AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 1997
REGISTRATION NO. 33-42310
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 5
TO
FORM S-6
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FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
DEFINED ASSET FUNDS--
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1T
(A UNIT INVESTMENT TRUST)
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051 SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013
PRUDENTIAL SECURITIES PAINEWEBBER INCORPORATED DEAN WITTER REYNOLDS INC.
INCORPORATED 1285 AVENUE OF THE TWO WORLD TRADE
ONE NEW YORK PLAZA AMERICAS CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10019 NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. LAURIE A. HESSLEIN DOUGLAS LOWE, ESQ.
P.O. BOX 9051 388 GREENWICH STREET 130 LIBERTY STREET--29TH
PRINCETON, NJ 08543-9051 NEW YORK, NY 10013 FLOOR
NEW YORK, NY 10006
COPIES TO:
LEE B. SPENCER, JR. ROBERT E. HOLLEY PIERRE DE SAINT PHALLE,
ONE NEW YORK PLAZA 1200 HARBOR BLVD. ESQ.
NEW YORK, NY 10292 WEEHAWKEN, NJ 07087 450 LEXINGTON AVENUE
NEW YORK, NY 10017
The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on February 14, 1996.
Check box if it is proposed that this filing will become effective on January
31, 1997 pursuant to paragraph (b) of Rule 485. / x /
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<PAGE>
DEFINED ASSET FUNDSSM
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GOVERNMENT This Defined Fund was formed for the purpose of
SECURITIES obtaining safety of capital and current monthly
INCOME FUND distributions of payments of interest and
GNMA SERIES 1T principal through investment in a fixed portfolio
A UNIT INVESTMENT consisting primarily of mortgage-backed securities
TRUST of the modified pass-through type (the 'Ginnie
- ------------------------------Maes') fully guaranteed as to principal and
/ / MONTHLY INCOME interest by the Government National Mortgage
/ / MORTGAGE BACKED Association ('GNMA'). The full faith and credit of
SECURITIES the United States is pledged to the payment of the
securities in the Fund but the units of the Fund,
as such, are not backed by said full faith and
credit. (See Risk Factors--GNMA Series and Freddie
Mac Series in Part B.) The value of the units of
the Fund will fluctuate with the value of the
Portfolio of underlying securities, and the
principal amount of underlying securities
represented by each unit will be reduced as
principal is paid on the underlying mortgages.
Minimum Purchase: $250.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------------------
SPONSORS: PART A OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED
Merrill Lynch, UNLESS ACCOMPANIED BY GOVERNMENT SECURITIES
Pierce, Fenner & Smith INCOME FUND PROSPECTUS PART B.
Incorporated INVESTORS SHOULD READ BOTH PARTS OF THIS
Smith Barney Inc. PROSPECTUS CAREFULLY AND RETAIN THEM FOR FUTURE
Prudential Securities REFERENCE.
Incorporated INQUIRIES SHOULD BE DIRECTED TO THE TRUSTEE AT
Dean Witter Reynolds Inc. 1-800-323-1508.
PaineWebber Incorporated PROSPECTUS PART A DATED JANUARY 31, 1997.
<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined funds are available including: insured funds, double and triple
tax-free funds and funds with 'laddered maturities' to help protect against
changing interest rates. Defined Asset Funds are offered by prospectus only.
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Defined GNMA Series
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Our defined portfolio of mortgage-backed GNMA Securities offers you a simple and
convenient way to participate in the GNMA market and obtain monthly income while
earning an attractive return as well as the assurance of an investment in
securities that are guaranteed by GNMA, a federal agency.
INVESTMENT OBJECTIVES
To obtain safety of capital and current monthly income distributions through
investment in a portfolio of interest-bearing GNMA Securities. The full faith
and credit of the United States is pledged to the payment of the Securities but
the units of the Fund, as such, are not directly backed.
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Defining Your Portfolio
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PROFESSIONAL SELECTION AND SUPERVISION
The Portfolio of Securities is selected by experienced buyers. The Fund is not
actively managed; however, it is regularly reviewed and a Security can be sold
if retaining it is considered detrimental to investors' interests.
PORTFOLIO COMPOSITION
The Portfolio consists of 2 different issues of mortgage-backed Securities of
the modified pass-through type guaranteed by the Government National Mortgage
Association (GNMA): 8.0% Ginnie Maes maturing 3/15/16 to 8/15/22, 82%; 8.50%
Ginnie Maes maturing 6/15/16 to 7/15/22, 18%. All of the Ginnie Maes in the Fund
are backed by pools of long term mortgages on 1-to 4-family dwellings. The
Ginnie Maes are fully guaranteed as to payment of principal and interest by
GNMA. The Fund was created November 19, 1991. The information in this prospectus
is as of October 31, 1996, the evaluation date.
TAX INFORMATION
Distributions of ordinary income or capital gain from the Fund will be included
in a U.S. investor's gross income, but will not be eligible for the dividends-
received deduction for corporations. Distributions to investors who are not U.S.
citizens or residents will generally be subject to withholding tax at the
statutory rate of 30% (or a lesser treaty rate). (See Taxes in Part B).
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Defining Your Investment
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PUBLIC OFFERING PRICE PER 1,000 UNITS $499.10
The Public Offering Price as of October 31, 1996, the evaluation date, is based
on the aggregate bid side value of the underlying Securities in the Fund
($50,030,006), divided by the number of units outstanding (104,690,860) times
1,000 plus a sales charge of 4.25% of the Public Offering Price (4.439% on the
value of the underlying Securities). The Public Offering Price on any subsequent
date will vary. An amount equal to principal cash, if any, as well as net
accrued but undistributed interest on the unit is added to the Public Offering
Price. The underlying Securities are evaluated by an independent evaluator at
3:30 p.m. Eastern time on every business day.
PREMIUM AND DISCOUNT ISSUES
On the evaluation date, 100% of the Securities were valued at a premium over par
(see Risk Factors in Part B).
LOW MINIMUM INVESTMENT
You can get started with a minimum purchase of about 1,000 Units. There is no
minimum purchase for payroll deduction plans.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities of Securities in the Fund will
be distributed to investors periodically when the amount to be distributed is
more than $5.00 per 1,000 units.
A-2
<PAGE>
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REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Fund at a reduced sales charge. Reinvestment helps to compound your
investment.
TERMINATION DATE
The Fund will generally terminate no later than one year following the maturity
date of the last maturing Security listed in the Portfolio. The Fund may be
terminated earlier if the value is less than 40% of the face amount of
securities deposited. On the evaluation date the value of the fund was 46% of
the face amount of securities deposited.
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Defining Your Risks
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RISK FACTORS
U. S. Government securities are not affected by credit risk but are subject to
changes in market value resulting from changes in interest rates. Unit price
fluctuates and the value of units will decline if interest rates increase. The
mortgages underlying the GNMA Securities are amortized, and there is no
prepayment protection. The potential for appreciation that might otherwise
result from a decline in interest rates would be limited by any increase in
prepayments by mortgagors as interest rates decline. Investors may also receive
payments of principal sooner than anticipated, and interest payments will
decrease as principal is returned. Because regular payments of principal will be
received over the life of the Fund and because of the possible maturity, sale or
other disposition of Securities, the size, composition and return of the
Portfolio may change at any time. Because of the sales charges, returns of
principal and fluctuations in unit price, among other reasons, the sale price
will generally be less than the cost of your units. There is no guarantee that
the Fund will achieve its investment objective.
The Fund itself and the units are not backed by the full faith and credit of the
U.S. Government (see Risk Factors in Part B).
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Defining Your Costs
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SALES CHARGES
Although the Fund is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Secondary
Market
Public Offering
Price
---------------
Maximum Sales Charges 4.25%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
Per 1,000
Units
---------------
Trustee's Fee $ 0.39
Portfolio Supervision, Bookkeeping and
Administrative Fees $ 0.12
Evaluator's Fee $ 0.02
Other Operating Expenses $ 0.21
---------------
TOTAL $ 0.74
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time. Your price is based on the Fund's
then current net asset value (based on the lower, bid side evaluation of the
Securities, as determined by an independent evaluator), plus principal cash, if
any, as well as accrued interest. The bid side redemption and secondary market
repurchase price per 1,000 units as of the evaluation date was $477.88 ($21.22
less than the Public Offering Price). There is no fee for redeeming or selling
your units.
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Defining Your Income
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MONTHLY INTEREST INCOME
The Fund pays monthly income.
WHAT YOU MAY EXPECT
(PAYABLE ON THE 23RD DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 17TH DAY OF
THE MONTH):
Regular Monthly Income per 1,000 units: $ 3.14
Annual Income per 1,000 units: $ 37.70
These figures are estimates determined as of the evaluation date and actual
payments may vary.
