<PAGE>
DEFINED
ASSET FUNDSSM
CORPORATE INCOME
FUND
- ------------------------------------------------------------
CASH OR ACCRETION BOND
SERIES--5
(A UNIT INVESTMENT TRUST)
PROSPECTUS, PART A
DATED SEPTEMBER 2, 1994
SPONSORS:
Merrill Lynch,
Pierce, Fenner & Smith Inc.
Smith Barney Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
This Defined Fund's objective is to provide a substantial level of safety
through investment in a portfolio consisting primarily of long-term compound
interest corporate bonds that are collateralized (the 'Compound Interest
Bonds'). There is no assurance that this objective will be met because it is
subject to the continuing ability of issuers of the Debt Obligations to meet
their principal and interest requirements. Furthermore, the market value of the
underlying Securities, and therefore the value of the Units, will flucutate with
changes in interest rates and other factors. The Securities were issued after
July 18, 1984, as a result of which the interest income (including original
issue discount) will be exempt from U.S. Federal income taxes, including
withholding taxes, for many foreign Holders (see Taxes in Part B).
The collateral backing the Compound Interest Bonds is primarily composed of
mortgage-backed Securities of the GNMA modified pass-through type ('GNMA
Certificates' or 'Ginnie Maes'), fully guaranteed as to the payment of principal
and interest by GNMA. The guaranty obligation of GNMA with respect to the GNMA
Certificates will be backed by the full faith and credit of the United States,
but the GNMA does not guarantee payment on the Bonds or on the Units of the
Fund, as such. The Fund is also designed for IRA accounts, Keogh plans and other
tax-deferred retirement programs. Units of the Fund are rated AAA by Standard &
Poor's.
MINIMUM PURCHASE IN INDIVIDUAL TRANSACTIONS: 1,000 UNITS
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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NOTE: PART A OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY DEFINED ASSET FUNDS--CORPORATE INCOME FUND PROSPECTUS,
PART B.
This Prospectus consists of two parts. The first includes an Investment Summary
and certified financial statements of the Fund, including the related securities
portfolio; the second contains a general summary of the Fund.
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Read and retain both parts of this Prospectus for future reference.
<PAGE>
DEFINED ASSET FUNDSSM is America's oldest and largest family of unit investment
trusts with over $90 billion sponsored since 1970. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.
Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra features: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against rising interest rates. Defined Funds are offered by prospectus only.
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CONTENTS
Investment Summary.......................................... A-3
Accountants' Opinion Relating to the Fund................... D-1
Statement of Condition...................................... D-2
Portfolio................................................... D-6
A-2
<PAGE>
DEFINED ASSET FUNDS--CORPORATE INCOME FUND, CASH OR ACCRETION BOND SERIES--5
INVESTMENT SUMMARY
AS OF MAY 31, 1994, THE EVALUATION DATE
PRINCIPAL AMOUNT OF SECURITIES(a)........................$ 3,281,522
NUMBER OF UNITS.......................................... 8,925,255
FACE AMOUNT OF SECURITIES PER UNIT (TIMES 1,000).........$ 367.66
FRACTIONAL UNDIVIDED INTEREST IN FUND REPRESENTED BY EACH
UNIT................................................... 1/8,925,255th
PUBLIC OFFERING PRICE PER 1,000 UNITS(b)
Aggregate bid side evaluation of Securities.........$ 3,348,753
--------------------
Divided by Number of Units (times 1,000)............$ 375.20
Plus sales charge of 3.50% of Public Offering Price
(3.626% of net amount invested) 13.60
--------------------
Public Offering Price per 1,000 Units...............$ 388.80
(plus cash
adjustments and
accrued interest)(c)
SPONSORS' REPURCHASE PRICE AND REDEMPTION PRICE PER 1,000
UNITS..................................................$ 375.20
(aggregate bid side evaluation of Securities) ($13.60 (plus cash
less than Public Offering Price per 1,000 Units) adjustments and
accrued interest)(c)
CALCULATION OF ESTIMATED NET ANNUAL INTEREST RATE PER
1,000 UNITS (BASED ON FACE AMOUNT PER 1,000 UNITS)
Annual interest rate per 1,000 Units................ 10.095%
Less estimated annual expenses per 1,000 Units
($4.15) expressed as a percentage................. 1.128%
--------------------
Estimated net annual interest rate per 1,000
Units............................................. 8.967%
--------------------
--------------------
RECORD DAY FOR PRINCIPAL AND INTEREST
DISTRIBUTIONS
The 10th day of each month.
PRINCIPAL AND INTEREST DISTRIBUTIONS
The 25th of each month after receipt of payments on any Compound Interest
Bond.
