File No. 33-62243
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Fidelity Defined Trusts, Series 1
(Exact Name of Trust)
National Financial Services Corporation
(Exact Name of Depositor)
82 Devonshire Street N7A
Boston, Massachusetts 02109-3614
(Complete address of Depositor's principal executive offices)
National Financial Services Corporation Chapman and Cutler
Attention: David J. Pearlman Attention: Mark J. Kneedy
82 Devonshire Street N7A 111 West Monroe Street
Boston, Massachusetts 02109-3614 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective on
May 5, 1997 pursuant to paragraph (b) of Rule 485.
CONTENTS OF POST-EFFECTIVE AMENDMENT
TO REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement comprises the
following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
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
PROSPECTUS - PART II
MAY 1, 1997
This Part II of the Prospectus may not be distributed unless accompanied by
Part I of the Prospectus. Both Parts I and II of the Prospectus should be
retained for future reference.
FIDELITY
INVESTMENTS(Registered trademark)
82 Devonshire Street, Boston, MA 02109
TABLE OF CONTENTS
Page
The Trusts 4
General Information 4
Risk Factors 5
Rating of Units 12
Insurance on the Corporate Bonds 12
Retirement Plans 14
Tax Status 14
Distribution Reinvestment 21
Interest, Estimated Long-Term Return and Estimated Current Return 22
Public Offering of Units 22
Market for Units 27
Redemption 27
Unitholders 29
Investment Supervision 33
Trust Administration 34
Trust Expenses 36
The Sponsor 38
Legal Opinions 38
Independent Certified Public Accountants 39
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.
The Trusts
Fidelity Defined Trusts are unit investments trusts consisting of
portfolios containing U.S. Treasury obligations, mortgage-backed securities
of the fully modified pass-through type, the payments of principal and
interest on which are fully guaranteed by the Government National Mortgage
Association ("GNMA SECURITIES") and/or corporate debt obligations
("CORPORATE BONDS"). See Part I of the Prospectus for a description of the
portfolio for each trust. 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. Trusts which contain
a laddered portfolio of U.S. Treasury Obligations are sometimes referred to
herein as "LADDERED TRUSTS." Trusts which contain a portfolio of U.S.
Treasury Obligations or GNMA Securities which provide for the reinvestment
of principal distributions into additional U.S. Treasury Obligations or
GNMA Securities, respectively, over a specific period (as set forth in Part
I) are sometimes referred to herein as "ROLLING TRUSTS." Trusts which
contain a portfolio of corporate debt obligations and, in certain Trusts,
U.S. Treasury Obligations are sometimes referred to herein as "CORPORATE
TRUSTS." Certain Corporate Trusts may contain a portfolio of insured
corporate debt obligations, in which case they shall sometimes be referred
to herein as "INSURED CORPORATE TRUSTS." As used herein, "SECURITIES"
shall collectively refer to the U.S. Treasury Obligations, GNMA Securities
or Corporate Bonds deposited in the Trusts. 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>
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.
Subsequent to the date of Part I of this Prospectus, a Security may cease
to be rated or its rating may be reduced below any minimum required as of a
Trust's 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
"Investment Supervision."
The Sponsor may not alter the portfolio of a Trust except upon the
occurrence of certain extraordinary circumstances or, in the case of a
Rolling Trust, in connection with a reinvestment of principal. See
"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" in Part I of this Prospectus 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, or
reinvested in the case of the Rolling Trust, 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 "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
"Tax Status." Information with respect to the call provisions and maturity
dates of the Securities is contained under "Portfolio" in Part I of this
Prospectus for each Trust.
<F1> Reference is made to the Trustee Agreement, and any statements
contained herein are qualified in their entirety by the provisions of the
Trust Agreement
Each Unit of a Trust represents an undivided fractional interest in the
Securities deposited therein, in the ratio shown under "Essential
Information" in Part I of this Prospectus. 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 "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.
During the Reinvestment Period for a Rolling Trust which contains U.S.
Treasury Obligations, the Sponsor will direct the Trustee to reinvest
principal payments on the U.S. Treasury Obligations into additional U.S.
Treasury Obligations as described in Part I of this Prospectus. Principal
amounts which cannot be reinvested will be distributed to Unitholders of
such a Trust semiannually unless the amount available for distribution is
less than $0.01 per Unit. After the Reinvestment Period, principal will
not be reinvested and will be distributed monthly (subject to amount
limitations) to Unitholders.
GNMA SECURITIES. An investment in Units of a Rolling Trust which contains
GNMA Securities should be made with an understanding of the risks inherent
therein, including the risk that the value of the portfolio and hence of
the Units will decline with increases in interest rates. The value of the
underlying GNMA Securities will fluctuate inversely with changes in
interest rates. In addition, the potential for appreciation of the
underlying GNMA Securities, which might otherwise be expected to occur as a
result of a decline in interest rates, may be limited or negated by
increased principal prepayments in respect of the underlying mortgages.
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 long term obligations
generally. The Sponsor cannot predict whether such fluctuations will
continue in the future.
GNMA Securities included in a Rolling Trust are backed by the indebtedness
secured by underlying mortgage pools of long-term mortgages on 1- to
4-family dwellings. The pool of mortgages which is to underlie a
particular new issue of Ginnie Maes is assembled by the proposed issuer of
such Ginnie Maes. The issuer is typically a mortgage banking firm, and in
every instance must be a mortgagee approved by and in good standing with
the Federal Housing Administration ("FHA"). In addition, GNMA imposes its
own criteria on the eligibility of issuers, including a net worth
requirement.
During the Reinvestment Period for a Rolling Trust which contains GNMA
Securities, the Sponsor will direct the Trustee to reinvest principal
payments and prepayments on the Ginnie Maes into additional Ginnie Mae
securities. While precise duplication of the Ginnie Maes to be purchased
with reinvested principal is the goal of the Sponsor, this may not be
possible because fractions of Ginnie Maes may not be purchased and
substantially similar securities may not be available. Principal amounts
which cannot be reinvested will be distributed to Unitholders of such Trust
semiannually unless the amount available for distribution is less than
$0.01 per Unit. After the Reinvestment Period, principal will not be
reinvested and will be distributed monthly (subject to amount limitations)
to Unitholders.
The mortgages underlying a Ginnie Mae may be prepaid at any time without
any significant premium or penalty at the option of the mortgagors. It has
been the experience of the mortgage industry that the average life of
mortgages comparable to those contained in a Rolling Trust, owing to
prepayments, refinancings and payments from foreclosures is considerably
less than the stated maturity set forth in "Essential Information" in Part
I of this Prospectus. A lower or higher return on Units may occur
depending on (i) whether the price at which the respective Ginnie Maes were
acquired by a Trust is lower or higher than par (which represents the price
at which such Ginnie Maes will be redeemed upon prepayment), (ii) whether
principal is reinvested or distributed to Unitholders and (iii) if
reinvestment occurs, whether the Ginnie Maes purchased by the Trustee with
reinvested principal are purchased at a premium or discount from par.
During periods of declining interest rates, prepayments of Ginnie Maes may
occur with increasing frequency because, among other reasons, mortgagors
may be able to refinance their outstanding mortgages at lower interest
rates. In such a case, (i) the reinvestment of principal may be at prices
which result in a lower return on Units or (ii) principal will be
distributed to Unitholders who cannot reinvest such principal distributions
in other securities at an attractive yield.
The Ginnie Maes in a Rolling Trust are guaranteed as to timely payment of
principal and interest by GNMA. Funds received by the issuers on account
of the mortgages backing the Ginnie Maes in the Rolling Trust are intended
to be sufficient to make the required payments of principal of and interest
on such Ginnie Maes but, if such funds are insufficient for that purpose,
the guaranty agreements between the issuers and GNMA require the issuers to
make advances sufficient for such payments. If the issuers fail to make
such payments, GNMA will do so. Any statement in this Prospectus that a
particular Security is backed by the full faith and credit of the United
States is based upon the opinion of an Assistant Attorney General of the
United States and should be so construed.
THE GNMA GUARANTIES REFERRED TO HEREIN RELATE ONLY TO PAYMENT OF PRINCIPAL
OF AND ON THE GINNIE MAES IN THE PORTFOLIO AND NOT THE UNITS OFFERED
HEREBY.
A number of factors, including homeowners' mobility, change in family size
and mortgage market interest rates will affect the average life of the
Ginnie Maes in a Rolling Trust. For example, Ginnie Maes issued during a
period of high interest rates will be backed by a pool of mortgage loans
bearing similarly high rates. In general, during a period of declining
interest rates, new mortgage loans with interest rates lower than those
charged during periods of high rates will become available. To the extent
a homeowner has an outstanding mortgage with a high rate, he may refinance
his mortgage at a lower interest rate or he may rapidly repay his old
mortgage. Should this happen, a Ginnie Mae issued with a high interest
rate may experience a rapid prepayment of principal as the underlying
mortgage loans prepay in whole or in part. Accordingly, there can be no
assurance that the prepayment levels which will be actually realized will
conform to the experience of the FHA, other mortgage lenders or other
Ginnie Mae investors. It is not possible to meaningfully predict
prepayment levels regarding the Ginnie Maes in a Rolling Trust. Therefore,
the termination of a Rolling Trust which contains GNMA Securities might be
accelerated as a result of prepayments made as described herein.
