November 17, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
Re: Fidelity Defined Trusts, Series 5 (the "Fund")
Gentlemen:
Enclosed please find a copy of the initial Registration Statement on
Form S-6 for the registration under the Securities Act of 1933 of
Units representing the ownership of interests in the subject Fund.
The initial Registration Statement is filed with the Securities and
Exchange Commission (the "Commission") on behalf of National Financial
Services Corporation (the "Sponsor").
Inasmuch as the Fund is not yet operative, no filings have been
required under any of the acts administered by the Commission.
Therefore, for purposes of Securities Act Release No. 5196 there are
no delinquencies to be reported or other references to be made to
filings under the 1934 Act.
No notification of registration or Registration Statement under the
Investment Company Act of 1940 (the "1940 Act") is currently being
submitted to the Commission, as the filings under the 1940 Act (File
No. 811-07349) are intended to apply not only to that series of the
Fund, but to all "subsequent series" as well.
We are advised that the Sponsor proposes to deposit securities and to
activate the subject Trust on or about December 4, 1996 or shortly
thereafter, depending on market conditions. An appropriate amendment
to the Registration Statement to reflect such deposit will be promptly
filed with the Commission at that time, accompanied by the request of
the Sponsor that the Registration Statement filed under the Securities
Act on 1933 be made effective.
Under these circumstances it will be appreciated if this matter can
receive prompt attention and in the event that there are any questions
in respect hereto, or if there is any way in which we can be of
assistance, please do not hesitate to telephone the undersigned
collect at (312-845-3787) or in my absence, Brian D. Free at
(312-845-3017).
Very truly yours,
Chapman and Cutler
By: /s/ Mark J. Kneedy Mark J. Kneedy
MJK:cw
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 ) *
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
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
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 )
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
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
Preliminary Prospectus Dated November , 1997
Fidelity Defined Trusts, Series 5
1,000 Units (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund is hereby
used as a preliminary Prospectus for the above stated Series. The
narrative information and structure of the attached final Prospectus
will be substantially the same as that of the final Prospectus for
this Series. Information with respect to pricing, the number of
Units, dates and summary information regarding the characteristics of
securities to be deposited in this Series is not now available and
will be different since each Series has a unique Portfolio.
Accordingly the information contained herein with regard to the
previous Series should be considered as being included for
informational purposes only. Ratings of the securities in this Series
are expected to be comparable to those of the securities deposited in
the previous Series. However, the Estimated Current Return for this
Series will depend on the interest rates and offering prices of the
securities in this Series and may vary materially from that of the
previous Series.
A registration statement relating to the units of this Series has been
filed with the Securities and Exchange Commission but has not yet
become effective. Information contained herein is subject to
completion or amendment. Such Units may not be sold nor may offer to
buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of the
Units in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such state.
(Incorporated herein by reference is the final prospectus from
Fidelity Defined Trusts, Series 3 (Registration No. 333-16711) as
filed on December 17, 1996, which shall be used as a preliminary
prospectus for the current Series of the Fund.)
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 or any state securities commission
nor has the Securities and Exchange Commission or any state securities
commission passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
FIDELITY
DEFINED TRUSTS
SERIES 5
(solid bullet) Laddered Government
Series 5, Short Treasury
Portfolio
(solid bullet) Laddered Government
Series 6, Short/Intermediate Treasury Portfolio
(solid bullet) Laddered Government
Series 7, Intermediate Treasury Portfolio
PROSPECTUS
_____________, 1997
FIDELITY
INVESTMENTS(Registered trademark)
82 Devonshire Street, Boston, MA 02109
TABLE OF CONTENTS
Page
Summary 3
Essential Information 5
The Trusts 7
Laddered Government Series 5, Short Treasury Portfolio, Laddered
Government Series 6, Short/Intermediate Treasury Portfolio and
Laddered Government Series 7, Intermediate Treasury Portfolio 8
Report of Independent Certified Public Accountants 12
Statements of Condition 13
Trust Information 14
General Information 14
Risk Factors 16
Rating of Units 18
Retirement Plans 19
Tax Status 19
Distribution Reinvestment 23
Interest, Estimated Long-Term Return and Estimated Current Return 24
Public Offering of Units 25
Market for Units 30
Redemption 30
Unitholders 33
Investment Supervision 37
Trust Administration 37
Trust Expenses 40
The Sponsor 41
Legal Opinions 42
Independent Certified Public Accountants 42
Estimated Cash Flows to Unitholders 42
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.