A-3
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1T
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Government Securities Income Fund,
GNMA Series - 1T:
We have audited the accompanying statement of condition of
Defined Asset Funds - Government Securities Income Fund,
GNMA Series - 1T, including the portfolio, as of October
31, 1996 and the related statements of operations and of
changes in net assets for the years ended October 31, 1996,
1995 and 1994. These financial statements are the
responsibility of the Trustee. Our responsibility is to
express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. Securities owned at October
31, 1996, as shown in such portfolio, were confirmed to us
by The Chase Manhattan Bank, the Trustee. An audit also
includes assessing the accounting principles used and
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 Defined Asset Funds - Government
Securities Income Fund, GNMA Series - 1T at October 31,
1996 and the results of its operations and changes in its
net assets for the above-stated years in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
January 8, 1997
D - 1.
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1T
STATEMENT OF CONDITION
As of October 31, 1996
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 49,302,570 )(Note 1)....... $50,030,006
Accrued interest .............................. 328,975
Cash - income ................................. 12,396
Cash - principal .............................. 20,470
-----------
Total trust property ........................ 50,391,847
LESS LIABILITIES:
Accrued Sponsors' fees ........................$ 13,354
Redemptions payable ........................... 174,153
Trustee's fees and expenses payable ........... 5,386 192,893
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NET ASSETS, REPRESENTED BY:
104,690,860 units of fractional undivided
interest outstanding (Note 3)............... 49,877,444
Undistributed net investment income ........... 321,510 $50,198,954
----------- ===========
UNIT VALUE ($ 50,198,954 / 104,690,860 units )... $ .47950
===========
See Notes to Financial Statements.
D - 2.
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1T
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
Years Ended October 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ......................$ 4,331,325 $ 5,076,081 $ 5,892,697
Trustee's fees and expenses .......... (65,384) (82,280) (96,510)
Sponsors' fees ....................... (6,625) (5,761) (8,384)
------------------------------------------------
Net investment income ................ 4,259,316 4,988,040 5,787,803
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REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized loss on
securities sold or redeemed ........ (70,683) (96,099) (302,619)
Unrealized appreciation (depreciation)
of investments ..................... (481,422) 4,286,798 (7,166,487)
------------------------------------------------
Net realized and unrealized
gain (loss) on investments ......... (552,105) 4,190,699 (7,469,106)
------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............$ 3,707,211 $ 9,178,739 $(1,681,303)
================================================
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1T
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
Years Ended October 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income ................$ 4,259,316 $ 4,988,040 $ 5,787,803
Realized loss on
securities sold or redeemed ........ (70,683) (96,099) (302,619)
Unrealized appreciation (depreciation)
of investments ..................... (481,422) 4,286,798 (7,166,487)
------------------------------------------------
Net increase (decrease) in net assets
resulting from operations .......... 3,707,211 9,178,739 (1,681,303)
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income .............................. (4,320,385) (5,028,163) (5,963,010)
Principal ............................ (8,628,253) (6,195,400) (26,136,013)
------------------------------------------------
Total distributions ..................(12,948,638) (11,223,563) (32,099,023)
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SHARE TRANSACTIONS:
Subscription amounts ................. 1,815,931
Redemption amounts - income .......... (12,347) (2,876)
Redemption amounts - principal ....... (2,326,412) (458,257)
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Total share transactions ............. (2,338,759) (461,133) 1,815,931
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NET DECREASE IN NET ASSETS .............(11,580,186) (2,505,957) (31,964,395)
NET ASSETS AT BEGINNING OF YEAR ........ 61,779,140 64,285,097 96,249,492
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NET ASSETS AT END OF YEAR ..............$50,198,954 $61,779,140 $64,285,097
================================================
PER UNIT:
Income distributions during
year ...............................$ .04036 $ .04599 $ .05455
================================================
Principal distributions during
year ...............................$ .08061 $ .05667 $ .24035
================================================
Net asset value at end of
year ...............................$ .47950 $ .56572 $ .58434
================================================
TRUST UNITS:
Issued during period ................. 2,400,401
Redeemed during year ................. 4,512,972 809,000
Outstanding at end of year ...........104,690,860 109,203,832 110,012,832
================================================
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1T
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities.
See "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
Distributions of combined interest and principal (plus any prepayments and
redemption proceeds) are made to Holders each month. Receipts other than
interest and principal paydowns, after deductions for redemptions and
applicable expenses, are also distributed as explained in "Income,
Distributions and Reinvestment - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 104,690,860 units at Date of Deposit ..............$109,051,359
Less sales charge ......................................... 4,295,896
-----------
Net amount applicable to Holders .......................... 104,755,463
Redemptions of units - net cost of 6,440,972 units redeemed
less redemption amounts (principal)...................... 2,542,690
Realized loss on securities sold or redeemed .............. (678,744)
Principal distributions ................................... (57,469,401)
Unrealized appreciation of investments .................... 727,436
-----------
Net capital applicable to Holders .........................$ 49,877,444
===========
4. INCOME TAXES
As of October 31, 1996, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $727,436, all of which
related to appreciated securities. The cost of investment securities for
Federal income tax purposes was $49,302,570 at October 31, 1996.
</TABLE>
D - 5.
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1T
<TABLE><CAPTION>
PORTFOLIO
As of October 31, 1996
Range of
Interest Stated Face
Security Description Rate Maturities(2) Amount Cost Value(1)
--------------------------------- -------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
1 Government National Mortgage Association 8.000% 03/15/16 $ 39,959,468 $ 40,195,724 $ 40,858,556
Modified Pass-Through Mortgage-Backed to
Securities 08/15/22
2 Government National Mortgage Association 8.500 06/15/16 8,834,672 9,106,846 9,171,450
Modified Pass-Through Mortgage-Backed to
Securities 07/15/22
--------------- --------------- ---------------
TOTAL $ 48,794,140 $ 49,302,570 $ 50,030,006
=============== =============== ===============
</TABLE>
(1) See Notes to Financial Statements.
(2) On the Dates of Deposit, the ranges of stated maturities
were as follows:
8.00% GNMA - 08/15/14 to 08/15/22
8.50% GNMA - 08/15/14 to 07/15/22
D - 6.
<PAGE>
AUTHORIZATION FOR REINVESTMENT
DEFINED ASSET FUNDS--
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1T
/ / Yes, I want to participate in the Fund's Reinvestment Plan and purchase
additional Units of the Fund each month.
I hereby acknowledge receipt of the Prospectus for Defined Asset
Funds--Government Securities Income Fund, GNMA Series 1T and authorize The Chase
Manhattan Bank to pay distributions on my Units as indicated below
(distributions to be reinvested will be paid for my account to The Chase
Manhattan Bank).
Income
distributions: reinvested / /
Capital
distributions: reinvested / /
Please print or type
Name Registered Holder
Address
Registered Holder
(Two signatures required if
joint tenancy)
City State Zip Code
This page is a self-mailer. Please complete the information above, cut
along the dotted line, fold along the lines on the reverse side, tape, and mail
with the Trustee's address displayed on the outside.
12345678
<PAGE>
BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 644, NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE CHASE MANHATTAN BANK (GNMA 1T) UNITED STATES
RETAIL PROCESSING DEPARTMENT
BOWLING GREEN STATION
P.O. BOX 5179
NEW YORK, NY 10274-5179
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(Fold along this line.)
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(Fold along this line.)
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
GOVERNNMENT SECURITIES INCOME FUND
CORPORATE INCOME FUND FIRST GNMA SERIES
THIS PART B OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED OR
PRECEDED BY PART A.
FURTHER NFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE, AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
Index
PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 2
How to Buy Units...................................... 4
How to Sell Units..................................... 5
Income and Distributions.............................. 6
Fund Expenses......................................... 8
PAGE
---------
Taxes................................................. 8
Records & Reports..................................... 12
Trust Indenture....................................... 12
Miscellaneous......................................... 13
Supplemental Information.............................. 15
Secondary Market Sales................................ A-1
FUND DESCRIPTION
PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Securities for the Portfolio after
considering the Fund's investment objectives as well as the availability of the
Securities, the price of the Securities compared to similar securities and the
extent to which they were trading at discounts or premiums to par, and the
maturities of the Securities. Only issues meeting these stringent criteria of
the Defined Asset Funds team of dedicated research analysts are included in the
Portfolio. No leverage or borrowing is used nor does the Portfolio contain other
kinds of securities to enhance yield. A summary of the Securities in the
Portfolio appears in Part A of the Prospectus.
Because each Defined Asset Fund is a preselected portfolio of securities,
you know the terms of the Securities before you invest. Of course, the Portfolio
will change somewhat over time, as Securities mature, are redeemed or are sold
to meet Unit redemptions or in other limited circumstances. Because the
Portfolio is not actively managed and principal is returned as the Securities
are disposed of, this principal should be relatively unaffected by changes in
interest rates.