PUBLIC UTILITY ISSUES. Certain of the Corporate Bonds in a Corporate Trust
may be obligations of public utility issuers. In general, public utilities
are regulated monopolies engaged in the business of supplying light, water,
power, heat, transportation or means of communication. Historically, the
utilities industry has provided investors with high levels of reliability,
stability and relative total return on their investments. However, an
investment in a Corporate Trust containing obligations of public utility
issuers should be made with an understanding of the characteristics of such
issuers and the risks which such an investment may entail. General
problems of such issuers include the difficulty in financing large
construction programs in an inflationary period, the limitations on
operations and increased costs and delays attributable to environmental
considerations, the difficulty of the capital markets in absorbing utility
debt, the difficulty in obtaining fuel at reasonable prices and the effect
of energy conservation. All of such issuers have been experiencing certain
of these problems in varying degrees. In addition, federal, state and
municipal governmental authorities may from time to time review existing,
and impose additional, regulations governing the licensing, construction
and operation of nuclear power plants, which may adversely affect the
ability of the issuers of certain of the Corporate Bonds in a Corporate
Trust to make payments of principal and/or interest on such Corporate
Bonds.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged
and the appropriate rate of return on an approved asset base, which must be
approved by the state commissions. Certain utilities have had difficulty
from time to time in persuading regulators, who are subject to political
pressures, to grant rate increases necessary to maintain an adequate return
on investment and voters in many states have the ability to impose limits
on rate adjustments (for example, by initiative or referendum). Any
unexpected limitations could negatively affect the profitability of
utilities whose budgets are planned far in advance. Also, changes in
certain accounting standards currently under consideration by the Federal
Accounting Standards Board could cause significant write-downs of assets
and reductions in earnings for many investor-owned utilities. In addition,
gas pipeline and distribution companies have had difficulties in adjusting
to short and surplus energy supplies, enforcing or being required to comply
with long-term contracts and avoiding litigation from their customers, on
the one hand, or suppliers, on the other hand.
Certain of the issuers of the Bonds in a Corporate Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to
time review existing, and impose additional, requirements governing the
licensing, construction and operation of nuclear power plants. Nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing difficulties.
These have been caused by various factors, including inflation, high
financing costs, required design changes and rework, allegedly faulty
construction, objections by groups and governmental officials, limits on
the ability to finance, reduced forecasts of energy requirements and
economic conditions. This experience indicates that the risk of
significant cost increases, delays and licensing difficulties remains
present through completion and achievement of commercial operation of any
nuclear project. Also, nuclear generating units in service have
experienced unplanned outages or extensions of scheduled outages due to
equipment problems or new regulatory requirements sometimes followed by a
significant delay in obtaining regulatory approval to return to service. A
major accident at a nuclear plant anywhere could cause the imposition of
limits or prohibitions on the operation, construction or licensing of
nuclear units in the United States.
In view of the uncertainties discussed above, there can be no assurance
that any bond issuer's share of the full cost of nuclear units under
construction ultimately will be recovered in rates or of the extent to
which a bond issuer could earn an adequate return on its investment in such
units. The likelihood of a significantly adverse event occurring in any of
the areas of concern described above varies, as does the potential severity
of any adverse impact. It should be recognized, however, that one or more
of such adverse events could occur and individually or collectively could
have a material adverse impact on the financial condition or the results of
operations or on a bond issuer's ability to make interest and principal
payments on its outstanding debt.
Other general problems of the gas, water, telephone and electric utility
industry (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement
facilities during an inflationary period, rising costs of rail
transportation to transport fossil fuels, the uncertainty of transmission
service costs for both interstate and intrastate transactions, changes in
tax laws which adversely affect a utility's ability to operate profitably,
increased competition in service costs, reductions in estimates of future
demand for electricity and gas in certain areas of the country,
restrictions on operations and increased cost and delays attributable to
environmental considerations, uncertain availability and increased cost of
capital, unavailability of fuel for electric generation at reasonable
prices, including the steady rise in fuel costs and the costs associated
with conversion to alternate fuel sources such as coal, availability and
cost of natural gas for resale, technical and cost factors and other
problems associated with construction, licensing, regulation and operation
of nuclear facilities for electric generation, including among other
considerations the problems associated with the use of radioactive
materials and the disposal of radioactive wastes, and the effects of energy
conservation. Each of the problems referred to could adversely affect the
ability of the issuers of any utility bonds in a Corporate Trust to make
payments due on these bonds.
In addition, the ability of state and local joint action power agencies to
make payments on bonds they have issued is dependent in large part on
payments made to them pursuant to power supply or similar agreements.
Courts in Washington and Idaho have held that certain agreements between
Washington Public Power Supply System ("WPPSS") and the WPPSS participants
are unenforceable because the participants did not have the authority to
enter into the agreements. While these decisions are not specifically
applicable to agreements entered into by public entities in other states,
they may cause a reexamination of the legal structure and economic
viability of certain projects financed by joint action power agencies,
which might exacerbate some of the problems referred to above and possible
lead to legal proceedings questioning the enforceability of agreements upon
which payment of these bonds may depend.
CORPORATE BONDS. An investment in Units of a Corporate Trust should be
made with an understanding of the risks that an investment in fixed rate,
investment grade corporate debt obligations may entail, including the risk
that the value of the Units will decline with increases in interest rates.
In recent years, there have been wide fluctuations in interest rates and
thus in the value of fixed-rate debt obligations generally. Generally
bonds with longer maturities will fluctuate in value more than bonds with
shorter maturities. A slowdown in the economy, or a development adversely
affecting an issuer's creditworthiness, may result in the issuer being
unable to maintain earnings or sell assets at the rate and at the prices,
respectively, that are required to produce sufficient cash flow to meet its
interest and principal requirements. The Sponsor cannot predict future
economic policies or their consequences or, therefore, the course or extent
of any similar market fluctuations in the future.
Should the issuer of any Corporate Bond default in the payment of principal
or interest, a Corporate Trust may incur additional expenses seeking
payment on the defaulted Corporate Bond. Because amounts (if any)
recovered by a Trust in payment under the defaulted Corporate Bond may not
be reflected in the value of the Units until actually received by a
Corporate Trust, and depending upon when a Unitholder purchases or sells
his Units, it is possible that a Unitholder would bear a portion of the
cost of recovery without receiving any portion of the payment recovered.
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 discount 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 "Tax Status." Market discount
attributable to interest 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 premium
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" in Part
I of this Prospectus 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 "Tax
Status."
LITIGATION. To the best of the Sponsor's knowledge, there is no litigation
pending as of the date of Part I of this Prospectus in respect of any
Security which might reasonably be expected to have a material adverse
effect on the Trusts. At any time after the date of Part I of this
Prospectus, 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
At the Initial Date of Deposit for each Laddered Trust, Rolling Trust and
Insured Corporate Trust, Standard & Poor's rated the Units of such Trusts
"AAA." Although each of these Trusts have elected not to renew this
rating, in the opinion of the Sponsor there has been no significant
structural change to any of these Trusts which would warrant a different
rating than was originally obtained. This is the highest rating assigned
by Standard & Poor's. Capacity to pay interest and repay principal is very
strong.
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") was, at the time it was given, 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.
Securities in an Insured Corporate Trust for which insurance has been
obtained by the issuer or the Sponsor (all of which were rated "AAA" by
Standard & Poor's and/or "Aaa" by Moody's Investors Service, Inc.
("MOODY'S")) may or may not have a higher yield than uninsured Securities
rated "AAA" by Standard & Poor's or "Aaa" by Moody's. In selecting
Securities for an Insured Corporate Trust, the Sponsor has applied the
criteria hereinbefore described.
Insurance on the Corporate Bonds
All Corporate Bonds in an insured Corporate Trust ("INSURED CORPORATE
TRUST") (as set forth in Part I of this Prospectus) except for any U.S.
Treasury obligations are insured as to the scheduled payment of interest
and principal either by the issuer of the Corporate Bonds or by the Sponsor
under a financial guaranty insurance policy obtained from MBIA Insurance
Corporation ("MBIA"). The premium for each such insurance policy has been
paid in advance by such issuer or the Sponsor and each such policy is
non-cancellable and will remain in force so long as such Corporate Bonds
are outstanding and MBIA remains in business. No premiums for such
insurance are paid by an Insured Corporate Trust. If MBIA is unable to
meet its obligations under its policy or if the rating assigned to the
claims-paying ability of MBIA deteriorates, no other insurer has any
obligation to insure any issue adversely affected by either of these
events.
The aforementioned insurance guarantees the scheduled payment of principal
and interest on all of such Corporate Bonds in an Insured Corporate Trust
except for any U.S. Treasury obligations. It does not guarantee the market
value of the Bonds or the value of the Units of such Corporate Trust. This
insurance is effective so long as the Corporate Bond is outstanding,
whether or not held by an Insured Corporate Trust. Therefore, any such
insurance may be considered to represent an element of market value in
regard to the Corporate Bonds, but the exact effect, if any, of this
insurance on such market value cannot be predicted.