MINIMUM CAPITAL DISTRIBUTION
No distribution need be made from Capital Account if balance is less than
$5.00 per 1,000 Units.
TRUSTEE'S ANNUAL FEE AND EXPENSES(d)
$4.15 per 1,000 Units (see Expenses and Charges in Part B).
PORTFOLIO SUPERVISION FEE(e)
Maximum of $0.35 per 1,000 original Principal Amount of underlying Compound
Interest Bonds (see Expenses and Charges in Part B).
EVALUATOR'S FEE FOR EACH EVALUATION
Maximum of $14 (see Expenses and Charges in Part B).
EVALUATION TIME
3:30 P.M. New York Time
MINIMUM VALUE OF FUND
Trust may be terminated if value of Fund is less than 40% of the original
Principal Amount of Fund Securities on the date of their deposit. As of the
Evaluation Date, the value of the Fund is 16% of the original Principal
Amount of Fund Securities on the date of their deposit.
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(a)On the initial date of Deposit (January 31, 1986) the Principal Amount
of Securities in the Fund was $20,111,312. Cost of Securities is set
forth under Portfolio.
(b)These figures assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated simply by dividing the
Public Offering Price per 1,000 Units, above, by 1,000, and
multiplying by the number of Units. The sales charge will be reduced
on a graduated scale in the case of quantity purchases (see Public
Offering Price in Part B). The resulting reduction in the Public
Offering Price will increase the effective return on a Unit.
(c)For Units purchased or redeemed on the Evaluation Date, accrued
interest is approximately equal to the undistributed net investment
income of the Fund (see Statement of Condition on p. D-2) divided by
the number of outstanding Units, plus accrued interest per Unit to the
expected date of settlement (5 business days after purchase or
redemption). The amount of the cash adjustment which is added is equal
to the cash per Unit held in the Capital Account not allocated to the
purchase of specific Securities (see Public Sale of Units--Public
Offering Price and Redemption in Part B).
(d)The Trustee receives annually for its services as Trustee $0.95 per
$1,000 original Principal Amount of Compound Interest Bonds. The
Trustee's Annual Fee and Expenses also includes the Portfolio
Supervision Fee and the Evaluator's Fee set forth herein.
(e)The Sponsors also may be reimbursed for their costs of bookkeeping and
administrative services to the Fund. Portfolio supervision fees
deducted in excess of portfolio supervision expenses may be used for
this reimbursement. Additional deductions for this purpose are
currently estimated not to exceed an annual rate of $0.10 per 1,000
Units.
A-3
<PAGE>
DEFINED ASSET FUNDS--CORPORATE INCOME FUND, CASH OR ACCRETION BOND SERIES--5
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
NUMBER OF ISSUES IN PORTFOLIO............................... 4
RANGE OF MATURITIES.................................................2015-2016
NUMBER OF COMPOUND INTEREST BONDS........................... 3
NUMBER OF U.S. TREASURY INTEREST BEARING BONDS.............. 1
PERCENTAGE OF ACCRETED PRINCIPAL AMOUNT OF PORTFOLIO
REPRESENTED BY EACH ISSUER(c) OF COMPOUND INTEREST BONDS:
Guaranteed Mortgage Corporation II 58%
M.D.C. Corporation Series B............................ 30%
STANDARD & POOR'S CORPORATION
RATING ON UNITS OF THE FUND(a) ........................................ AAA
PERCENT OF ACCRETED PRINCIPAL AMOUNT OF PORTFOLIO COMPRISED
OF:(b)
GNMA-COLLATERALIZED BONDS:
9.75% Compound Interest Bond (stated maturity
4/01/2016)............................................. 45%
10.30% Compound Interest Bond (stated maturity
3/01/2016)........................................... 30%
11.00% Compound Interest Bond (stated maturity
12/01/2015).......................................... 13%
- ------------------------------
(a) See Description of Ratings in Part B.
(b) See Risk Factors--Cash or Accretion Bond Series, Select Series and
GNMA-Collateralized Bond Series in Part B.
(c) All of the issuers of the Compound Interest Bonds are limited purpose
corporations organized solely for the purpose of issuing bonds
collateralized by mortgage-backed securities. See Risk Factors--Cash
or Accretion Bond Series, Select Series and GNMA-Collateralized Bond
Series--Limited Assets and Limited Liability in Part B. The
collateral security for each issue will serve as collateral only for
that issue.
