in such
Registration Statement and the preliminary prospectus included therein.
Very truly yours,
Carter, Ledyard & Milburn
SFl:tbm
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR FIDELITY DEFINED TRUST SERIES 5 LADDERED GOVERNMENT SERIES 5,
SHORT TREASURY PORTFOLIO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER>1
<NAME> FIDELITY DEFINED TRUST SERIES 5
LADDERED GOVERNMENT SERIES 5, SHORT TREASURY PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-04-1997
<PERIOD-START> DEC-04-1997
<PERIOD-END> DEC-04-1997
<INVESTMENTS-AT-COST> 499,032
<INVESTMENTS-AT-VALUE> 499,032
<RECEIVABLES> 558
<ASSETS-OTHER> 41,450
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 541,039
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42,008
<TOTAL-LIABILITIES> 42,008
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 499,031
<SHARES-COMMON-STOCK> 50,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 499,031
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR FIDELITY DEFINED TRUST SERIES ** FIDELITY INVESTMENT GRADE
SERIES *** AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<SERIES>
<NUMBER>2
<NAME> FIDELITY DEFINED TRUST SERIES 5
LADDERED GOVERNMENT SERIES 6, SHORT/INTERMEDIATE TREASURY PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-04-1997
<PERIOD-START> DEC-04-1997
<PERIOD-END> DEC-04-1997
<INVESTMENTS-AT-COST> 499,326
<INVESTMENTS-AT-VALUE> 499,326
<RECEIVABLES> 8,284
<ASSETS-OTHER> 40,575
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 548,185
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,859
<TOTAL-LIABILITIES> 48,859
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 499,326
<SHARES-COMMON-STOCK> 50,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 499,326
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR FIDELITY DEFINED TRUST SERIES 5 LADDERED GOVERNMENT, INTERMEDIATE
TREASURY PORTFOLIO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER>3
<NAME> FIDELITY DEFINED TRUST SERIES 5
LADDERED GOVERNMENT SERIES 7, INTERMEDIATE TREASURY PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-04-1997
<PERIOD-START> DEC-04-1997
<PERIOD-END> DEC-04-1997
<INVESTMENTS-AT-COST> 512,698
<INVESTMENTS-AT-VALUE> 512,698
<RECEIVABLES> 1,664
<ASSETS-OTHER> 40,575
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 554,937
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42,239
<TOTAL-LIABILITIES> 42,239
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 512,698
<SHARES-COMMON-STOCK> 50,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 512,698
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