MBIA is the principal operating subsidiary of MBIA, Inc., a New York Stock
Exchange listed company. MBIA, Inc. is not obligated to pay the debts of
or claims against MBIA. MBIA is domiciled in the State of New York and
licensed to do business in and subject to regulation under the laws of all
50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the
United States and the Territory of Guam. MBIA has two European branches,
one in the Republic of France and the other in the Kingdom of Spain. New
York has laws prescribing minimum capital requirements, limiting classes
and concentrations of investments and requiring the approval of policy
rates and forms. State laws also regulate the amount of both the aggregate
and individual risks that may be insured, the payment of dividends by the
insurer, changes in control and transactions among affiliates.
Additionally, MBIA is required to maintain contingency reserves on its
liabilities in certain amounts and for certain periods of time.
As of December 31, 1996, MBIA had admitted assets of $4.4 billion
(audited), total liabilities of $3.0 billion (audited), and total capital
and surplus of $1.4 billion (audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance
regulatory authorities. As of December 31, 1995, MBIA had admitted assets
of $3.8 billion (audited), total liabilities of $2.5 billion (audited), and
total capital and surplus of $1.3 billion (audited) determined in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. Copies of MBIA Corporation's financial
statements prepared in accordance with statutory accounting practices are
available from MBIA Corporation. The address of MBIA Corporation is 113
King Street, Armonk, New York 10504.
Moody's rates all bond issues insured by MBIA "Aaa" and short-term loans
"MIG-1," both designated to be of the highest quality. Standard & Poor's
rates all new issues by MBIA "AAA."
Because the Corporate Bonds in an Insured Corporate Trust (other than U.S.
Treasury Obligations) are insured as to the scheduled payment of principal
and interest and on the basis of the financial condition and the method of
operation of MBIA, at the Initial Date of Deposit for each Insured
Corporate Trust, Standard & Poor's assigned to Units in an Insured
Corporate Trust its "AAA" investment rating. While the sponsor has elected
not to renew this "AAA" rating on Insured Corporate Trust Units, in the
opinion of the Sponsor there has been no significant structural change to
any of these Trusts which would warrant a different rating than that
originally obtained. This is the highest rating assigned to securities by
such rating agency. These ratings should not be construed as an approval
of the offering of the Units by Standard & Poor's or as a guarantee of the
market value of an Insured Corporate Trust or the Units thereof.
Bonds in an Insured Corporate Trust for which insurance has been obtained
by the issuer thereof or by the Sponsor from MBIA (all of which were rated
"Aaa" by Moody's) may or may not have a higher yield than uninsured bonds
rated "Aaa" by Moody's. In selecting Corporate Bonds for the portfolio of
an Insured Corporate Trust, the Sponsor has applied the criteria
hereinbefore described.
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
GRANTOR TRUST
The following discussion applies only to those Trusts classified as Grantor
Trusts under "Tax Status" in Part I of this Prospectus, 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. The Trusts are not associations taxable as corporations for federal
income tax purposes.
2. Each Unitholder will be considered the owner of a PRO RATA portion of
each of a Trust's 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 such 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.
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. 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 includible 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%.
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% 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 the Trusts are not associations taxable as
corporations and the income of a 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. 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.
REGULATED INVE1
STMENT COMPANY
The following discussion applies only to those Trusts classified as
regulated investment companies under "Tax Status" in Part I of this
Prospectus, which are structured to qualify as a regulated investment
company for federal tax purposes. In the opinion of Chapman and Cutler,
counsel or the Sponsor, under existing law:
Each Trust is an association taxable as a corporation under the Code and
intends to qualify on a continuing basis for and elect tax treatment as a
"regulated investment company" under the Code. If a Trust so qualifies and
timely distributes to Unitholders 90% or more of its taxable income
(without regard to its net capital gain, I.E., the excess of its net
long-term capital gain over its net short-term capital loss), it will not
be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders. In
addition, to the extent a Trust timely distributes to Unitholders at least
98% of its taxable income (including any net capital gain), it will not be
subject to the 4% excise tax on certain undistributed income of "regulated
investment companies." Each Trust intends to timely distribute its taxable
income (including any net capital gain) to avoid the imposition of federal
income tax or the excise tax. Distributions of the entire net investment
income of a Trust is required by the Indenture.
Distributions from a Trust (other than its net capital gain), to the extent
of the earnings and profits of such Trust, will be taxable as ordinary
income to Unitholders. To the extent that distributions to a Unitholder in
any year exceed a Trust's current and accumulated earnings and profits,
they will be treated as a return of capital and will reduce the
Unitholder's basis in his or her Units and, to the extent that they exceed
his or her basis, will be treated as a gain from the sale of his or her
Units as discussed below. Distributions from a Trust will not be eligible
for the 70% dividends-received deduction for corporations.
Although distributions generally will be treated as distributed when paid,
distributions declared in October, November or December, payable to
Unitholders of record on a specified date in one of those months and paid
during January of the following year will be treated as having been
distributed by a Trust (and received by the Unitholders) on December 31 of
the year such distributions are declared.
Distributions of a Trust's net capital gain which a Trust properly
designates as capital gain dividends will be taxable to Unitholders thereof
as long-term capital gains, regardless of the length of time the Units have
been held by a Unitholder. Distributions in partial liquidation,
reflecting the proceeds of prepayments, redemptions, maturities or sales of
Securities from a Trust (exclusive of net capital gain) will not be taxable
to Unitholders of such Trust to the extent that they represent a return of
capital for tax purposes. The portion of distributions which represents a
return of capital will, however, reduce a Unitholder's basis in his Units,
and to the extent they exceed the basis of his Units will be taxable as a
capital gain. A Unitholder may recognize a taxable gain (or loss) when his
or her Units are sold or redeemed. Such gain or loss generally will
constitute either a long-term or short-term capital gain or loss depending
upon the length of time the Unitholder has held his Units. Any loss of
Units held six months or less will be treated as long-term capital loss to
the extent of any long-term capital gains dividends received (or deemed to
have been received) by the Unitholder with respect to such Units during the
six-month period or less that the Unitholder owns the Units. For taxpayers
other than corporations, net capital gains are presently subject to a
maximum stated marginal rate of 28%. 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. A capital loss is long-term if the asset is held
for more than one year and short-term if held for one year or less.
The Tax Act raised tax rates on ordinary income while capital gains remain
subject to a 28% maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively lower rate
under the Act, the 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 advisors regarding the potential effect of this provision on
their investment in Units.
Under the Code, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee business
expenses, will be deductible by individuals only to the extent they exceed
2% of adjusted gross income. Miscellaneous itemized deductions subject to
this limitation under present law do not include expenses incurred by a
Trust as long as the Units of such Trust are held by or for 500 or more
persons at all times during the taxable year or another exception is met.
In the event the Units of a Trust are held by fewer than 500 persons,
additional taxable income may be realized by the individual (and other
noncorporate) Unitholders in excess of the distributions received from a
Trust.
If a Security has been purchased by a Trust at a market discount (I.E., for
a purchase price less than its stated redemption price at maturity (or if
issued with original issue discount, its "revised issue price")) unless the
amount of market discount is "DE MINIMIS" as specified in the Code, each
payment of principal on the Security will generally constitute ordinary
income to a Trust to the extent of any accrued market discount unless a
Trust elects to include the accrued market discount in taxable income as it
accrues. The amount of market discount that is deemed to accrue each month
shall generally be the amount of discount that bears the same ratio to the
total amount of remaining market discount that the amount of interest paid
during the accrual period bears to the total amount of interest remaining
in the Securities as of the beginning of the accrual period.
The market discount rules do not apply to Stripped U.S. Treasury
Obligations because they are stripped debt instruments subject to special
original issue discount rules.
Additional Units of a Trust may be issued after the Initial Date of Deposit
in respect of additional Securities deposited in a Trust by the Sponsor.
Because of possible market interest rate fluctuations, the purchase price
to a Trust of the additional Securities may differ from the purchase price
of the Securities in a Trust on the Initial Date of Deposit. If interest
rates decline and such additional Securities are purchased at a higher
price than the Securities originally deposited, then the amounts includible
in the taxable income of a Trust in proportion to the asset value of a
Trust will be reduced for all Unitholders thereof, not just the Unitholders
of such additional Units. Conversely, if interest rates rise and such
additional Securities are purchased at a lower price than the Securities
originally deposited, then the amounts includible in the taxable income of
the Trust in proportion to the asset value of a Trust will be increased for
all Unitholders thereof, not just the Unitholders of such additional Units.
Each Unitholder 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 (including amounts received upon the redemption of Units)
will be subject to back-up withholding.
Each Unitholder of a Trust shall receive an annual statement describing the
tax status of the distributions paid by such Trust. The foregoing
discussion relates only to the federal income tax status of a Trust and to
the tax treatment of distributions by such Trust to United States
Unitholders.