GNMA Series and Freddie Mac Series. Ginnie Maes are mortgage-backed
Securities issued by the Government National Mortgage Association (GNMA), which
is a wholly-owned U.S. government corporation within the Department of Housing
and Urban Development. The Ginnie Maes are of the 'modified pass-through' type,
the terms of which provide for timely monthly payments by the issuers to the
registered holders (including the Fund) of their pro rata shares of the
scheduled principal payments on account of the mortgages backing these Ginnie
Maes, plus any prepayments of principal of such mortgages received, and interest
on the aggregate unpaid principal balance of these Ginnie Maes. Ginnie Maes are
guaranteed by GNMA as to timely payment of principal and interest. The full
faith and credit of the United States is pledged to the payment of all amounts
which may be required to be paid under the guaranty. The GNMA guaranty relates
only to payment of principal of and interest on the Ginnie Maes in the Portfolio
and not to the Units of the Fund. All mortgages in the pools backing the Ginnie
Maes contained in the Portfolio are mortgages on 1-to 4-family dwellings
(amortizing over a period of up to 30 years). In general, the mortgages in these
pools provide for equal monthly payments over the life of the mortgage (aside
from prepayments), designed to repay the principal of the mortgage over this
period, together with interest at a fixed rate on the unpaid balance.
1
<PAGE>
Freddie Macs are mortgage-backed securities issued by the Federal Home Loan
Mortgage Corporation (FHLMC), which is a corporate instrumentality of the United
States, established primarily to increase the availability of mortgage credit
for the financing of urgently needed housing. The common stock of FHLMC is owned
by the Federal Home Loan Banks. FHLMC Mortgage Participation Certificates (PCs)
of the type held by the Portfolios represent an undivided interest in a group of
mortgages purchased by FHLMC. The underlying mortgage loans are fixed-rate
mortgages with original terms to maturity of about 15 years, most of which are
secured by first liens on 1-to 4-family dwellings. FHLMC guarantees the timely
payment of interest, the amount of principal due to be paid on the underlying
mortgage and the ultimate collection of all principal. The FHLMC PCs are not
guaranteed by the United States or by any Federal Home Loan Bank, and they are
not backed by the full faith and credit of the United States.
PORTFOLIO SUPERVISION
The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. Experienced financial analysts regularly review the Portfolio
and a Security may be sold in certain circumstances including the occurrence of
a default in payment on the Security, institution of certain legal proceedings,
if the Security becomes inconsistent with the Fund's investment objectives, a
decline in the price of the Security or the occurrence of other market or credit
factors that, in the opinion of Defined Asset Funds research analysts, makes
retention of the Security detrimental to the interests of investors.
The Sponsors and the Trustee are not liable for any default or defect in a
Security. If a contract to purchase any Security fails, the Sponsors may
generally deposit a replacement security so long as it is a security issued by
the same issuer as that of the failed Security and has a fixed maturity date
substantially similar to the failed Security. A replacement security must be
deposited within 110 days after deposit of the failed contract, at a cost that
does not exceed the funds reserved for purchasing the failed Security and at a
yield to maturity and current return substantially equivalent (considering then
current market conditions and relative creditworthiness) to those of the failed
Security, as of the date the failed contract was deposited.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline with increases in interest rates.
Generally speaking, securities with longer maturities will fluctuate in value
more than securities with shorter maturities. In recent years there have been
wide fluctuations in interest rates and in the value of fixed-rate bonds
generally. The Sponsors cannot predict the direction or scope of any future
fluctuations.
Certain of the Securities may have been deposited at a market discount or
premium principally because their interest rates are lower or higher than
prevailing rates on comparable debt securities. The current returns of market
discount securities are lower than comparably rated securities selling at par
because discount securities tend to increase in market value as they approach
maturity. The current returns of market premium securities are higher than
comparably rated securities selling at par because premium securities tend to
decrease in market value as they approach maturity. Because part of the purchase
price is returned through current income payments and not at maturity, an early
redemption at par of a premium security will result in a reduction in yield to
the Fund. Market premium or discount attributable to interest rate changes does
not indicate market confidence or lack of confidence in the issue.
U.S. Treasury Series. U.S. Treasury obligations, though backed by the full
faith and credit of the United States, are subject to changes in market value
when interest rates fluctuate. 'Laddered' Series seeks to protect against
declining interest rates by investing a portion of the Portfolio in longer-term
Securities, while if interest rates rise investors will be able to reinvest the
proceeds of principal as it is returned in higher yielding obligations. It is
anticipated that equal portions of principal invested will be returned annually
as Securities mature.
Treasury 'Zero' Series. The value of Stripped Treasury Securities, and
therefore of the Units of these Series, may be subject to greater fluctuations
in response to changing interest rates than in a fund consisting of debt
obligations with comparable maturities that pay interest currently. This risk is
greater when the period to maturity is longer. Furthermore, the stripping of the
interest coupons will cause the Units and therefore the investor's pro rata
portion of each Stripped Treasury Security to be purchased at a deep discount.
The Stripped
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Treasury Securities do not make any periodic payments of interest. Accordingly,
Funds holding primarily Stripped Treasury Securities are not a suitable
investment for persons seeking current cash distributions.
GNMA Series and Freddie Mac Series. Ginnie Maes and FHLMC PCs purchased at
a market discount will increase in value faster than Ginnie Maes and FHLMC PCs
purchased at a market premium if interest rates decrease. Conversely, if
interest rates increase, the value of these Securities purchased at a market
discount will decrease faster than those purchased at a 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. The potential for appreciation on the Securities, which could otherwise
be expected to result from a decline in interest rates, may tend to be limited
by any increased prepayments by mortgagors as interest rates decline. In
addition, prepayments of principal on Ginnie Maes and FHLMC PCs purchased at a
premium over par will result in some loss on investment while prepayments on
Ginnie Maes and FHLMC PCs purchased at a discount from par will result in some
gain on investment. The Securities in the Portfolio, though backed by GNMA or
FHLMC, are subject to changes in market value when interest rates fluctuate.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the date of this
Prospectus which might reasonably be expected to have a material adverse effect
upon the Fund. At any time after the initial date of deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, affecting the
Securities in the Fund.
PAYMENT OF THE SECURITIES AND LIFE OF THE FUND
The size and composition of the Fund will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units and
whether or not the Sponsors are able to sell the Units acquired by them in the
secondary market. As a result, Units offered in the secondary market may not
represent the same face amount of Securities as on the initial date of deposit.
Factors that the Sponsors will consider in determining whether or not to sell
Units acquired in the secondary market include the size of the Fund relative to
its original size, the ratio of Fund expenses to income, the Fund's current and
long-term returns, the degree to which Units may be selling at a premium over
par and the cost of maintaining a current prospectus for the Fund. These factors
may also lead the Sponsors to seek to terminate the Fund earlier than its
mandatory termination date.
GNMA Series and Freddie Mac Series. Monthly payments and prepayments of
principal are made to the Fund in respect of the mortgages underlying the
Securities. All of the mortgages in the pools relating to the Securities are
subject to prepayment without any significant premium or penalty at the option
of the mortgagors (i.e., the homeowners). While the mortgages on 1-to 4-family
dwellings underlying the Ginnie Maes are amortized over a period of up to 30
years and those underlying the FHLMC PCs are amortized over a period of up to 15
years, it has been the experience of the mortgage industry that the average life
of comparable mortgages, owing to prepayments, is much less, perhaps as little
as nine and 6 years, respectively. Generally speaking, a number of factors,
including mortgage market interest rates and homeowners mobility, will affect
the average life of the Ginnie Maes and FHLMC PSc. Changes in prepayment
patterns which are influenced by changes in housing cycles and mortgage
refinancing could influence yield assumptions used in pricing the securities.
While the value of these mortgage backed securities generally fluctuates
inversely with changes in interest rates, it should be noted that their
potential for appreciation, which could otherwise be expected to result from a
decline in interest rates, may tend to be limited by any increased prepayments
by mortgagors as interest rates decline. Accordingly, the termination of the
Fund might be accelerated as a result of prepayments made as described above.
Early termination of a Fund or early payments of principal may have
important consequences to the investor; e.g., to the extent that Units were
purchased with a view to an investment of longer duration, the overall
investment program of the investor may require readjustment; or the overall
return on investment may be less or greater than anticipated, depending in part
on whether the purchase price paid for Units represented the payment of an
overall premium or a discount, respectively, above or below the stated principal
amounts of the underlying mortgages.
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FUND TERMINATION
The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Security or upon the consent of investors holding 51% of
the Units. The Fund may also be terminated earlier by the Sponsors once the
total assets of the Fund have fallen below the minimum value specified in Part A
of the Prospectus. A decision by the Sponsors to terminate the Fund early will
be based on factors similar to those considered by the Sponsors in determining
whether to continue the sale of Units in the secondary market.
Notice of impending termination will be provided to investors and
thereafter Units will no longer be redeemable. On or shortly before termination,
the Fund will seek to dispose of any Securities remaining in the Portfolio
although any Security unable to be sold at a reasonable price may continue to be
held by the Trustee in a liquidating trust pending its final disposition. A
proportional share of the expenses associated with termination, including
brokerage costs in disposing of Securities, will be borne by investors remaining
at that time. This may have the effect of reducing the amount of proceeds those
investors are to receive in any final distribution.