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").
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 or an insurer 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."
Fidelity Defined Trusts Series 5
Essential Information
At the Opening of Business on the Initial Date of Deposit:
_______________, 1997
Sponsor: National Financial Services Corporation
Evaluator: Muller Data Corporation
Trustee: The Chase Manhattan Bank
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.
____________________
(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 of
1.75% of the Public Offering Price per Unit (1.781% of the net amount
invested). 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 _________, 1998
and the Distribution Date is the 20th day of the month, commencing
_________, 1998. On __________, 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. 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.
(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 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").<F1>
<F1> Reference is made to the Trust Agreement, and any statements
contained herein are qualified in their entirety by the provisions of
the Trust Agreement.
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 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 1998. Laddered Government Series
5, Short Treasury Portfolio has a dollar weighted average maturity of
_____ 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 1998. Laddered Government
Series 6, Short/Intermediate Treasury Portfolio has a dollar weighted
average maturity of _____ 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 annually, commencing in 19__. Laddered Government Series 7,
Intermediate Treasury Portfolio has a dollar weighted average maturity
of _____ 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 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:
______________,1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Aggregate Costs of Bonds to
Principal Description Coupon Maturity (Trust(1)
$ % of $
% of
% of
% of
% of
_ % of
$ $
</TABLE>
Laddered Government Series 6, Short/Intermediate Treasury Portfolio
as of the Opening of Business on the Initial Date of Deposit:
______________,1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Aggregate Costs of Bonds to
Principal Description Coupon Maturity Trust(1)
$ % of $
% of
% of
% of
% of
% of
% of
__________ % of
$ $
</TABLE>
Laddered Government Series 7, Intermediate Treasury Portfolio
as of the Opening of Business on the Initial Date of Deposit:
______________,1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Aggregate Costs of Bonds to
Principal Description Coupon Maturity Trust(1)
$ % of $
% of
% of
% of
% of
% of
% of
__________ % of
$ $
</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>
<S> <C> <C> <C> <C>
Annual
Cost of Profit or Interest Bid Side
Securities (Loss) to Income to Value of
Trust to Sponsor Sponsor Trust Securities
Laddered Government Series 5 $ $ $ $
Laddered Government Series 6 $ $ $ $
Laddered Government Series 7 $ $ $ $
</TABLE>
____________________
(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.
Report of Independent Certified Public Accountants
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, ______________, 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 ______________, 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, ____________, 1997, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
_____________, 1997
Fidelity Defined Trusts Series 5
Statements of Condition at the Opening of Business
on ____________, 1997, the Initial Date of Deposit
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Laddered Laddered Laddered
Government Government Government
Series 5 Series 6 Series 7
Investment in Securities
Contracts to purchase
Securities(1) $ $ $
Organizational Costs(3)
Accrued interest to
Initial Date of Deposit
on
underlying Securities
(1)(3) ______ ______ ______
Total $ $ $
Number of Units
Liabilities and Interest
of Unitholders
Liabilities -
Accrued Organizational
Costs(2)
Accrued interest payable
to Sponsor(1)(3)
Interest of Unitholders -
Cost to investors(4) $ $ $
Less: Gross underwriting
commission(4)
( ) ( ) ( )
Net interest to
Unitholders(1)(3)(4) $ $ $
Total $ $ $
</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
___________, 1997. The contracts to purchase Securities are
collateralized by an irrevocable letter of credit of $__________ which
has been deposited with the Trustee. Of this amount, $__________
relates to the offering price of Securities to be purchased.
(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 $30,000,000 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.
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, 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 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 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 advisor. 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.