A-4
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Co-Trustees and Holders
of Defined Asset Funds - Corporate Income Fund,
Cash or Accretion Bond Series - 5:
We have audited the accompanying statement of condition of Defined Asset
Funds - Corporate Income Fund, Cash or Accretion Bond Series - 5, including the
portfolio, as of May 31, 1994 and the related statements of operations and of
changes in net assets for the years ended May 31, 1994, 1993 and 1992. These
financial statements are the responsibility of the Co-Trustees. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Securities owned at
May 31, 1994, as shown in such portfolio, were confirmed to us by Investors Bank
& Trust Company, a Co-Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Co-Trustees, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Defined Asset Funds - Corporate
Income Fund, Cash or Accretion Bond Series - 5 at May 31, 1994 and the results
of its operations and changes in its net assets for the above-stated years in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
July 21, 1994
D-1
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
<TABLE>
STATEMENT OF CONDITION
AS OF MAY 31, 1994
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (adjusted cost $3,262,845) (Note 1) $3,348,753
Accrued interest receivable 67,584
Cash 75,462
Total trust property 3,491,799
LESS LIABILITY - Accrued expenses 11,024
NET ASSETS, REPRESENTED BY:
8,925,255 units of fractional undivided interest
outstanding (Note 3) $3,348,757
Undistributed net investment income 132,018 $3,480,775
UNIT VALUE ($3,480,775/ 8,925,255 units) $.38999
</TABLE>
See Notes to Financial Statements.
D-2
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended May 31,
1994 1993 1992
<S> <C> <C> <C>
INVESTMENT INCOME:
Accretion on collateralized bonds $ 38,042 $378,700 $1,057,207
Interest income 396,605 489,806 113,076
Co-Trustees' fees and expenses (30,691) (47,285) (26,582)
Sponsors' fees (5,051) (11,432) (4,935)
Net investment income 398,905 809,789 1,138,766
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain (loss) on securities sold or
redeemed (137,627) 3,795 6,163
Unrealized appreciation (depreciation) of
investments (37,720) 28,775 202,144
Net realized and unrealized gain (loss) on
investments (175,347) 32,570 208,307
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $223,558 $842,359 $1,347,073
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended May 31,
1994 1993 1992
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 398,905 $ 809,789 $ 1,138,766
Realized gain (loss) on securities sold or
redeemed (137,627) 3,795 6,163
Unrealized appreciation (depreciation) of
investments (37,720) 28,775 202,144
Net increase in net assets resulting from
operations 223,558 842,359 1,347,073
DISTRIBUTIONS TO HOLDERS (Note 2):
Income (318,118) (433,745) (50,398)
Principal (2,443,263) (3,295,879) (194,861)
Total distributions (2,761,381) (3,729,624) (245,259)
CAPITAL SHARE TRANSACTIONS:
Issuance of 189,615, 607,392 and 1,143,755
additional units, respectively (Note 1)
Redemptions of 416,000, 2,940,000 and 995
units, respectively (284,194) (2,828,806) (1,025,267)
NET INCREASE (DECREASE) IN NET ASSETS (2,822,017) (5,716,071) 76,547
NET ASSETS AT BEGINNING OF YEAR 6,302,792 12,018,863 11,942,316
NET ASSETS AT END OF YEAR $3,480,775 $ 6,302,792 $12,018,863
PER UNIT:
Income distributions during year $.03323 $.04344 $.00434
Principal distributions during year $.18172 $.34076 $.01684
Net asset value at end of year $.38999 $.68871 $1.04655
TRUST UNITS OUTSTANDING AT END OF YEAR 8,925,255 9,151,640 11,484,248
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
(a) Securities are stated at value as determined by the Evaluator based on
bid side evaluations for the securities (see "Redemption - Computation
of Redemption Price Per Unit" in this Prospectus, Part B).
(b) Accrued interest is added to the principal and cost of the
collateralized bonds in accordance with their terms. On June 15 and
December 15 of each year, additional units are issued ratably to
Holders based on one unit per one dollar of aggregate increase in the
accreted principal amount of the compound interest bonds.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
(d) Interest income is recorded as earned.
2. DISTRIBUTIONS
The Fund is presently receiving distributions of principal or interest on
its holdings of the collateralized bonds in accordance with the terms of
such bonds. Monthly distributions are made to Holders as payments of
principal and interest are received on such bonds. Proceeds from the sale
of investment securities in excess of the amount needed for redemption of
units are distributed periodically. For additional information, see
"Special Considerations - Cash or Accretion Bond Series, Select Series,
GNMA-Collateralized Bond Series" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 8,925,255 units outstanding $8,925,255
Redemptions of units - net cost of 22,383,868 units redeemed
less redemption amounts 1,035,848
Realized loss on securities sold (618,553)
Principal distributions (6,079,701)
Net unrealized appreciation of investments 85,908
Net capital applicable to Holders $3,348,757
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount on
the collateralized bonds, expenses paid, and realized gains and losses on
securities sold are attributable to the Holders, on a pro rata basis, for
Federal income tax purposes in accordance with the grantor trust rules of
the United States Internal Revenue Code.