FOREIGN INVESTORS - A Unitholder who is a foreign investor (I.E., an
investor other than a United States citizen or resident or a United States
corporation, partnership, estate or trust) should be aware that, generally,
subject to applicable tax treaties, distributions from a Trust, which
constitute dividends for Federal income tax purposes (other than dividends
which a Trust designates as capital gain dividends) will be subject to
United States income taxes, including withholding taxes. However,
distributions received by a foreign investor from a Trust that are
designated by such Trust as capital gain dividends should not be subject to
United States Federal income taxes, including withholding taxes, if all of
the following conditions are met (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor in a trade
or business within the United States, (ii) the foreign investor (if an
individual) is not present in the United States for 183 days or more during
his or her taxable year, and (iii) the foreign investor provides all
certification which may be required of his 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). Foreign
investors should consult their tax advisors with respect to United States
tax consequences of ownership of Units. Units in a Trust and Trust
distributions may also be subject to state and local taxation and
Unitholders should consult their tax advisors in this regard.
Distributions reinvested into additional Units of a Trust will be taxed to
a Unitholder in the manner described above (I.E., as ordinary income,
long-term capital gain or as a return of capital).
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
"Unitholders-Distributions to Unitholders."
Interest, Estimated Long-Term Return and Estimated Current Return
As of the date of Part I of this Prospectus, the Estimated Long-Term Return
and the Estimated Current Return, if applicable, for each Trust were as set
forth in "Essential Information" in Part I of this Prospectus. 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 payments and
prepayments and with reinvestment (in the case of a Rolling Trust),
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, which includes the reinvestment of Securities in a
Rolling 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.
Payments received in respect of mortgages underlying Ginnie Mae, if any, in
a Rolling Trust will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment
made by the obligor on each mortgage remains constant (aside from optional
prepayments of principal), in the early years most of each such payment
will represent interest, while in later years, the proportion representing
interest will decline and the proportion representing principal will
increase. However, by reason of optional prepayments, principal payments
in the earlier years on mortgages underling Ginnie Maes may be
substantially in excess of those required by the amortization schedules of
such mortgages. Therefore, principal payments in later years may be
substantially less since the aggregate unpaid principal balances of such
underlying mortgages may have been greatly reduced. To the extent that the
underling mortgages bearing higher interest rates in a Rolling Trust are
prepaid faster than the other underlying mortgages, the net annual interest
rate per Unit and the Estimated Current Return of the Units of a Rolling
Trust can be expected to decline. Monthly payments to the Unitholders of a
Rolling Trust will reflect all of these factors.
Public Offering of Units
PUBLIC OFFERING PRICE. Units of a Trust are offered at the Public Offering
Price thereof. The Public Offering Price for secondary market transactions
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 plus a sales charge based upon the
dollar weighted average maturity of such Trust determined in accordance
with the tables set forth below (which includes a deferred sales charge for
each Corporate Trust, Insured Corporate Trust and Rolling Trust which
contains GNMA securities). 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.
The sales charge per Unit for each Laddered Trust and each Rolling Trust
which contains U.S. Treasury Obligations will be set forth in the following
table:
Amount Invested
Less than $500,000 $500,000 to $999,999 $1,000,000 and up
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percent Percent Percent Percent Percent Percent
Weighted of of Net of of Net of of Net
Average Offering Amount Offering Amount Offering Amount
Maturity 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 sales charge per Unit for each Corporate Trust, Insured Corporate Trust
and Rolling Trust which contains GNMA Securities will be set forth in the
following table:
Dollar Weighted Average Dollar Weighted Average
Maturity Less than 5 Years Maturity Greater than 5 Years
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percent of Percent of Percent of Percent of
Offering Net Amount Offering Net Amount
Amount Invested Price* Invested* Price* Invested*
Less than $100,000 2.500% 2.564% 3.500% 3.627%
$100,000 to $249,999 2.250% 2.302% 3.250% 3.359%
$250,000 to $499,999 2.000% 2.041% 3.000% 3.093%
$500,000 to $999,999 1.750% 1.781% 2.750% 2.828%
$1,000,000 and up 1.500% 1.523% 2.500% 2.564%
</TABLE>
____________________
* In addition, a deferred sales charge of $.167 will be assessed per 100
Units per month on a Trust's respective Record Date, through December of
1999.
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
secondary market at the Public Offering Price less the concession the
Sponsor typically would allow such broker-dealer. See "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 allows dealers and other selling agents.
Had Units of a Trust been available for sale at the opening of business on
the date set forth in Part I of this Prospectus, the Public Offering Price
would have been as shown under "Essential Information" in Part I of this
Prospectus. The Public Offering Price per Unit of a Trust on the date of
Part I of this Prospectus or on any subsequent date will vary from the
amount stated under "Essential Information" in Part I of this Prospectus in
accordance with fluctuations in the prices of the underlying Securities and
the amount of accrued interest on the Units. The aggregate bid side
evaluations of the Securities shall be determined (i) on the basis of
current bid prices of the Securities, (ii) if bid prices are not available
for any particular Security, on the basis of current bid prices for
comparable securities, (iii) by determining the value of Securities on the
bid 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" in Part I of this
Prospectus on each business day commencing with the date of Part I of this
Prospectus, 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" in Part I of this
Prospectus. 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 date of settlement 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 maybe 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,
but as to which certificates requested have not been received, see
"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 (monthly in the case
of Ginnie Maes), 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, 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.
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 his proportionate
share of the accrued interest from the purchaser of his 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.
PUBLIC DISTRIBUTION OF UNITS. Units repurchased in the secondary market
may be offered by this Prospectus at the secondary market public offering
price determined in the manner described above. 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 secondary market concessions and agency commissions for each Laddered
Trust and each Rolling Trust which contains U.S. Treasury Obligations as a
percentage of the Public Offering Price are as follows:
Less than $500,000 to $999,999 $1,000,000
Average Maturity $500,000 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%
The secondary market concessions and agency commissions for each Corporate
Trust, Insured Corporate Trust and Rolling Trust which contains GNMA
Securities as a percentage of the Public Offering Price are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Dollar Amount Dollar Weighted Average Dollar Weighted Average
of Transaction Maturity Less than 5 Years Maturity Greater than 5 Years
Less than $100,000 1.750% 3.000%
$100,000 to $249,999 1.500% 2.750%
$250,000 to $499,999 1.350% 2.600%
$500,000 to $999,999 1.150% 2.400%
$1,000,000 and up 0.950% 2.200%
</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. In maintaining a market for the Units, the Sponsor
will realize profits or sustain losses in the amount of any difference
between the price at which Units are purchased and the price at which Units
are resold (which price included a sales charge as indicated in Part I for
each Trust) or redeemed. The secondary market public offering price of
Units may be greater or less than the cost of such Units to the Sponsor.
Market for Units
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. 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.
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
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," as of the evaluation time stated under "Essential Information" in
Part I of this Prospectus, next following such tender, 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.
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 certain Securities
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,
unless reinvested in substitute Securities. To the extent Securities are
sold, the size and diversity of a Trust will be reduced. See "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" in Part I of this Prospectus 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 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 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 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
"Redemption."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit 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. On the dates set forth under
"Essential Information" in Part I of this Prospectus for each Trust, 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 distribute 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 (monthly in the case of GNMA Securities) 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.
Unitholders of a Trust 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 includible 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 "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.
With the exception of principal amounts to be reinvested in the Rolling
Trust during the Reinvestment Period, 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
Securities in a Trust, as set forth above, unless such principal is to be
reinvested in connection with a Rolling Trust.
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 New 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; and
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 New Securities, Replacement
Securities or Reinvestment 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; and
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 (and reinvestments made in
connection with a Rolling Trust), 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. In addition, the Sponsor will instruct the
Trustee to dispose of certain Securities and to take such further action as
maybe needed from time to time to ensure that a Rolling Trust continues to
satisfy the qualifications of a regulated investment company, including the
requirements with respect to diversification under Section 851 of the
Internal Revenue Code. 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 "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 Agreements.
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. 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. The Evaluator for each Trust is set forth in Part I of this
Prospectus. 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. 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" in Part I of this
Prospectus, 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" in Part I of this Prospectus, 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.
The Trustee receives for its services fees set forth under "Essential
Information" in Part I of this Prospectus. The Trustee fee which is
calculated monthly is based on the largest aggregate principal amount of
Securities in a Trust at any time during the period. In no event shall the
Trustee be paid less than $2,000 per Trust in any one year. Funds that are
available for future distributions, redemptions and payment of expenses are
held in accounts which are non-interest bearing to Unitholders and are
available for use by the Trustee pursuant to normal trust procedures;
however, the Trustee is also authorized by the Trust Agreements to make
from time to time certain non-interest bearing advances to the Trusts.
The Trustee's fee is payable on or before each Distribution Date. The
Trustee has agreed to pay the Sponsor that portion of the Trustee's annual
fee as set forth under "Essential Information" in Part I of this Prospectus
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" in Part I of this Prospectus, 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 Accounts. 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 a 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 III 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 III 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
November 30, 1996, it manages more than $415 billion in assets in over 27
million individual shareholder accounts.