Tax Status
The following discussion applies to the Laddered Trusts, each of which
are organized as grantor trusts for federal tax purposes. 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 Internal Revenue Code of
1986 (the "CODE"). Each Unitholder will be considered to have
received his 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
payment at maturity) or when the Unitholder redeems or sells his
Units. The cost of the Units to a Unitholder on the date such Units
are purchased is allocated among the Securities held in a Trust (in
accordance with the proportion of the fair market values of such
Securities) in order to determine his tax basis for his PRO RATA
portion in each Security. Unitholders must reduce the tax basis of
their Units for their share of accrued interest received, if any, on
Securities delivered after the date on which the Unitholders pay for
their Units and, consequently, such Unitholders may have an increase
in taxable gain or reduction in capital loss upon the disposition of
such Units. 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
non-recognition 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 Units are sold or redeemed for an amount equal to or less than his
original cost. A Trust may contain certain "zero coupon" Securities
(the "STRIPPED TREASURY SECURITIES") that are treated as bonds that
were originally issued at an original issue discount provided,
pursuant to a Treasury Regulation (the "REGULATION") issued on
December 28, 1992, that the amount of original issue discount
determined under Section 1286 of the Code is not less than a DE
MINIMIS amount as determined thereunder. Because the Stripped
Treasury Securities represent interest in "stripped" U.S. Treasury
bonds, a Unitholder's initial cost for his 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 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 Regulation. To the extent that 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 the Stripped Treasury Securities, this method will
generally result in an increasing amount of income to the Unitholders
each year.
LIMITATIONS ON DEDUCTIBILITY OF TRUST EXPENSES BY UNITHOLDERS - Each
Unitholders 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 him. 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.
PREMIUM - If a Unitholder's tax basis of his PRO RATA portion in any
Securities held by a Trust exceeds the amount payable by the issuer of
the Security with respect to such PRO RATA interest upon the maturity
of the Security, such excess would be considered "premium" which may
be amortized by the Unitholder at the Unitholder's election as
provided in Section 171 of the Code.
ORIGINAL ISSUE DISCOUNT - Certain of the Securities in a Trust may
have been acquired with "original issue discount." In the case of any
Securities in a Trust acquired with "original issue discount" that
exceeds a "DE MINIMIS" amount as specified in the Code, such discount
is includable in taxable income of the Unitholders on an accrual basis
computed daily, without regard to when payments of interest on such
Securities are received. The Code provides a complex set of rules
regarding the accrual of original issue discount. These rules provide
that original issue discount generally accrues on the basis of a
constant compound interest rate over the term of the Securities.
Unitholders should consult their tax advisers as to the amount of
original issue discount as it accrues.
Special original issue discount rules apply if the purchase price of
the Security by a Trust exceeds its original issue price plus the
amount of original issue 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 Security issued with original issue discount
exceeds his PRO RATA portion of its adjusted issue price. Unitholders
should also consult their tax advisers regarding these special rules.
MARKET DISCOUNT - If a Unitholder's tax basis in his PRO RATA portion
of Securities is less than the allocable portion of such Security's
stated redemption price at maturity (or, if issued with original issue
discount, the allocable portion of its "REVISED ISSUE PRICE"), such
difference will constitute market discount unless the amount of market
discount is "DE MINIMIS" as specified in the Code. Market discount
accrues daily computed on a straight-line basis, unless the Unitholder
elects to calculate accrued market discount under a constant-yield
method. The market discount rules do not apply to Stripped Treasury
Securities because they are stripped debt instruments subject to
special original issue discount rules discussed above. Unitholders
should consult their own tax advisers regarding whether an election
should be made and as to the amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on the Securities, on the sale,
maturity or disposition of such Securities by a Trust, and on the sale
by a Unitholder of Units, unless a Unitholder elects to include the
accrued market discount in taxable income as such discount accrues.
If a Unitholder does not elect to annually include accrued market
discount in taxable income as it accrues, deductions for any interest
expense incurred by the Unitholder which is incurred to purchase or
carry his Units will be reduced by such accrued market discount. In
general, the portion of any interest expense which was not currently
deductible would ultimately be deductible when the accrued market
discount is included in income.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS - The tax basis of a
Unitholder with respect to his interest in a Security is increased by
the amount of original issue discount (and market discount, if the
Unitholder elects to include 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 Units will equal his
tax 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 PRO RATA interest in a
Security is disposed of in a taxable transaction for an amount greater
(or less) than his tax basis therefor. 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 gains are subject to a maximum marginal
stated tax rate of 28 percent. 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 is deemed thereby to have
disposed of his 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 Revenue Reconciliation Act of 1993" (the "TAX ACT") raised tax
rates on ordinary income while capital gains remain subject to a 28
percent maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively lower
rate under the Tax Act, the Tax Act includes a provision that
recharacterizes capital gains 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 disposition of, his 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. On December 7, 1995 the U.S. Treasury Department
released proposed legislation that, if adopted, could affect the
United States federal income taxation of such non-United States
Unitholders and the portion of the Trust's income allocable to
non-United States Unitholders.