HOW TO BUY UNITS
PUBLIC OFFERING PRICE
Units are available from any of the Sponsors at the Public Offering Price
plus accrued interest on the Units. The Public Offering Price varies each
Business Day with changes in the value of the Portfolio and other assets and
liabilities of the Fund. In the secondary market (after the initial offering
period), the Public Offering Price is based on the bid side evaluation of the
Securities, and includes a sales charge based on the number of Units of the Fund
purchased in the secondary market on the same day by a single purchaser (see
Secondary Market sales charge schedule in Appendix A). Purchases in the
secondary market of one or more Series sponsored by the Sponsors that have the
same rates of sales charge may be aggregated.
To qualify for a reduced sales charge, the dealer must confirm that the
sale is to a single purchaser or is purchased for its own account and not for
distribution. For these purposes, Units held in the name of the purchaser's
spouse or child under 21 years of age are deemed to be purchased by a single
purchaser. A trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account is also considered a single purchaser. This
procedure may be amended or terminated at any time without notice.
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit or per 1,000 Units, as
applicable.
Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the interest
accrued on the Securities, net of Fund expenses, from the initial date of
deposit to, but not including, the settlement date for Units (less any prior
distributions of interest income to investors).
EVALUATIONS
Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and the
following Federal holidays: Martin Luther King's Birthday, Columbus Day and
Veterans Day. Securities evaluations are generally determined on the basis of
current bid or offer prices for the Securities or comparable securities or by
appraisal or by any combination of these methods. Under current market
conditions the bid prices for Treasury obligations of the type deposited in the
Portfolio are expected to be approximately .10% less than the offer price. The
bid price for the Ginnie Maes and Freddie Mac PCs of the type deposited in the
Portfolio are expected to be 1/4 to 1/2 of 1% less than the offer price.
Neither the Sponsors, the Trustee or the Evaluator will be liable for errors in
the Evaluator's judgment. The fees of the Evaluator will be borne by the Fund.
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CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.
HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the
Securities, the sale price may be less than the cost of your Units. You should
consult your financial professional for current market prices to determine if
other broker-dealers or banks are offering higher prices for Units.
The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates must be properly endorsed
or accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. The Fund has no back-end load or 12b-1 fees,
so there is never a fee for cashing in your investment. If they do not purchase
Units tendered, the Trustee is authorized in its discretion to sell Units in the
over-the-counter market if it believes it will obtain a higher net price for the
redeeming investor.
By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Securities, net accrued interest, cash and the value of any other Fund
assets; deducting unpaid taxes or other governmental charges, accrued but unpaid
Fund expenses, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units. Securities are evaluated
on the offer side during the initial offering period and on the bid side
thereafter.
If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Agent for the
Sponsors, based on market and credit factors determined to be in the best
interest of the Fund. These sales are often made at times when the Securities
would not otherwise be sold and may result in lower prices than might be
realized otherwise and will also reduce the size and diversity of the Fund.
Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Securities not reasonably
practicable, or for any other period permitted by the SEC.
Monthly Payment U.S. Treasury Series. You may request distribution in kind
from the Trustee instead of cash redemption, provided that you are tendering
Units with a value of at least $50,000. By the seventh calendar day after
tender, an amount and value of Securities per Unit, together with a pro rata
portion of the cash balance in the Fund, equal to the Redemption Price per Unit,
will be paid over to the Trustee, as distribution agent, and either held for
your account or disposed of in accordance with your instructions. Any brokerage
commissions on
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sales of Securities in connection with in-kind redemptions will be borne by you.
The Sponsors may modify or terminate this redemption in kind option at any time
without notice to investors.
REDEMPTION BY CHECK
Investors in some Funds (identified in Part A of the Prospectus) who have
submitted a properly completed application form and who have elected, by
surrendering any Certificates with this application, to hold their Units in
uncertificated form are entitled to receive upon request without charge checks
which will be drawn upon a special account of the Fund with The Chase Manhattan
Bank, N.A. (the 'Bank'). This election, however, does not create a checking or
other bank account relationship between an investor and the Bank. Checks may be
made payable to the order of any person in amounts of $500 or more. When a check
is presented to the Bank for payment, this shall be treated as a tender for
redemption of a sufficient number of Units to cover the amount of the check. So
long as the Sponsors are maintaining a market at prices in excess of the
Redemption Price per Unit, the Sponsors will repurchase any of the Units that
are tendered at a price computed as set forth under Market for Units. If the
Sponsors are no longer maintaining such a market, Units tendered for redemption
by check will be redeemed at their Redemption Price per Unit, based on the lower
bid side evaluation of the Securities. Units may not be tendered by check within
15 days following their date of purchase.
Investors who choose to utilize the Fund's check writing service are
subject to the procedures, rules and regulations of the Bank governing checking
accounts and redemptions by draft.
The Bank will not honor checks for amounts exceeding the value of the
investor's Units at the time the check is presented to the Bank for payment. If
insufficient Units are in the account, the check will be returned marked
'insufficient funds'. Since the dollar value of the Units may change daily, the
total value of the account may not be determined in advance and, accordingly,
the account may not be entirely redeemed by check. For the same reason, even
checks written for amounts less than the present value of an investor's account
may be dishonored if the value of the Units in the account declines between the
time when the check is written and the time when it is presented for payment.
The Bank will not honor checks personally presented for payment at any office of
the Bank. This checking service may be terminated or modified at any time by the
Bank upon prior notice to the investors.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME
Interest received is credited to an Income Account and other receipts to a
Capital Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Fund.
DISTRIBUTIONS
Each Unit receives an equal share of any distributions of interest income
net of estimated expenses. Along with the income distributions, the Trustee will
distribute the investor's pro rata share of principal received from any
disposition of a Security to the extent available for distribution. As each
Security in the Portfolio matures, the balance in the Capital Account will be
distributed on or about the second business day following the maturity date to
investors of record on the business day immediately preceding the distribution
day. Stripped ('Zero') Treasury Securities pay only at maturity.
The estimated annual income per Unit, after deducting estimated annual Fund
expenses, will change as Securities mature, are called or sold or otherwise
disposed of, as prepayments occur on mortgages underlying any mortgage-backed
Securities, as replacement obligations are deposited and as Fund expenses
change. Because the Portfolio is not actively managed, income distributions will
generally not be affected by changes in interest rates and the amount of income
should be substantially maintained as long as the Portfolio remains unchanged;
however, optional redemptions of Securities, prepayments on mortgage-backed
Securities or other Portfolio changes may occur more frequently when interest
rates decline, which would result in early returns of principal and possibly
earlier termination of the Fund.
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RETURN CALCULATIONS
Estimated Current Return shows the estimated annual cash to be received
from interest-bearing securities in the Portfolio (net of estimated annual
expenses) divided by the Public Offering Price (including the maximum sales
charge). Estimated Long Term Return is a measure of the estimated return over
the estimatd life of the Fund. This represents an average of the yields to
maturity (or in certain cases, to an earlier call date) of the individual
securities in the Portfolio, adjusted to reflect the maximum sales charge and
estimated expenses. The average yield for the Portfolio is derived by weighting
each security's yield by its market value and the time remaining to the call or
maturity date, depending on how the security is priced. Unlike Estimated Current
Return, Estimated Long Term Return takes into account maturities, discounts and
premiums of the underlying securities.
No return estimated can be predictive of your actual return because returns
will vary with purchase price (including sales charges), how long units are
held, changes in Portfolio composition, changes in interest income and changes
in fees and expenses. Therefore, Estimated Current Return and Estimated Long
Term Return are designed to be comparative rather than predictive. A yield
calculation which is more comparable to an individual security may be higher or
lower than Estimated Current Return or Estimated Long Term Return which are more
comparable to return calculations used by other investment products.
GNMA Series and Freddie Mac Series. The estimated long-term return figure
is calculated using an estimated average life for the Securities. Estimated
average life is an essential factor in the calculation of Estimated Long Term
Return. When the Fund has a shorter average life than is estimated, Estimated
Long Term Return will be higher if the Fund contains Securities priced at a
discount and lower if the Securities are priced at premium. Conversely, when the
Fund has a longer average life than is estimated, Estimated Long Term Return
will be lower if the Securities are priced at a discount and higher if the
Securities are priced at a premium. To calculate estimated average life an
assumption of the present average age of available mortgage-backed Securities in
the marketplace with the same coupon is made; the calculation of estimated
average life is based upon actual recent prepayments, industry assumptions about
prepayments and analysis of several factors including, among other things, the
coupon, the housing environment, the present interest rate (no change in
interest rate is assumed) and historical trends. For a more detailed explanation
of the calculation of estimated average life, see Payment of the Securities and
Life of the Fund--GNMA Series and Freddie Mac Series above.
REINVESTMENT --GNMA SERIES 1, 2, J, 1A, 1B, 1C, 1I, 1K, 1V-1Z
Distributions will be paid in cash unless you elect to have your
distributions reinvested in The GNMA Fund Investment Accumulation Program, Inc.