At May 31, 1994, the cost of the investment securities for Federal income
tax purposes was approximately equivalent to the adjusted cost as shown in
the Fund's portfolio.
D-5
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
PORTFOLIO
AS OF MAY 31, 1994
<TABLE>
<CAPTION>
Estimated
Optional Optional Payment
Portfolio No. and Title of Rating of Accreted Interest Call Call Commencement Adjusted
Securities Issues(1) Principal(2) Maturities Rate Date(3) Percentage(3) Date(4) Cost(2) Value(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Guaranteed Mortgage Corporation AAA $1,486,279 4/01/16 9.750% 2/01/96100% $1,409,694 $1,475,707
II, GNMA - Collateralized
Mortgage Bnds., Series Q,
Class Q-4
2 Guaranteed Mortgage Corporation AAA 440,040 12/01/15 11.000 10/01/95100 484,230 436,850
II, GNMA-Collateralized
Mortgage Bnds., Series R,
Class R-4
3 M.D.C. Corporation Series B, AAA 980,203 3/01/16 10.300 3/01/01100 974,233 972,726
Class B-4
4 U.S. Treasury Bnds. 9.875% 375,000 11/15/15 9.875 - 394,688 463,470
TOTAL $3,281,522 $3,262,845 $3,348,753
</TABLE>
See Notes to Portfolio.
D-6
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
CASH OR ACCRETION BOND SERIES - 5
NOTES TO PORTFOLIO
AS OF MAY 31, 1994
(1) A description of the rating symbols and their meanings appears under
"Description of Ratings" in this Prospectus, Part B. "NR", if applicable,
indicates that this security is not currently rated by any of the major
rating services.
(2) See Notes to Financial Statements.
(3) The collateralized bonds were issued in series and each series is callable
at the option of the Issuer, in whole (but not in part), without premium,
at any time (i) on or after certain predetermined call dates or (ii) after
the aggregate outstanding principal amount of the collateralized bonds of
such series declines to a stated percentage of the aggregate outstanding
principal amount of such collateralized bonds on their original issue date.
Furthermore, principal on the collateralized bonds may be prepaid to the
extent that principal on the mortgages underlying the GNMA or FNMA
Certificates are prepaid. See "Life of the Bonds and of the Fund" in this
Prospectus, Part B.
D-7
<PAGE>
DEFINED
ASSET FUNDSSM
SPONSORS: CORPORATE INCOME FUND
Merrill Lynch, Cash or Accretion Bond Series--5
Pierce, Fenner & Smith Inc. (A Unit Investment Trust)
Unit Investment Trusts PROSPECTUS PART A
P.O. Box 9051 This Prospectus does not contain all of
Princeton, N.J. 08543-9051 the information with respect to the
(609) 282-8500 investment company set forth in its
Smith Barney Inc. registration statement and exhibits
Unit Trust Department relating thereto which have been filed
Two World Trade Center--101st Floor with the Securities and Exchange
New York, N.Y. 10048 Commission, Washington, D.C. under the
1-800-298-UNIT Securities Act of 1933 and the
PaineWebber Incorporated Investment Company Act of 1940, and to
1200 Harbor Boulevard which reference is hereby made.
Weehawken, N.J. 07087 No person is authorized to give any
(201) 902-3000 information or to make any
Prudential Securities Incorporated representations with respect to this
One Seaport Plaza investment company not contained in this
199 Water Street Prospectus; and any information or
New York, N.Y. 10292 representation not contained herein must
(212) 776-1000 not be relied upon as having been
Dean Witter Reynolds Inc. authorized. This Prospectus does not
Two World Trade Center--59th Floor constitute an offer to sell, or a
New York, N.Y. 10048 solicitation of an offer to buy,
(212) 392-2222 securities in any state to any person to
EVALUATOR: whom it is not lawful to make such offer
Kenny S&P Evaluation Services in such state.
65 Broadway
New York, N.Y. 10006
INDEPENDENT ACCOUNTANTS:
Deloitte & Touche LLP
1633 Broadway
3rd Floor
New York, N.Y. 10019
CO-TRUSTEES:
The First National Bank of Chicago
Investors Bank & Trust Company
P.O. Box 1537
Boston, MA 02205-1537
1-800-338-6019
11704--9/94