If at any time the Sponsor shall fail to perform any of its duties under a
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 information with regard to the Sponsor relates to the Sponsor
only and not to the 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 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 all Trusts
but Rolling Trusts.
Independent Certified Public Accountants
The statements of condition and the related portfolios at the date of Part
I of this Prospectus as included in Part I of this Prospectus have been
audited by Deloitte & Touche LLP, independent certified public accountants,
as set forth in their report in Part I of the Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
SUMMARY OF ESSENTIAL INFORMATION
FIDELITY DEFINED TRUSTS SERIES 1
AS OF DECEMBER 31, 1996
SPONSOR: NATIONAL FINANCIAL SERVICES CORPORATION
TRUSTEE: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
EVALUATOR: MULLER DATA CORPORATION
The income, expense and distribution data set forth below has been
calculated for Unitholders purchasing less than 50,000 Units of a Trust.
Unitholders purchasing 50,000 Units or more of a Trust will receive a
slightly higher return because of the reduced sales charge for larger
purchases.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
LADDERED LADDERED ROLLING
GOVERNMENT GOVERNMENT GOVERNMENT
SERIES 1 SERIES 2 SERIES 1
Public Offering Price per Units (1) $9.8565 $9.7453 $9.8662
Principal Amount of Securities per Units $10.0000 $10.0000 $10.0100
Estimated Current Return based on Public
Offering Price (2)(4)(5) $5.658% $5.640% $5.316%
Estimated Long-Term Return (2)(3)(4) 4.264% 5.2020% $4.417%
Estimated Normal Annual Distribution per
Unit $.515 $.5155 $.5199
Principal Amount of Securities $32,900,000 $16,200,000 $7,920,000
Number of Units 3,290,000 1,620,000 791.010
Fractional Undivided Interest per Units 3,290,000 1,620,000 1,791,010
Calculation of Public Offering Price:
Aggregate Offering Price of Securities $32,934,677 $16,079,176 $7,925,405
Aggregate Offering Price of Securities
per Unit $10.0105 $9.9254 $10,0193
Plus Sales Charge per Units (2) $.154 $.1801 $.1531
Public Offering Price per Unit (1) $9.8565 $9.7453 $9.8662
Calculation of Estimated Net Annual
Interest Income per Unit:
Estimated Annual Interest $.5800 $.5775 $.5475
Less: Estimated Annual Expense $.0223 $.0279 $.0230
Estimated Net Annual Interest $.5577 $.5496 $.5245
Estimated Daily Rate of Net Interest $.0015 $.0015 $.0014
Estimated Average Life of Securities 1.08 years 2.77 years .57 years
Minimum Principal Value of the Trust under which Trust Agreement
may be terminated
Evaluations for purposes of sale, purchase or redemption of Units are made
as of the close of business of the Sponsor (currently 4:15pm 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.
LADDERED LADDERED ROLLING
GOVERNMENT GOVERNMENT GOVERNMENT
SERIES 1 SERIES 2 SERIES 1
Trustee's Annual Fee per $1,000 principal
amount of Securities
(6) $ 1.84 $ 2.09 $2.08
Estimated net annual interest income per
Unit during the first year
Interest Payments (7):
Estimated Normal Monthly Distribution
per Unit .0468 .0468 .0472
Estimated Normal Annual Distribution
per Unit .5157 .5155 .5199
Sales Charge (5):
As a percentage of Public Offering
Price per Unit .0156% .0185% .0155%
As a percentage of net amount invested .0154% .0181% .0153%
Date Trusts Established 1/3/96 1/3/96 1/3/96
Mandatory Termination Date 1/31/00 5/31/02 1/31/00
Maximum Evaluator's Annual Evaluation
Fee per $1,000 Principal
Amount of Securities $.10 $.10 $.10
Maximum Sponsor's Annual Surveillance
Fee per $1,000 Principal
Amount of Securities $.10 $.10 $.10
Estimated Annual Organizational
Expenses per Unit (8) $.0029 $.0060 $.0122
</TABLE>
(1) Anyone ordering Units will pay accrued interest from the preceding
record date to the date of settlement (normally three business days after
order).
(2) The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge. See "Public
Offering of Units - Public Offering Price" in Part II of this Properties.
(3) The Estimated Current Returns are 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
the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the accrued
interest; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The
Estimated Long-Term Returns are calculated using a formula which: (1)
takes into consideration and determines and factors in the relative
weightings of, the market values, yield (which take into account the
amortization of premiums and the accretion of discounts) and the expected
retirement dates of all of the Securities in the applicable Trust and (2)
takes into account the expenses and sales charge associated with each Trust
Unit. Since the market values and estimated retirement dates of the
Securities and expenses of each Trust will change, there is no assurance
that the present Estimated Long-Term Returns as indicated above will be
realized in the future. The Estimated Current Returns and Estimated
Long-Term Returns are expected to differ because the calculation of the
Estimated Long-Term Returns reflects the estimated date and amount of
principal returned while the Estimated Current Return calculations include
only net annual interest income and Public Offering Price.
(4) This figure is 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 the principal prepayment, redemption, maturity,
call, exchange or sale of the underlying Securities. The estimated cash
flows to Unitholders for the Trusts are available upon request at no charge
from the Sponsor.
(5) The sales charge as a percentage of the net amount invested in earning
assets will increase as accrued interest increases. Transactions subject
to quantity discounts (see "Public Offering of Units - Public Offering
Price in Part II of this Properties") will have reduced sales charges,
thereby reducing all percentages in the table.
(6) The Trustee's annual fee includes $.07 per Unit 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) Unitholders will receive interest distributions monthly. The Record
Date is the 10th day of the month, and the distribution date is the 20th
day of the month.
(8) 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 Expenses" in Part II of this Properties and "Statements of Financial
Condition". Historically, the Sponsors of unit investment trusts have paid
all of the costs of establishing such trusts.
STATEMENT OF FINANCIAL CONDITION
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
TRUST PROPERTY
Investments in municipal bonds at market value (cost
$32,946,290) (Note (a) and Schedule of Portfolio
Securities Notes (4) and (5)) $32,934,677
Accrued interest receivable 812,561
Deferred organizational costs 38,546
Total 33,785,784
LESS LIABILITIES:
Advance from Trustee $ 707,421
Accrued Sponsor fees 1,635
Total liabilities 709,056
NET ASSETS:
Balance applicable to 3,290,000 Units of fractional
undivided interest outstanding (Note (c)):
Capital, less net unrealized market
depreciation of $11,613 32,934,677
Undistributed net investment income
(Note (b)) 142,051
Net assets $33,076,728
Net asset value per Unit ($33,076,728 divided
by 3,290,000 Units) $ 10.05
See notes to financial statements
STATEMENT OF OPERATIONS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
FOR THE PERIOD FROM
JANUARY 3, 1996
(DATE OF DEPOSIT) TO
DECEMBER 31, 1996
Investment income - interest $918,921
Less Expenses:
Trustee fees and expenses 30,221
Sponsor fees 1,635
Amortization of organizational costs 9,637
Total expenses 41,493
Investment income - net 877,428
Net unrealized market depreciation (11,613)
Net increase in net assets resulting from
operations $865,815
See notes to financial statements
STATEMENT OF CHANGES IN NET ASSETS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
FOR THE PERIOD FROM
JANUARY 3, 1996
(DATE OF DEPOSIT) TO
DECEMBER 31, 1996
Operations:
Investment income - net $ 882,054
Net unrealized market depreciation (11,613)
Net increase in net assets resulting from
operations 870,411
Capital share Transactions:
Creation on 3,240,000 Units 32,516,262
Net investment income distributions (783,190)
Total capital share transactions 31,733,072
Net increase in net assets 32,527,718
Net assets:
Beginning of period (Note (c)) 505,620
End of period (including undistributed net
investment income of $142,051) $33,033,338
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of the significant accounting
policies of the Trust:
(1) Basis of Presentation
The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
the Trust. The Trustee is also responsible for all estimates and accruals
reflected in the Trust's financial statements. The Evaluator determines
the price for each underlying Security included in the Trust's Portfolio of
Securities on the basis set forth in Part II of this Prospectus, "Public
Offering of Units - Public Offering Price". Under the Securities Act of
1933 ("the Act"), as amended, the Sponsor is deemed to be an issuer of the
Trust Units. As such, the Sponsor has the responsibility of an issuer
under the Act with respect to financial statements of the Trust included in
the Trust's Registration Statement under the Act and amendments thereto.
(2) Investments
Investments are stated at market value as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period, except that value on the initial date of deposit (January 3, 1996)
represents the cost of investments to the Trust based on the offering side
evaluations as of the opening of business on the initial date of deposit.
(3) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such taxes.
(4) Expenses
The Trust pays annual Trustee's fees, estimated expenses and Evaluator's
fees, and may incur additional charges as explained and under "Trust
Expenses" in Part II of this Prospectus.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders on or
shortly after the twentieth day of each month after deducting applicable
expenses. Receipts other than interest are distributed as explained in
Unitholders - Distributions to Unitholders in Part II of this Prospectus.