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."
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.
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>
<S> <C> <C> <C> <C> <C> <C> <C>
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
Price Invested Price Invested Price Invested
1.750% 1.781% 1.500% 1.523% 1.250% 1.266%
</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>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than $500,000 $500,000 to $999,999 $1,000,000 and up
Percent Percent Percent Percent Percent Percent
of of Net of of Net of of Net
Offering Amount Offering Amount Offering Amount
Amount
Invested Price Invested Price Invested Price Invested
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
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 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 1/2 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>
<S> <C> <C> <C>
Less than $500,000 to $1,000,000
Series $500,000 $999,999 and up
Laddered Government Series 5,
Short Treasury Portfolio 1.10% .90% .70%
Laddered Government Series 6,
Short/Intermediate Treasury Portfolio 1.10% .90% .70%
Laddered Government Series 7,
Intermediate Treasury Portfolio 1.10% .90% .70%
The secondary market concessions and agency commissions for each Trust
are as follows:
Less than $500,000 to $1,000,000
Average Maturity $500,000 $999,999 and up
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
Unit 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.
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 for 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 Trusts. 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
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.
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
Agreements to advance such amounts as may be necessary to provide
interest distributions of approximately equal amounts. The Trustee
will be reimbursed, without interest, for 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 maybe 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 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.
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.
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.
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.
During the first year the Trustee has agreed to lower its fees and
absorb expenses by the amount set forth under "Essential Information."
The Trustee's fee will not be increased in future years in order to
make up this reduction in the Trustee's fee. 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.
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.
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 Certified Public Accountants
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 certified public accountants, 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.
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>
<S> <C> <C> <C>
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
$ $ $
</TABLE>
FIDELITY DEFINED TRUSTS
LADDERED GOVERNMENT SERIES 6
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
$ $ $
</TABLE>
FIDELITY DEFINED TRUSTS
LADDERED GOVERNMENT SERIES 7
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
$ $ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Laddered Laddered Laddered
Government Government Government
Series 5 Series 6 Series 7
Principal Amount of Securities $_____ $_____ $_____
Principal Amount of Securities per Unit(1) $_____ $_____ $_____
Number of Units
Fractional Undivided Interest per Unit 1/____ 1/____ 1/____
Estimated Current Return based on
Public Offering Price(2) ____% ____% ____%
Estimated Long-Term Return(2) ____% ____% ____%
Calculation of Public Offering Price:
Aggregate Offering Price of Securities $_____ $_____ $_____
Aggregate Offering Price of Securities per Unit $_____ $_____ $_____
Plus Sales Charge per Unit(3) $_____ $_____ $_____
Public Offering Price per Unit(3) $_____ $_____ $_____
Calculation of Estimated Net Annual Interest
Income per Unit(4):
Estimated Annual Interest Income $_____ $_____ $_____
Less: Estimated Annual Expense $_____ $_____ $_____
Estimated Net Annual Interest Income $_____ $_____ $_____
First Payment per Unit $_____ $_____ $_____
Estimated Normal Monthly Distribution
per Unit $_____ $_____ $_____
Minimum Principal Value of the Trust under
which Trust Agreement may be terminated(5) ____% ____% ____%
Trustee's Annual Fee and Estimated
Expenses per Unit(6) $_____ $_____ $_____
Maximum Evaluator's Evaluation Fee
per Evaluation $_____ $_____ $_____
Maximum Sponsor's Annual Surveillance
Fee per Unit $_____ $_____ $_____
Estimated Annual Organizational Expenses
per Unit(7) $_____ $_____ $_____
Date of Trust Agreements _____ _____ _____
First Settlement Date _____ _____ _____
Mandatory Termination Date _____ _____ _____
</TABLE>
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 (to be filed by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be filed by amendment).