The Program is an open-end management investment company whose primary
investment objective is to obtain a high level of current income through
investment in a portfolio of Ginnie Maes. Investors participating in the Program
will be taxed on their reinvested distributions in the manner described in Taxes
even though distributions are reinvested in the Program. For more complete
information about the Program, including charges and expenses, return the
enclosed form for a prospectus. Read it carefully before you decide to
participate. Notice of election to participate must be received by the Trustee
in writing at least ten days before the Record Day for the first distribution to
which the notice is to apply.
REINVESTMENT --MONTHLY PAYMENT U.S. TREASURY SERIES 1-5, 18, GNMA SERIES 1R, 1S,
1T, 1U; FREDDIE MAC SERIES 10-12
Distributions on Units may be reinvested by participating in the Fund's
reinvestment plan. Under the plan, the Units acquired for investors will be
either Units already held in inventory by the Sponsors or new Units created by
the Sponsors's deposit of additional Securities.
Purchases made pursuant to the Reinvestment Plan will be made at a reduced
sales charge. Unit prices are based on the bid side evaluation of the underlying
Securities. Under the Reinvestment Plan, the Fund will pay the distributions to
the Trustee which in turn will purchase for the Holder full and fractional Units
of the Fund at the price determined as of the close of business on the
distribution day and will add the Units to the Holder's account and send the
Holder an account statement reflecting the reinvestment. The Sponsors reserve
the right to amend, modify or terminate the reinvestment plan at any time
without prior notice. Investors holding Units in 'street name' should contact
their broker, dealer or financial institution if they wish to participate in the
reinvestment plan.
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Monthly Payment Series 1 and 3. Only income distributions may be
reinvested; principal distributions will be paid in cash. Units purchased by
reinvestment of income distributions will be acquired at net asset value; no
sale charge will be deducted.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for maintaining
the Fund's registration statement current with Federal and State authorities,
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts and may sell Securities
for this purpose if cash is not available. The Sponsors receive an annual fee of
a maximum of $0.25 per $1,000 face amount to reimburse them for the cost of
providing Portfolio supervisory services to the Fund. While the fee may exceed
their costs of providing these services to the Fund, the total supervision fees
from all Series of Government Securities Income Fund will not exceed their costs
for these services to all of those Series during any calendar year. The Sponsors
may also be reimbursed for their costs of providing bookkeeping and
administrative services to the Fund, currently estimated at $0.10 per Unit or
per 1,000 Units as applicable. The Trustee's, Sponsors' and Evaluator's fees may
be adjusted for inflation without investors' approval.
All or some portion of the expenses incurred in establishing the Fund,
including the cost of the initial preparation of documents relating to the Fund,
Federal and State registration fees, the initial fees and expenses of the
Trustee, legal expenses and any other out-of-pocket expenses will be paid by the
Fund and amortized over five years. Any balance of the expenses incurred in
establishing the Fund, as well as advertising and selling expenses will be paid
from the Underwriting Account at no charge to the Fund. Sales charges on Defined
Asset Funds range from under 1.0% to 5.5%. This may be less than you might pay
to buy and hold a comparable managed fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results.
TAXES -- SECTION A: MONTHLY PAYMENT U.S. TREASURY SERIES 18; GNMA SERIES 1, 2,
1R-1Z; FREDDIE MAC SERIES 10-12
TAXATION OF THE FUND
The Fund intends to qualify for and elect the special tax treatment
applicable to 'regulated investment companies' under Sections 851-855 of the
Internal Revenue Code of 1986, as amended (the 'Code'). Qualification and
election as a 'regulated investment company' involve no supervision of
investment policy or management by any government agency. If the Fund qualifies
as a 'regulated investment company' and distributes to investors 90% or more of
its taxable income without regard to its net capital gain (net capital gain is
defined as the excess of net long-term capital gain over 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) it distributes to investors in a
timely manner. In addition, the Fund will not be subject to the 4% excise tax on
certain undistributed income of 'regulated investment companies' to the extent
it distributes to investors in a timely manner at least 98% of its taxable
income (including any net capital gain). It is anticipated that the Fund will
not be subject to Federal income tax or the excise tax because the Indenture
requires the distribution of the Fund's taxable income (including any net
capital gain) in a timely manner. Although all or a portion of the Fund's
taxable income (including any net capital gain) for a calendar year may be
distributed shortly after the end of the calendar year, such a distribution will
be treated for Federal income tax purposes as having been received by investors
during the calendar year.
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DISTRIBUTIONS
Distributions to investors of the Fund's interest income, gain that is
treated as ordinary income under the market discount rules, and any net
short-term capital gain in any year will be taxable as ordinary income to
investors to the extent of the Fund's taxable income (without regard to any net
capital gain) for that year. Any excess will be treated as a return of capital
and will reduce the investor's basis in his Units and, to the extent that they
exceed his basis, will be treated as a gain from the sale of his Units as
discussed below. It is anticipated that substantially all of the distributions
of the Fund's interest income, ordinary gain and any net short-term capital gain
will be taxable as ordinary income to investors.
Distributions that are taxable as ordinary income to investors will
constitute dividends for Federal income tax purposes but will not be eligible
for the dividends-received deduction for corporations. Distributions of the
Fund's net capital gain (designated as capital gain dividends by the Fund) will
be taxable to investors as long-term capital gain, regardless of the time the
Units have been held by an investor. An investor will recognize taxable gain or
loss if the investor sells or redeems his Units. Any gain or loss arising from
(or treated as arising from) the sale or redemption of Units will be capital
gain or loss, except in the case of a dealer. Capital gains are currently taxed
at the same rate as ordinary income. However, the excess of net long-term
capital gains over net short-term capital losses may be taxed at a lower rate
than ordinary income for certain noncorporate taxpayers. A capital gain or loss
is long-term if the asset is held for more than one year and short-term if held
for one year or less. However, any capital loss on the sale or redemption of a
Unit that an investor has held for six months or less will be a long-term
capital loss to the extent of any capital gain dividends previously distributed
to the investor by the Fund. The deduction of capital losses is subject to
limitations.
Payments of principal on underlying mortgages or sales of Securities by the
Fund (to meet redemptions or otherwise) may give rise to gain (including market
discount) to the Fund. The amount of gain will be based upon the cost of the
Security to the Fund and will be without regard to the value of the Security
when a particular investor purchases his Units. Such gain must be distributed to
Investors to avoid Federal income (or excise) taxation to the Fund. In the case
of sales to meet redemptions, some or all of such gain must be so distributed to
nonredeeming investors. Any such distribution will be taxable to investors as
discussed above (i.e., as ordinary income or long-term capital gain), even if as
to a particular investor the distribution economically represents a return of
capital. Since such distributions do not reduce an investor's tax basis in his
Units, an investor will have a corresponding capital loss (or a reduced amount
of gain) on a subsequent sale or redemption of his Units.
The Federal tax status of each year's distributions will be reported to
investors and to the Internal Revenue Service. The foregoing discussion relates
only to the Federal income tax status of the Fund and to the tax treatment of
distributions by the Fund to U.S. investors. Investors who are not U.S. citizens
or residents should be aware that distributions from the Fund generally will be
subject to a withholding tax of 30%, or a lower treaty rate, and should consult
their own tax advisers to determine whether investment in the Fund is
appropriate. Distributions may also be subject to state and local taxation and
investors should consult their own tax advisers in this regard.
Investors will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the investor or are
automatically reinvested (see Income, Distributions and Reinvestment--
Reinvestment above).
TAXES -- SECTION B: MONTHLY PAYMENT U.S. TREASURY SERIES 1-17, 19-23; U.S.
TREASURY SERIES 7--LADDERED ZERO COUPONS; GNMA SERIES J, 1A, 1B, 1C,
1I, 1K
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Security in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). The total cost to an investor of his Units, including sales
charges, is allocated to his pro rata portion of each Security, in
proportion to the fair market values thereof on the date the investor
purchases his Units, in order to determine his tax basis for his pro rata
portion of each Security.
9
<PAGE>
Each investor will be considered to have received the interest or
accrued original issue discount on his pro rata portion of each Security
when interest on the Security is received or original issue discount is
accrued by the Fund. An individual investor who itemizes deductions may
deduct his pro rata share of fees and other expenses of the Fund only to
the extent that such amount together with the investor's other
miscellaneous deductions exceeds 2% of his adjusted gross income.
If an investor's tax basis for his pro rata portion of a Security
exceeds the redemption price at maturity thereof (subject to certain
adjustments), the investor will be considered to have purchased his pro
rata portion of the Security at a 'bond premium'. The investor may elect to
amortize the bond premium prior to the maturity of the Security. The amount
amortized in any year should be applied to offset the investor's interest
from the Security and will result in a reduction of basis for his pro rata
portion of the Security.