NOTES TO FINANCIAL STATEMENTS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (January 3, 1996) exclusive of
accrued interest, computed on the basis set forth under "Public Offering of
Units - Public Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of Units to investors to the net
amount applicable to investors as of December 31, 1996 follows:
Original cost to investors $ 513,320
Less: Gross underwriting commissions (sales charge) 7,700
Net cost to investors 505,620
Cost of supplemental creations of units 32,440,670
Net unrealized market depreciation (11,613)
Net amount applicable to investors $32,934,677
(d) OTHER INFORMATION
Selected data for a Unit of the Trust during the period:
Income distributions during period $.5157
Net asset value at end of period 10.05
Trust Units outstanding at end of period $3,290,000
SCHEDULE OF PORTFOLIO SECURITIES
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
PORT-
FOLIO FACE COUPON MATURITY MARKET
NO. TITLE OF SECURITIES AMOUNT RATE DATE VALUE(1)(2)
1. US Treasury Note $ 6,580,000 6.250% 01/31/97 $ 6,589,541
2. US Treasury Note 6,580,000 5.500 07/31/97 6,587,172
3. US Treasury Note 6,580,000 5.625 01/31/98 6,580,000
4. US Treasury Note 6,580,000 5.250 07/31/98 6,532,690
5. US Treasury Note 6,580,000 6.375 01/15/99 6,645,274
$32,900,000 $32,934,677
See notes to schedule of portfolio securities
NOTES TO SCHEDULE OF PORTFOLIO SECURITIES
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(1) The market value of the Securities as of December 31, 1996 was
determined by the Evaluator on the basis of bid side evaluations for the
securities at such date.
(2) At December 31, 1996, the net unrealized market depreciation of all
Securities was comprised of the following:
Gross unrealized market appreciation $927,285
Gross unrealized market depreciation (38,898)
Net unrealized market depreciation $ 11,613
The aggregate cost of the Securities for Federal income tax purposes was
$32,946,290 at December 31, 1996.
STATEMENT OF FINANCIAL CONDITION
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
TRUST PROPERTY
Investments in municipal bonds at market value (amortized
cost $16,136,046) (Note (a) and Schedule of Portfolio
Securities Notes (4) and (5)) $16,079,176
Accrued interest receivable 93,791
Deferred organizational costs 38,546
Total 16,211,513
LESS LIABILITIES:
Advance from Trustee $ 45,122
Accrued Trustee's fees and expenses 170
Accrued Sponsor's fees 797
Total liabilities 46,089
NET ASSETS:
Balance applicable to 1,620,000 Units of
fractional undivided interest outstanding
(Note (c)):
Capital, less net unrealized market
depreciation of $56,870 16,079,176
Undistributed net investment income
(Note (b)) 86,248
Net assets $16,165,424
Net asset value per Unit ($16,165,424 divided
by 1,620,000 Units) $ 9.98
See notes to financial statements
STATEMENT OF OPERATIONS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
FOR THE PERIOD FROM
JANUARY 3, 1996
(DATE OF DEPOSIT) TO
DECEMBER 31, 1996
Investment income - interest $547,947
Less Expenses:
Trustee fees and expenses 16,631
Sponsor fees 797
Amortization of organizational costs 9,637
Total expenses 27,065
Investment income - net 520,882
Net unrealized market depreciation (56,870)
Net increase in net assets resulting from
operations $464,012
See notes to financial statements
STATEMENT OF CHANGES IN NET ASSETS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
FOR THE PERIOD FROM
JANUARY 3, 1996
(DATE OF DEPOSIT) TO
DECEMBER 31, 1996
Operations:
Investment income - net $ 520,882
Net unrealized market depreciation (56,870)
Net increase in net assets resulting
from
operations 464,012
Capital Share Transactions:
Creation of 1,570,000 Units 15,577,577
Net investment income distributions (381,722)
Total capital share transactions 15,195,855
Net increase in net assets 15,659,867
Net assets:
Beginning of period (Note (c)) 505,557
End of period (including undistributed net
investment
income of $86,248) $16,165,424
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Defined Trusts Series 1. The following is a summary of the significant
accounting policies of the Trust:
(1) Basis of Presentation
The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
the Trust. The Trustee is also responsible for all estimates and accruals
reflected in the Trust's financial statements. The Evaluator determines
the price for each underlying Security included in the Trust's Portfolio of
Securities on the basis set forth in Part II of this Prospectus, "Public
Offering of Units - Public Offering Price". Under the Securities Act of
1933 ("the Act"), as amended, the Sponsor is deemed to be an issuer of the
Trust Units. As such, the Sponsor has the responsibility of an issuer
under the Act with respect to financial statements of the Trust included in
the Trust's Registration Statement under the Act and amendments thereto.
(2) Investments
Investments are stated at market value as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period, except that value on the initial date of deposit (January 3, 1996)
represents the cost of investments to the Trust based on the offering side
evaluations as of the opening of business on the initial date of deposit.
(3) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such taxes.
(4) Expenses
The Trust pays annual Trustee's fees, estimated expenses and Evaluator's
fees, and may incur additional charges as explained and under Trust
Expenses in Part II of this Prospectus.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders on or
shortly after the twentieth day of each month after deducting applicable
expenses. Receipts other than interest are distributed as explained in
Unitholders - Distributions to Unitholders in Part II of this Prospectus.
NOTES TO FINANCIAL STATEMENTS
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (January 3, 1996) exclusive of
accrued interest, computed on the basis set forth under "Public Offering of
Units - Public Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of Units to investors to the net
amount applicable to investors as of December 31, 1996 follows:
Original cost to investors $ 514,562
Less: Gross underwriting commissions (sales charge) 9,005
Net cost to investors 505,557
Cost of supplemental creations of units 15,538,318
Net unrealized market depreciation (56,870)
Accumulated interest accretion 92,171
Net amount applicable to investors $16,079,176
(d) OTHER INFORMATION
Selected data for a Unit of the Trust during the period:
Income distributions during period $.5155
Net asset value at end of period 9.98
Trust Units outstanding at end of period 1,620,000
SCHEDULE OF PORTFOLIO SECURITIES
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
PORT-
FOLIO FACE COUPON MATURITY MARKET
NO. TITLE OF SECURITIES AMOUNT RATE DATE VALUE(1)(2)
1. US Treasury Note $ 3,240,000 6.125% 05/31/97 $ 3,251,146
2. US Treasury Note 3,240,000 6.125 05/31/98 3,257,982
3. US Treasury Note (3) 648,000 0.000 05/15/99 564,252
4. US Treasury Note 2,592,000 6.750 05/31/99 2,638,578
5. US Treasury Note (3) 324,000 0.000 05/15/00 265,038
6. US Treasury Note 2,916,000 6.250 05/31/00 2,931,047
7. US Treasury Note (3) 972,000 0.000 05/15/01 745,961
8. US Treasury Note 2,268,000 8.000 05/15/01 2,425,172
$16,200,000 $16,079,176
See notes to schedule of portfolio securities
NOTES TO SCHEDULE OF PORTFOLIO SECURITIES
FIDELITY DEFINED TRUSTS SERIES 1
LADDERED GOVERNMENT SERIES 2
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(1) The market value of the Securities as of December 31, 1996 was
determined by the Evaluator on the basis of bid side evaluations for the
Securities at such date.
(2) At December 31, 1996, the net unrealized market depreciation of all
Securities was comprised of the following:
Gross unrealized market appreciation $ 6,125
Gross unrealized market depreciation 62,995
Net unrealized market depreciation $56,870
The aggregate cost of the Securities for Federal income tax purposes was
$16,136,046 at December 31, 1996.
(3) This Security has been purchased at a deep discount from the par value
because there is little or 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.