3.2 Opinion of counsel as to Federal income tax status of securities
being registered (to be filed by amendment).
3.3 Opinion of Counsel as to New York income tax status of securities
being registered (to be filed by amendment).
3.4 Opinion of Counsel as to advancement of funds by Trustee (to be
filed by amendment).
4.1 Consent of Rating Agency (to be filed by amendment).
4.2 Consent of Independent Auditors (to be filed by amendment).
4.3 Consent of Evaluator (to be filed by amendment).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Fidelity Defined Trusts, Series 5 has duly caused this
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 20th day of November, 1997.
Fidelity Defined Trusts, Series 5
Registrant)
By: National Financial Services Corporation
(Depositor)
___________________________
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 November 20, 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
___________________________
(Attorney-in-fact)*
_______________________________
*An executed copy of the related powers of attorney was filed as
Exhibit 7.1 to the initial Registration Statement on Form S-6 for
Fidelity Defined Trusts, Series 1 as filed on August 29, 1995 (File
No. 33-62243) and the same is hereby incorporated herein by this
reference. All other powers of attorney are filed herein.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, director or
officer of National Financial Services Corporation, a Massachusetts
corporation, hereby constitutes and appoints David J. Pearlman and
Eric D. Roiter, and each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal thereto and file one
or more Registration Statements on Form S-6 under the Securities Act
of 1933, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with
respect to any series of Fidelity Defined Trusts; any other unit
investment trust sponsored by National Financial Services Corporation
and any predecessors, affiliates or successors thereof whether or not
in existence at the date hereof and which may be created after the
date hereof with any regulatory authority, federal or state, relating
to the registration thereof or the issuance of units of fractional
undivided interests therein, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same as
fully to all intents and purposes as he might or could do if
personally present, hereby ratifying and conforming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
Signed this 20th day of November, 1997.
/s/ Kenneth Klipper
Kenneth Klipper
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, director or
officer of National Financial Services Corporation, a Massachusetts
corporation, hereby constitutes and appoints David J. Pearlman and
Eric D. Roiter, and each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal thereto and file one
or more Registration Statements on Form S-6 under the Securities Act
of 1933, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with
respect to any series of Fidelity Defined Trusts; any other unit
investment trust sponsored by National Financial Services Corporation
and any predecessors, affiliates or successors thereof whether or not
in existence at the date hereof and which may be created after the
date hereof with any regulatory authority, federal or state, relating
to the registration thereof or the issuance of units of fractional
undivided interests therein, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same as
fully to all intents and purposes as he might or could do if
personally present, hereby ratifying and conforming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
Signed this 20th day of November, 1997.
/s/Kenneth A. Rathgeber
Kenneth A. Rathgeber
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, director or
officer of National Financial Services Corporation, a Massachusetts
corporation, hereby constitutes and appoints David J. Pearlman and
Eric D. Roiter, and each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal thereto and file one
or more Registration Statements on Form S-6 under the Securities Act
of 1933, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with
respect to any series of Fidelity Defined Trusts; any other unit
investment trust sponsored by National Financial Services Corporation
and any predecessors, affiliates or successors thereof whether or not
in existence at the date hereof and which may be created after the
date hereof with any regulatory authority, federal or state, relating
to the registration thereof or the issuance of units of fractional
undivided interests therein, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same as
fully to all intents and purposes as he might or could do if
personally present, hereby ratifying and conforming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
Signed this 20th day of November, 1997.
/s/ Norman R. Malo
Norman R. Malo
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, director or
officer of National Financial Services Corporation, a Massachusetts
corporation, hereby constitutes and appoints David J. Pearlman and
Eric D. Roiter, and each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal thereto and file one
or more Registration Statements on Form S-6 under the Securities Act
of 1933, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with
respect to any series of Fidelity Defined Trusts; any other unit
investment trust sponsored by National Financial Services Corporation
and any predecessors, affiliates or successors thereof whether or not
in existence at the date hereof and which may be created after the
date hereof with any regulatory authority, federal or state, relating
to the registration thereof or the issuance of units of fractional
undivided interests therein, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same as
fully to all intents and purposes as he might or could do if
personally present, hereby ratifying and conforming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
Signed this 20th day of November, 1997.
/s/ John J. Mulherin John J. Mulherin