An investor will recognize taxable gain or loss when all or part of his
pro rata portion of a Security is disposed of by the Fund or when he sells
or redeems all or some of his Units. Any such taxable gain or loss will be
capital gain or loss, except that any gain from the disposition of an
investor's pro rata portion of a Security acquired by the investor at a
'market discount' (i.e., where the investor's tax basis for his pro rata
portion of the Security (which includes any original issue discount which
will accrue thereon) is less than its stated redemption price at maturity)
will be treated as ordinary income to the extent the gain does not exceed
the accrued market discount.
Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and income received by the Fund
will be treated as income of the investors.
Notwithstanding the foregoing, an investor who is a non-resident alien
individual or a foreign corporation (a 'Foreign Investor') will generally
not be subject to U.S. federal income taxes, including withholding taxes,
on the interest income (including any original issue discount) on, or any
gain from the sale or other disposition of, his pro rata portion of any
Security provided that (i) the interest income or gain is not effectively
connected with the conduct by the Foreign Investor of a trade or business
within the United States, (ii) if the interest is United States source
income (which is the case for most Securities issued by United States
issuers), the Security is issued after July 18, 1984 and the Foreign
Investor does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of voting stock of the issuer of the
Security and is not a controlled foreign corporation related (within the
meaning of Section 864(d)(4) of the Code) to the issuer of the Security,
(iii) with respect to any gain, the Foreign Investor (if an individual) is
not present in the United States for 183 days or more during the taxable
year and (iv) the Foreign Investor provides the required certification of
his status and of certain other matters. Withholding agents will file with
the Internal Revenue Service foreign person information returns with
respect to such interest payments accompanied by such certifications.
Foreign Investors should consult their own tax advisers with respect to
United States federal income tax consequences of ownership of Units.
* * *
After the end of each calendar year, the Trustee will furnish to each
investor an annual statement containing information relating to the interest
received by the Fund on the Securities, the gross proceeds received by the Fund
from the disposition of any Security (resulting from redemption or payment at
maturity of any Security or the sale by the Fund of any Security), and the fees
and expenses paid by the Fund. The Trustee will also furnish annual information
returns to each investor and to the Internal Revenue Service. Investors may
request from the Trustee evaluations of the Securities that were furnished by
the Evaluator.
Monthly Payment U.S. Treasury Series (except Series 18) and U.S. Treasury Series
7--Laddered Zero Coupons:
The Sponsors believe that investors who are individuals will not be subject
to any state or local personal income taxes on the interest received by the Fund
and distributed to them. However, investors (including individuals) may be
subject to state and local taxes on any capital gains (or market discount
treated as ordinary income) derived from the Fund and to other state and local
taxes (including corporate income or franchise taxes, personal property or
intangibles taxes, and estate or inheritance taxes) on their Units or the income
derived therefrom. In addition, individual investors (and any other investors
which are not subject to state and local taxes on the interest income derived
from the Fund) will probably not be entitled to a deduction for state and local
tax purposes for their share of the fees and expenses paid by the Fund, for any
amortized bond premium or for any interest on indebtedness incurred to purchase
or carry their Units. Therefore, even though the Sponsors believe
10
<PAGE>
that interest income from the Fund is exempt from state and local personal
income taxes in all states, investors should consult their own tax advisers with
respect to state and local taxation.
A distribution to an investor of Securities upon redemption of Units will
not be a taxable event to the investor or to nonredeeming investors. The
redeeming investor's basis for the Securities will be equal to the basis for the
Securities (previously represented by his Units) prior to the redemption, and
his holding period for the Securities will include the period during which he
held his Units. However, the investor will recognize taxable gain or loss when
he sells the Securities so distributed.
For GNMA Series J, 1A, 1B, 1C, 1I, 1K, an investor may also recognize
ordinary gain or loss as a result of principal payments received on underlying
mortgages issued by natural persons. In addition, any gain recognized by an
investor on the disposition of his pro rata portion of a Ginnie Mae will
constitute ordinary income (which will be treated as interest income for most
purposes) to the extent it does not exceed the accrued market discount on the
Ginnie Mae attributable to underlying mortgages.
For Freddie Mac Series, the information statement relating to Freddie Mac
PCs indicates that the mortgages underlying the Freddie Mac PCs may be subject
to rules for obligations originally issued at a discount or to rules for
stripped bonds and coupons under Section 1286 of the Code. Investors are urged
to consult their tax advisers with respect to the application of these rules to
an investment in Units. Investors may also recognize ordinary gain or loss as a
result of principal payments received on underlying mortgages issued by natural
persons.
For U.S. Treasury Series 7--Laddered Zero Coupons, the Fund consists
primarily of Stripped Treasury Securities. An investor is required to treat its
pro rata portion of each Stripped Treasury Security as a bond that was
originally issued on the date the investor purchased Units and at an original
issue discount equal to the excess of the investor's pro rata portion of the
amount payable on such Stripped Treasury Security over the Stripped Treasury
Security's ratable share of the original bond's purchase price determined on the
basis of the respective fair market values of the stripped bond and the stripped
coupon. An investor in a pro rata portion of a Stripped Treasury Security is
required to include in income annually a portion of such original issue discount
determined under a formula which takes into account the compounding of interest.
Because of the original issue discount rules, investors will be required for
Federal income tax purposes to include amounts in ordinary gross income in
advance of the receipt of the cash attributable to such income. The inclusion of
original issue discount in gross income for Federal income tax purposes may
differ from the accrual for financial accounting purposes to the extent that
generally accepted accounting principles permit or require the inclusion of
interest on the basis of a compounding period other than a semi-annual period.
Therefore, purchase of Units may be appropriate only for Individual Retirement
Accounts, Keogh Plans, pension funds and other tax-deferred retirement plans or
for investors who can have taxable income attributed to them in advance of the
receipt of the cash attributable to such income and prior to the time that such
income is earned. Purchasers of Units should consult their own advisers as to
the tax treatment of original issue discount with respect to their particular
circumstances, including the application of state and local laws, in order to
determine whether an investment in the Fund would be appropriate for them.
* * *
For GNMA Series 1A, 1B, 1C, 1I, 1K, the Sponsors believe that the mortgages
underlying the Ginnie Maes originated after July 18, 1984. In the case of
Monthly Payment U.S. Treasury Series (except Series 1 and 18) and U.S. Treasury
Series 7--Laddered Zero Coupons, the Sponsors believe that the U.S. Treasury
Securities, the interest on which is United States source income (which is the
case for most Securities issued by United States issuers) were issued after July
18, 1984. To the best knowledge of the Sponsors, interest on any Security issued
by a non-United States issuer is not subject to any foreign withholding taxes
under current law.
RETIREMENT PLANS
Certain Series of Government Securities Income Fund may be well suited for
purchase by Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds
and other qualified retirement plans, certain of which are briefly described
below. Generally, capital gains and income received in each of the foregoing
plans are exempt from Federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special 5 or 10 year averaging or tax-deferred rollover treatment. Investors in
IRAs, Keogh plans and other tax-deferred retirement plans should consult their
plan custodian as to the
11
<PAGE>
appropriate disposition of distributions. Investors considering participation in
any of these plans should review specific tax laws related thereto and should
consult their attorneys or tax advisors with respect to the establishment and
maintenance of any of these plans. These plans are offered by brokerage firms,
including the Sponsor of this Fund, and other financial institutions. Fees and
charges with respect to such plans may vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may be
purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units of the Fund. Any individual
(including one covered by an employer retirement plan) can make a contribution
in an IRA equal to the lesser of $2,000 ($2,250 in a spousal account) or 100% of
earned income; such investment must be made in cash. However, the deductible
amount an individual may contribute will be reduced if the individual's adjusted
gross income exceeds $25,000 (in the case of a single individual), $40,000 (in
the case of married individuals filing a joint return) or $200 (in the case of a
married individual filling a separate return). Certain transactions which are
prohibited under Section 408 of the Code will cause all or a portion of the
amount in an IRA to be deemed to be distributed and subject to tax at that time.
Unless nondeductible contributions were made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally are
eligible for tax-deferred rollover treatment. Taxable distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability or where the amount distributed is part of a series of substantially
equal periodic (at least annual) payments that are to be made over the life
expectancies of the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a corporation may purchase Units of the Fund.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Securities and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Securities held by the Fund, which may be inspected by investors at
reasonable times during business hours.
With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Securities in exchange or substitution for Securities (or contracts) previously
deposited, the Trustee will send a notice to each investor, identifying both the
Securities removed and the replacement Securities deposited. The Trustee sends
each investor of record an annual report summarizing transactions in the Fund's
accounts and amounts distributed during the year and Securities held, the number
of Units outstanding and the Redemption Price at year end, the interest received
by the Fund on the Securities, the gross proceeds received by the Fund from the
disposition of any Security (resulting from redemption or payment at maturity or
sale of any Security), and the fees and expenses paid by the Fund, among other
matters. The Trustee will also furnish annual information returns to each
investor. Investors may obtain copies of Security evaluations from the Trustee
to enable them to comply with federal and state tax reporting requirements. Fund
accounts are audited annually by independent accountants selected by the
Sponsors. Audited financial statements are available from the Trustee on
request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended
12
<PAGE>
upon consent of investors holding 51% of the Units. No amendment may reduce the
interest of any investor in the Fund without the investor's consent or reduce
the percentage of Units required to consent to any amendment without unanimous
consent of investors. Investors will be notified on the substance of any
amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to appoint a successor promptly;
however, if upon resignation no successor has accepted appointment within 30
days after notification, the resigning Trustee or Evaluator may apply to a court
of competent jurisdiction to appoint a successor.
Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains and is agreeable to the resignation. A new Sponsor may be
appointed by the remaining Sponsors and the Trustee to assume the duties of the
resigning Sponsor. If there is only one Sponsor and it fails to perform its
duties or becomes incapable of acting or bankrupt or its affairs are taken over
by public authorities, the Trustee may appoint a successor Sponsor at reasonable
rates of compensation, terminate the Indenture and liquidate the Fund or
continue to act as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been appointed as Agent for the Sponsors by the other
Sponsors.
The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect
wholly-owned subsidiary of The Travelers Inc.; Prudential Securities
Incorporated, an indirect wholly-owned subsidiary of the Prudential Insurance
Company of America; Dean Witter Reynolds, Inc., a principal operating subsidiary
of Dean Witter Discover & Co. and PaineWebber Incorporated, a wholly-owned
subsidiary of PaineWebber Group Inc. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. Each Sponsor has acted as principal underwriter and managing underwriter
of other investment companies. The Sponsors, in addition to participating as
members of various selling groups or as agents of other investment companies,
execute orders on behalf of investment companies for the purchase and sale of
securities of these companies and sell securities to these companies in their
capacities as brokers or dealers in securities.
13
<PAGE>
PUBLIC DISTRIBUTION
The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.
The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold. Sales to dealers and to introducing
dealers, if any, will initially be made at prices which represent a concession
from the Public Offering Price, but the Agent for the Sponsors reserves the
right to change the rate of any concession from time to time. Any dealer or
introducing dealer may reallow a concession up to the concession to dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
In maintaining a secondary market for Units, the Sponsors will realize
profits or sustain losses in the amount of any difference between the prices at
which they buy Units and the prices at which they resell these Units (which
include the sales charge) or the prices at which they redeem the Units. Cash, if
any, made available by buyers of Units to the Sponsors prior to a settlement
date for the purchase of Units may be used in the Sponsors' businesses to the
extent permitted by Rule 15c3-3 under the Securities Exchange Act of 1934 and
may be of benefit to the Sponsors.
FUND PERFORMANCE
Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of income and principal
distributions reinvested, may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective investors. Total return figures are not averaged, and may not
reflect deduction of the sales charge, which would decrease the return. Average
annualized return figures reflect deduction of the maximum sales charge. No
provision is made for any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the
Securities in the Portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to performance data from publications such
as Donoghue's Money Fund Report, Lehman Brothers Intermediate Treasury Bond
Index, Lipper Analytical Services, Inc., Morningstar Publications, Inc., Money
Magazine, The New York Times, U.S. News and World Report, Barron's, Business
Week, CDA Investment Technology, Inc., Forbes Magazine or Fortune Magazine. As
with other performance data, performance comparisons should not be considered
representative of the Fund's relative performance for any future period.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio of bonds and the return are relatively fixed) and
'hold with confidence' (because the portfolio is professionally selected and
regularly reviewed). Defined Asset Funds offers an array of simple and
convenient investment choices, suited to fit a wide variety of personal
financial goals--a buy and hold strategy for capital accumulation, such as for
children's education or retirement, or attractive, regular current income
consistent with the preservation of principal. Unit investment trusts are
particularly suited for the many investors who prefer to seek long-term income
by purchasing sound investments and holding them, rather than through active
trading. Few individuals have the knowledge, resources or capital to buy and
hold a diversified portfolio on their own; it would generally take a
considerable sum of money to obtain the breadth and diversity that Defined Asset
Funds offer. One's investment objectives may call for a combination of Defined
Asset Funds.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From
14
<PAGE>
time to time various advertisements, sales literature, reports and other
information furnished to current or prospective investors may present the
average annual compounded rate of return of selected asset classes over various
periods of time, compared to the rate of inflation over the same periods.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee shown on the back cover
of this Prospectus, investors will receive at no cost to the investor
supplemental information about the Fund, which has been filed with the SEC. The
supplemental information includes more detailed risk factor disclosure about the
types of Securities that may be part of the Fund's Portfolio and general
information about the structure and operation of the Fund.
15
<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
APPENDIX A
SECONDARY MARKET SALES
GNMA SERIES 1 AND 2
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC
AS PERCENT OF AS PERCENT OF OFFERING PRICE
BID SIDE PUBLIC NET AMOUNT -----------------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- -------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 250....................................................... 4.25% 4.439% 2.763%
250-499............................................................. 3.25 3.359 2.113
500-749............................................................. 2.50 2.564 1.625
750-999............................................................. 2.00 2.041 1.300
1,000 or more....................................................... 1.50 1.523 0.975
<CAPTION>
GNMA SERIES J AND SUBSEQUENT SERIES
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
------------------------------------ PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- -------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C> <C>
Less than 250,000......................................................... 4.25% 4.439% 2.763%
250,000-499,999........................................................... 3.25 3.359 2.113
500,000-749,999........................................................... 2.50 2.564 1.625
750,000-999,999........................................................... 2.00 2.041 1.300
1,000,000 or more......................................................... 1.50 1.523 0.975
<CAPTION>
FREDDIE MAC SERIES 10, 11 AND 12
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
------------------------------------ PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- -------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C> <C>
Less than 100,000......................................................... 3.50% 3.627% 2.275%
100,000-499,999........................................................... 3.00 3.093 1.950
500,000-749,999........................................................... 2.25 2.302 1.463
750,000-999,999........................................................... 1.50 1.523 0.975
1,000,000 or more......................................................... 1.25 1.266 0.813
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 1 AND 3
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
------------------------------------ PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- -------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C> <C>
Less than 250,000......................................................... 2.50% 2.564% 1.625%
250,000-499,999........................................................... 2.00 2.041 1.300
500,000-749,999........................................................... 1.50 1.523 0.975
750,000-999,999........................................................... 1.25 1.266 0.813
1,000,000 or more......................................................... 1.00 1.010 0.650
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 5
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
------------------------------------ PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- -------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C> <C>
Less than 250,000......................................................... 2.75% 2.828% 1.788%
250,000-499,999........................................................... 2.25 2.302 1.463
500,000-749,999........................................................... 1.50 1.523 0.975
750,000-999,999........................................................... 1.25 1.266 0.813
1,000,000 or more......................................................... 1.00 1.010 0.650
</TABLE>
a-1
<PAGE>
MONTHLY PAYMENT U.S. TREASURY SERIES 6
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
------------------------------------ PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- -------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C> <C>
Less than 1,000,000....................................................... 1.00% 1.010% 0.650%
1,000,000 or more......................................................... 0.50 0.503 0.325
<CAPTION>
U.S. TREASURY SERIES 7--LADDERED ZERO COUPONS
SALES CHARGE DEALER
(GROSS UNDERWRITING PROFIT) CONCESSION
----------------------------------
AS PERCENT OF AS PERCENT OF
PUBLIC OFFERING NET AMOUNT
NUMBER OF UNITS PRICE INVESTED AS PERCENT
- ---------------------------------------------------------------------------------- ----------------- --------------- OF PUBLIC
OFFERING
PRICE
-----------
<S> <C> <C> <C>
ASSURANCE TRUST 1995
Less than 1,000................................................................. 1.25% 1.266% 0.813%
1,000 or more................................................................... 1.00 1.010 0.650
ASSURANCE TRUST 2000
Less than 500................................................................... 2.00% 2.041% 1.300%
500-999......................................................................... 1.50 1.523 0.975
1,000 or more................................................................... 1.00 1.010 0.650
ASSURANCE TRUST 2005
Less than 250................................................................... 3.00% 3.093% 1.950%
250-499......................................................................... 2.50 2.564 1.625
500-749......................................................................... 2.00 2.041 1.300
750-999......................................................................... 1.50 1.523 0.975
1,000 or more................................................................... 1.00 1.010 0.650
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 8, 19, 20 AND 23
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC
AS PERCENT OF AS PERCENT OF OFFERING PRICE
BID SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 1,000,000......................................................... 1.50% 1.523% 0.975%
1,000,000 or more........................................................... 1.25 1.266 0.813
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 10
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 500,000........................................................... 1.75% 1.781% 1.138%
500,000-999,999............................................................. 1.25 1.266 0.813
1,000,000 or more........................................................... 0.75 0.756 0.488
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 12 AND 13
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 1,000,000......................................................... 0.75% 0.756% 0.488%
1,000,000 or more........................................................... 0.50 0.503 0.325
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 14
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 1,000,000......................................................... 1.00% 1.010% 0.650%
1,000,000 or more........................................................... 0.75 0.756 0.488
</TABLE>
a-2
<PAGE>
<TABLE><CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 15
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 500,000........................................................... 2.00% 2.041% 1.300%
500,000-999,999............................................................. 1.50 1.523 0.975
1,000,000 or more........................................................... 1.00 1.010 0.650
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 16
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 1,000,000......................................................... 1.25% 1.266% 0.813%
1,000,000 or more........................................................... 1.00 1.010 0.650
<CAPTION>
MONTHLY PAYMENT U.S. TREASURY SERIES 17, 18, 21 AND 22
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 500,000........................................................... 2.25% 2.302% 1.463%
500,000-999,999............................................................. 1.75 1.781 1.138
1,000,000 or more........................................................... 1.25 1.266 0.813
<CAPTION>
U.S. TREASURY STRATEGY SERIES 1
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC OFFERING
AS PERCENT OF BID AS PERCENT OF PRICE
SIDE PUBLIC NET AMOUNT ---------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- ---------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Less than 1,000,000......................................................... 1.50% 1.523% 0.975%
1,000,000 to 4,999,999...................................................... 1.00 1.010 0.650
5,000,000 or more........................................................... 0.75 0.756 0.490
</TABLE>
The above graduated sales charges will apply on all purchases on any one
day by the same purchaser of Units only in the amounts stated. Concurrent
purchases in the secondary market of one or more Series sponsored by the
Sponsors which have the same rates of sales charge will be aggregated. Units
held in the name of the spouse of the purchaser or in the name of a child of the
purchaser under 21 years of age are deemed to be registered in the name of the
purchaser. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account.