STATEMENT OF FINANCIAL CONDITION
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
TRUST PROPERTY
Investments in municipal bonds at market value (cost
$7,911,147) (Note (a) and Schedule of Portfolio
Securities Notes (4) and (5)) $7,925,405
Accrued interest receivable 134,476
Deferred organizational costs 38,546
Total 8,098,427
LESS LIABILITIES:
Due to Trustee $ 119,147
Accrued Trust fees and expenses 510
Total Liabilities 119,657
NET ASSETS:
Balance applicable to 791,010 Units of fractional
undivided interest outstanding (Note (c)):
Capital, plus net unrealized market
appreciation of $14,259 7,926,918
Undistributed net investment income
(Note (b)) 51,852
Net assets $7,978,770
Net asset value per Unit ($7,978,770 divided by 791,010 Units) $ 10.09
See notes to financial statements
STATEMENT OF OPERATIONS
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
FOR THE PERIOD FROM
JANUARY 3, 1996
(DATE OF DEPOSIT) TO
DECEMBER 31, 1996
Investment income - interest $324,273
Less Expenses:
Trustee fees and expenses 20,623
Sponsor fees 510
Amortization of organizational costs 9,637
Total expenses 30,770
Investment income - net 293,503
Net gain on investments:
Realized loss on securities sold or
redeemed (27,271)
Net unrealized market appreciation 14,259
Net loss on investments (13,012)
Net increase in net assets resulting from
operations $280,491
See notes to financial statements
STATEMENT OF CHANGES IN NET ASSETS
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
FOR THE PERIOD FROM
JANUARY 3, 1996
(DATE OF DEPOSIT) TO
DECEMBER 31, 1996
Operations:
Investment income - net $ 293,503
Realized loss on securities sold or
redeemed (27,271)
Net unrealized market appreciation 14,259
Net increase in net assets
resulting from
operations 280,491
Capital share Transactions:
Creation of 751,410 Units 7,562,458
Redemption of 400 Units (4,023)
Net investment income distributions (262,471)
Total capital share transactions 7,295,964
Net increase in net assets 7,576,455
Net assets:
Beginning of period (Note (c)) 402,315
End of period (including undistributed net investment
income of $51,852) $7,978,770
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of the significant accounting
policies of the Trust:
(1) Basis of Presentation
The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
the Trust. The Trustee is also responsible for all estimates and accruals
reflected in the Trust's financial statements. The Evaluator determines
the price for each underlying Security included in the Trust's Portfolio of
Securities on the basis set forth in Part II of this Prospectus, "Public
Offering of Units - Public Offering Price". Under the Securities Act of
1933 ("the Act"), as amended, the Sponsor is deemed to be an issuer of the
Trust Units. As such, the Sponsor has the responsibility of an issuer
under the Act with respect to financial statements of the Trust included in
the Trust's Registration Statement under the Act and amendments thereto.
(2) Investments
Investments are stated at market value as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period, except that value on the initial date of deposit (January 3, 1996)
represents the cost of investments to the Trust based on the offering side
evaluations as of the opening of business on the initial date of deposit.
(3) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such taxes.
(4) Expenses
The Trust pays annual Trustee's fees, estimated expenses and Evaluator's
fees, and may incur additional charges as explained and under "Trust
Expenses" in Part II of this Prospectus.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders on or
shortly after the twentieth day of each month after deducting applicable
expenses. Receipts other than interest are distributed as explained in
"Unitholders - Distributions to Unitholders" in Part II of this Prospectus.
NOTES TO FINANCIAL STATEMENTS
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (January 3, 1996) exclusive of
accrued interest, computed on the basis set forth under "Public Offering of
Units - Public Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of Units to investors to the net
amount applicable to investors as of December 31, 1996 follows:
Original cost to investors $ 408,440
Less: Gross underwriting commissions (sales charge) (6,125)
Net cost to investors 402,315
Cost of supplemental creations of units 7,537,615
Cost of securities sold/market (5,787,271)
Proceeds from securities sold/matured 5,760,000
Net unrealized market appreciation 14,259
Net amount applicable to investors $7,926,918
(d) OTHER INFORMATION
Selected data for a Unit of the Trust during the period:
Income distributions during period $.5199
Net asset value at end of period 10.09
Trust Units outstanding at end of period 791,010
SCHEDULE OF PORTFOLIO SECURITIES
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
DECEMBER 31, 1996
PORT-
FOLIO FACE COUPON MATURITY MARKET
NO. TITLE OF SECURITIES AMOUNT RATE DATE VALUE(1)(2)
1. US Treasury Note $1,980,000 4.750% 02/15/97 $1,978,911
2. US Treasury Note 1,980,000 6.125 05/31/97 1,986,811
3. US Treasury Note 1,980,000 5.750 09/30/97 1,985,089
4. US Treasury Note 1,980,000 5.250 12/31/97 1,974,595
$7,920,000 $7,925,405
See notes to schedule of portfolio securities
NOTES TO SCHEDULE OF PORTFOLIO SECURITIES
FIDELITY DEFINED TRUSTS SERIES 1
ROLLING GOVERNMENT SERIES 1
SHORT TREASURY PORTFOLIO
DECEMBER 31, 1996
(1) The market value of the Securities as of December 31, 1996 was
determined by the Evaluator on the basis of bid side evaluations for the
Securities at such date.
(2) At December 31, 1996, the net unrealized market appreciation of all
Securities was comprised of the following:
Gross unrealized market appreciation $14,872
Gross unrealized market depreciation (613)
Net unrealized market appreciation $14,259
The aggregate cost of the Securities for Federal income tax purposes was
$7,911,147 at December 31, 1996.
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated April 14, 1997, accompanying the
financial statements of the Fidelity Defined Trusts Series 1 (Laddered
Government Series 1, Short Treasury Portfolio, Laddered Government Series
2, Short/Intermediate Treasury Portfolio, Rolling Government Series 1,
Short Treasury Portfolio) included herein and to the reference to our Firm
as experts under the heading "Auditors" in the prospectus which is a part
of this registration statement.
DELOITTE & TOUCHE LLP
New York, New York
INDEPENDENT AUDITORS' REPORT
THE UNITHOLDERS, SPONSOR AND TRUSTEE
FIDELITY DEFINED TRUSTS SERIES 1
(LADDERED GOVERNMENT SERIES 1, SHORT TREASURY PORTFOLIO
LADDERED GOVERNMENT SERIES 2, SHORT/INTERMEDIATE TREASURY PORTFOLIO
ROLLING GOVERNMENT SERIES 1, SHORT TREASURY PORTFOLIO)
We have audited the statements of financial condition and schedules of
portfolio securities of Fidelity Defined Trusts Series 1 (Laddered
Government Series 1, Short Treasury Portfolio, Laddered Government Series
2, Short/Intermediate Treasury Portfolio and Rolling Government Series 1,
Short Treasury Portfolio) as of December 31, 1996, and the related
statements of operations and changes in net assets for the period from
January 3, 1996 (date of deposit) to December 31, 1996. These financial
statements are the responsibility of the Trustee (see Footnote (a)(1)).
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audit 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 the securities owned
as of December 31, 1996 as shown in the statements of financial condition
and schedules of portfolio securities by correspondence with The Chase
Manhattan Bank, the Trustee. An audit also includes assessing the
accounting principles used and the significant estimates made by the
Trustee, 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 Fidelity Defined Trusts
Series 1 (Laddered Government Series 1, Short Treasury Portfolio, Laddered
Government Series 2, Short/Intermediate Treasury Portfolio and Rolling
Government Series 1, Short Treasury Portfolio) as of December 31, 1996, and
the results of their operations and the changes in their net assets for the
period from January 3, 1996 (date of deposit) to December 31, 1996 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
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 1
PROSPECTUS - PART I
MAY 1, 1997
LADDERED GOVERNMENT SERIES 1, SHORT TREASURY PORTFOLIO
LADDERED GOVERNMENT SERIES 2, SHORT/INTERMEDIATE TREASURY PORTFOLIO
ROLLING GOVERNMENT SERIES 1, SHORT TREASURY PORTFOLIO
This Part I of the Prospectus may not be distributed unless accompanied by
Part II of the Prospectus. Both Parts I and II of the Prospectus should be
retained for future reference.
FIDELITY
INVESTMENTS(Registered trademark)
82 Devonshire Street, Boston, MA 02109
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.
FIDELITY DEFINED TRUSTS, SERIES 1
Prospectus
Part I
May 1, 1996
The Trusts
Fidelity Defined Trusts, Series 1 consists of three underlying unit
investment trusts: Laddered Government Series 1, Short Treasury Portfolio;
Laddered Government Series 2, Short/Intermediate Series 1; and Rolling
Government Series 1, Short Treasury Portfolio..
LADDERED GOVERNMENT SERIES 1, SHORT TREASURY PORTFOLIO
Laddered Government Series 1, Short Treasury Portfolio ("Laddered
Government Series 1") was 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 maturity levels that are backed by the full faith and credit of
the United States government. Laddered Government Series 1 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. obligations.
At the Initial Date of Deposit, Laddered Government Series 1 consisted of a
portfolio of U.S. Treasury Obligations with differing maturity levels,
designed to return approximately 20% of the principal amount of the Trust
semi-annually over the three year life of the Trust. As of December 31,
1996, Laddered Government Series 1 had a dollar weighted maturity of _____
years.
Tax Status - Laddered Government Series 1 may be an appropriate investment
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 government. In
addition, many investors may benefit from the exemption from state and
local personal income taxes that will pass through the Trust to Unitholders
in all states. Laddered Government Series 1 has been created as a grantor
trust for federal tax reasons. See "Tax Status" in Part II of this
Prospectus.
LADDERED GOVERNMENT SERIES 2, SHORT /INTERMEDIATE TREASURY PORTFOLIO
Laddered Government Series 2, Short/Intermediate Treasury Portfolio
("Laddered Government Series 2") was 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 maturity levels that are backed by the full faith
and credit of the United States government. Laddered Government Series 2
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. obligations. At the Initial Date of Deposit, Laddered Government
Series 2 consisted of a portfolio of U.S. Treasury Obligations with
differing maturity levels, designed to return approximately 20% of the
principal amount of the Trust annually over the six year life of the Trust.
As of December 31, 1996, Laddered Government Series 2 had a dollar weighted
maturity of _____ years.
Tax Status - Laddered Government Series 2 may be an appropriate investment
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 government. In
addition, many investors may benefit from the exemption from state and
local personal income taxes that will pass through the Trust to Unitholders
in all states. Laddered Government Series 2 has been created as a grantor
trust for federal tax reasons. See "Tax Status" in Part II of this
Prospectus.
ROLLING GOVERNMENT SERIES 1, SHORT TREASURY PORTFOLIO
Rolling Government Series 1, Short Treasury Portfolio ("Rolling Government
Series 1") was formed for the purpose of providing safety of capital as is
consistent with current income and current monthly distributions of
interest through an investment in a portfolio of U.S. Treasury Obligations
that are backed by the full faith and credit of the United States
government. Rolling Government Series 1 was also formed for the purpose of
passing through to Unitholders in all states the exemption from state
personal income taxes afforded to direct owners of U.S. obligations.
Rolling Government Series 1 also seeks to provide an extendible investment
by quarterly reinvesting, until approximately January 1998 (the "Extension
Period"), the proceeds of maturing U.S. Treasury Obligations into new U.S.
Treasury securities ("Extension Securities") with maturities of
approximately one year. This reinvestment strategy is designed to produce
a higher overall yield than shorter-term investments with less price
volatility than longer-term investments. Rolling Government Series 1 was
designed to maintain a short dollar-weighted maturity, no greater than
approximately 8 months. 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 the portfolio which will generally
increase or decrease inversely with changes in interest rates.
Extensions - The Trust's portfolio consists of U.S. Treasury Obligations
with "laddered" maturities such that approximately 25% of the portfolio
matures every three months. The Sponsor is authorized to direct the
reinvestment of the proceeds of each maturing Security into Extension
Securities (an "Extension"). Extensions of approximately 25% of the
portfolio at each maturity of Securities will continue through the
Extension Period and, assuming the Trust does not terminate prior thereto,
it is anticipated that Extensions will continue until principal
distributions commence in 1998.
Extension Securities are Securities (i) issued by the U.S. Treasury; (ii)
with a fixed maturity date that is within one month of the first
anniversary of the maturity date of the Security the proceeds of which are
being reinvested in the Extension Security; (iii) purchased at par or, in
order of preference, at a discount to, or premium over par, as close to par
as practicable; and (iv) that are not when, as and if issued obligations.
The purchase of Extension Securities shall not disqualify the Trust as a
"regulated investment company" under the Internal Revenue Code.
The guidelines under which the Trust will purchase Extension Securities
takes into account price and maturity date. Whenever a U.S. Treasury
security in the Trust's portfolio matures, the Sponsor will direct the
Trustee to purchase the most currently available 1-year U.S. Treasury
security at par. If no obligations are available at par, the Sponsor will
select obligations with a price as close as possible to par. To preserve
the Trust's par values, there will be a bias favoring discounts, when
available. Therefore, discounted obligations will be selected so long as
the discount is not more than three times the smaller premium obligation
available. That is, assuming no maturity differences, if there is an
obligation available at a price of $100.125, no alternative obligation will
be selected at less than $99.625. If obligations mature at different dates
within the one month permissible, in determining which obligation to
purchase the Sponsor will increase the premium or discount of the security
by 25 cents (1/4 point) for every month away from the precise one year
maturity date of the original obligation being extended. There will be no
attempt to delay the purchase of the Extension Securities to take advantage
of market movements.
During the Extension Period, the pro rata share of cash in the Principal
Account which has not been reinvested or committed for reinvestment will be
computed as of the 10th day of the month and distributions to the
Unitholders as of the related Record Date will be made on the 20th day of
such month. After the Extension Period, the pro rata share of cash in the
Principal Account will also be computed as described above. Proceeds from
the disposition of any of the Securities or amounts representing principal
on the Securities received after such Record Date and prior to the
following Distribution Date will be held in the Principal Account and not
distributed until the next Distribution Date. The Trustee is not required
to make a distribution from the Principal Account unless the amount
available for distribution shall equal at least $1.00 per 100 Units. See
"Distributions to Unitholders" in Part II of this Prospectus.
Tax Status - Rolling Government Series 1 may be an appropriate investment
for investors who desire to participate in a portfolio of taxable, fixed
income securities offering the safety of capital as is consistent with
current income and current monthly distributions of interest provided by a
portfolio backed by the full faith and credit of the United States
government. In addition, many investors may benefit from the exemption
from state and local personal income taxes that will pass through the Trust
to Unitholders in all states. Rolling Government Series 1 has been created
as a regulated investment company for federal tax reasons. See "Tax
Status" in Part II of this Prospectus.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Fidelity Defined Trusts, Series 1, certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Boston and State of
Massachusetts on the 1st day of May, 1997.
Fidelity Defined Trusts, Series 1
(Registrant)
By National Financial Services Corporation
(Depositor)
By /s/David J. Pearlman
Assistant Clerk
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities on May 1, 1997:
James H. Messenger
James H. Messenger President and Director
Timothy M. McKenna
Timothy M. McKenna Director
Robert P. Mazzarella
Robert P. Mazzarella Director
Sherif A. Nada
Sherif A. Nada Director
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated May 1, 1997 accompanying the financial
statements of Fidelity Defined Trusts, Series 1 as of May 1, 1997 and for
the period then ended, contained in this Post-Effective Amendment No. 1 to
Form S-6.
We consent to the use of the aforementioned report in the Post-Effective
Amendment and to the use of our name as it appears under the caption
"INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS".
Deloitte & Touche LLP
New York, New York
May 1, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR FIDELITY DEFINED TRUST
SERIES 1, LADDERED GOVERNMENT SERIES 2,
SHORT/INTERMEDIATE TREASURY PORTFOLIO
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATMENTS
<RESTATED>
<CIK> 0000947056
<NAME> Fidelity Defined Trusts Series I
<SERIES>
<NUMBER> 1
<NAME> LADDERED GOVERNMENT SERIES 2
SHORT/INTERMEDIATE TREASURY PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-03-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 16,136,046
<INVESTMENTS-AT-VALUE> 16,079,176
<RECEIVABLES> 93,791
<ASSETS-OTHER> 38,546
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,211,513
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46,089
<TOTAL-LIABILITIES> 46,089
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,136,046
<SHARES-COMMON-STOCK> 1,620,000
<SHARES-COMMON-PRIOR> 50,000
<ACCUMULATED-NII-CURRENT> 86,248
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (56,870)
<NET-ASSETS> 16,165,424
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 455,774
<OTHER-INCOME> 92,173
<EXPENSES-NET> 27,065
<NET-INVESTMENT-INCOME> 520,882
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (56,870)
<NET-CHANGE-FROM-OPS> 464,012
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 381,722
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,570,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,659,867
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR FIDELITY DEFINED TRUST
SERIES 1, LADDERED GOVERNMENT SERIES 1,
SHORT TERM PORTFOLIO
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATMENTS
<RESTATED>
<CIK> 0000947056
<NAME> Fidelity Defined Trusts Series I
<SERIES>
<NUMBER> 2
<NAME> ROLLING GOVERNMENT SERIES 1, SHORT TREASURY
PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-03-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,911,147
<INVESTMENTS-AT-VALUE> 7,925,405
<RECEIVABLES> 134,476
<ASSETS-OTHER> 38,546
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,098,427
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 119,657
<TOTAL-LIABILITIES> 119,657
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,912,659
<SHARES-COMMON-STOCK> 791,010
<SHARES-COMMON-PRIOR> 40,000
<ACCUMULATED-NII-CURRENT> 51,852
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,259
<NET-ASSETS> 7,978,770
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 324,273
<OTHER-INCOME> 0
<EXPENSES-NET> 30,770
<NET-INVESTMENT-INCOME> 293,503
<REALIZED-GAINS-CURRENT> (27,271)
<APPREC-INCREASE-CURRENT> 14,259
<NET-CHANGE-FROM-OPS> 280,491
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 262,471
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 751,410
<NUMBER-OF-SHARES-REDEEMED> 400
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,576,455
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR FIDELITY DEFINED TRUST
SERIES 1, LADDERED GOVERNMENT SERIES 1,
SHORT TERM PORTFOLIO
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<RESTATED>
<CIK> 0000947056
<NAME> Fidelity Defined Trusts Series I
<SERIES>
<NUMBER> 3
<NAME> LADDERED GOVERNMENT SERIES 1 SHORT TREASURY
PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-03-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 32,946,290
<INVESTMENTS-AT-VALUE> 32,934,677
<RECEIVABLES> 812,561
<ASSETS-OTHER> 38,546
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,785,784
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 709,056
<TOTAL-LIABILITIES> 709,056
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,946,290
<SHARES-COMMON-STOCK> 3,290,000
<SHARES-COMMON-PRIOR> 50,000
<ACCUMULATED-NII-CURRENT> 142,051
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,613)
<NET-ASSETS> 33,076,728
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 891,142
<OTHER-INCOME> 0
<EXPENSES-NET> 41,493
<NET-INVESTMENT-INCOME> 849,649
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (11,613)
<NET-CHANGE-FROM-OPS> 838,034
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 783,190
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,240,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 32,571,108
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