a-3
<PAGE>
14102--10/95
<PAGE>
DEFINED
ASSET FUNDSSM
SPONSORS: GOVERNMENT SECURITIES
Merrill Lynch, INCOME FUND
Pierce, Fenner & Smith Incorporated GNMA Series 1T
Defined Asset Funds (A Unit Investment Trust)
P.O. Box 9051 PROSPECTUS PART A
Princeton, NJ 08543-9051 This Prospectus consists of a Part A and
(609) 282-8500 a Part B. This Prospectus does not
Smith Barney Inc. contain all of the information with
Unit Trust Department respect to the investment company set
388 Greenwich Street--23rd Floor forth in its registration statement and
New York, NY 10013 exhibits relating thereto which have
(212) 816-4000 been filed with the Securities and
PaineWebber Incorporated Exchange Commission, Washington, D.C.
1200 Harbor Boulevard under the Securities Act of 1933 and the
Weehawken, NJ 07087 Investment Company Act of 1940, and to
(201) 902-3000 which reference is hereby made. Copies
Prudential Securities Incorporated of filed material can be obtained from
One New York Plaza the Public Reference Section of the
New York, NY 10292 Commission, 450 Fifth Street, N.W.,
(212) 778-6164 Washington, D.C. 20549 at prescribed
Dean Witter Reynolds Inc. rates. The Commission also maintains a
Two World Trade Center--59th Floor Web site that contains information
New York, NY 10048 statements and other information
(212) 392-2222 regarding registrants such as Defined
EVALUATOR: Asset Funds that file electronically
Kenny S&P Evaluation Services, with the Commission at
a division of J. J. Kenny Co., Inc. http://www.sec.gov.
65 Broadway No person is authorized to give any
New York, NY 10006 information or to make any
TRUSTEE: representations with respect to this
The Chase Manhattan Bank investment company not contained in its
Customer Service Retail Department registration statement and exhibits
Bowling Green Station relating thereto; and any information or
P.O. Box 5187 representation not contained therein
New York, NY 10274-5187 must not be relied upon as having been
1-800-323-1508 authorized. 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.
14036--01/97
<PAGE>
DEFINED ASSET FUNDS--
GOVERNMENT SECURITIES INCOME FUND
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet of Form S-6.
The cross-reference sheet (incorporated by reference to the Registration
Statement on Form S-6 of Defined Asset Funds Municipal Insured Series, 1933 Act
File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1--Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multi-state
Series--48, 1933 Act File No. 33-50247).
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
Post Effective Amendment No. 4 to the Registration Statement of
Government Securities Income Fund, Freddie Mac Series 10, 1933 Act
File No. 33-46142).
R-1
<PAGE>
DEFINED ASSET FUNDS--
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1T
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
DEFINED ASSET FUNDS--GOVERNMENT SECURITIES INCOME FUND, GNMA SERIES 1T (A UNIT
INVESTMENT TRUST), 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 REGISTRATION STATEMENT OR
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW
YORK ON THE 24TH DAY OF JANUARY, 1997.
SIGNATURES APPEAR ON PAGES R-3, R-4, R-5, R-6 AND R-7.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Smith Barney Inc.
has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Merrill Lynch, Pierce, have been filed
Fenner & Smith Incorporated: under
Form SE and the
following 1933 Act
File
Number: 33-43466
and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Number:
33-41631
ALAN D. HOGAN
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS
By
WILLIAM W. HUESTIS
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-4
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
33-49753, 33-55073
and 333-10441
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT H. LESSIN
WILLIAM J. MILLS, II
MICHAEL B. PANITCH
PAUL UNDERWOOD
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-5
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Number: 33-17085
Reynolds Inc.:
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors of PaineWebber Number: 33-55073
Incorporated:
JOSEPH J. GRANO, JR.
DONALD B. MARRON
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-7
EXHIBIT 4.1
KENNY S&P EVALUATION SERVICES
A DIVISION OF J. J. KENNY CO., INC.
65 BROADWAY
NEW YORK, N.Y. 10006-2551
TELEPHONE (212) 770-4422
FAX 212/797-8681
January 24, 1997
Frank A. Ciccotto
Vice President
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Unit Investment Trust Division
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank
1 Chase Manhattan Plaza--3B
New York, New York 10081
RE: DEFINED ASSET FUNDS--GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES 1T
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-42310 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J. J.
Kenny Co., Inc. as evaluator.
You are hereby authorized to file copies of this letter with the Securities
and Exchange Commission.
Sincerely,
FRANK A. CICCOTTO
Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Defined Asset Funds--Government Securities Income Fund--GNMA Series--1T
We consent to the use in this Post-Effective Amendment No. 5 to Registration
Statement No. 33-42310 of our opinion dated January 8, 1997 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading 'Auditors' in such Prospectus.
DELOITTE & TOUCHE LLP
New York, N.Y.
January 22, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<S>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 49,302,570
<INVESTMENTS-AT-VALUE> 50,030,006
<RECEIVABLES> 328,975
<ASSETS-OTHER> 32,866
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50,391,847
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (192,893)
<TOTAL-LIABILITIES> (192,893)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,150,008
<SHARES-COMMON-STOCK> 104,690,860
<SHARES-COMMON-PRIOR> 109,203,832
<ACCUMULATED-NII-CURRENT> 321,510
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 727,436
<NET-ASSETS> 50,198,954
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,331,325
<OTHER-INCOME> 0
<EXPENSES-NET> (72,009)
<NET-INVESTMENT-INCOME> 4,259,316
<REALIZED-GAINS-CURRENT> (70,683)
<APPREC-INCREASE-CURRENT> (481,422)
<NET-CHANGE-FROM-OPS> 3,707,211
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,320,385)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (8,628,253)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 4,512,972
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (11,580,186)
<ACCUMULATED-NII-PRIOR> 394,926
<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>
<PAGE>
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
January 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We hereby represent that the Post-Effective Amendments to the registered
unit investment trusts described in Exhibit A attached hereto do not contain
disclosures which would render them ineligible to become effective pursuant to
Rule 485(b) under the Securities Act of 1933.
Very truly yours,
Davis Polk & Wardwell
Attachment
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
1933 ACT 1940 ACT
FUND NAME CIK FILE NO. FILE NO.
- --------- --- -------- --------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-GSIF GNMA SERIES 1T 781331 33-42310 811-2810
DEFINED ASSET FUNDS-GSIF MPUSTS-5 828427 33-19689 811-2810
DEFINED ASSET FUNDS-CIF IS-16 891628 33-49031 811-2295
DEFINED ASSET FUNDS-IS-27 DAF 895588 33-60245 811-2295
DEFINED ASSET FUNDS-MITF IS-158 803792 33-36548 811-1777
DEFINED ASSET FUNDS- IS-196 DAF 912789 33-50437 811-1777
DEFINED ASSET FUNDS- IS-213 DAF 804008 33-55641 811-1777
DEFINED ASSET FUNDS- IS-214 DAF 804009 33-56073 811-1777
DEFINED ASSET FUNDS-MITF MPS-521 803728 33-48965 811-1777
DEFINED ASSET FUNDS- MPS-562 DAF 924304 33-61825 811-1777
DEFINED ASSET FUNDS-MITF MSS 7U 847227 33-37314 811-1777
DEFINED ASSET FUNDS-MITF MSS 9O 868186 33-43467 811-1777
TOTAL: 12 FUNDS
</TABLE>
