DEFINED ASSET FUNDS-REGISTERED TRADEMARK-
----------------------------------------------------
GOVERNMENT SECURITIES INCOME FUND
U.S. GOVERNMENT ZERO COUPON BOND
SERIES 3 AND 8
UNIT INVESTMENT TRUSTS
- PORTFOLIOS OF STRIPPED U.S. TREASURY SECURITIES
- DESIGNED FOR SAFETY OF CAPITAL AND HIGH YIELD TO
MATURITY
- INVESTMENT ALTERNATIVES FOR EMPLOYEE BENEFIT PLANS
ESTABLISHED BY MERRILL LYNCH & CO., INC. AND
AFFILIATES
-----------------------------------------------------
The Securities and Exchange Commission has not
SPONSORS: approved or disapproved these Securities or passed
MERRILL LYNCH, upon the adequacy of this prospectus. Any
PIERCE, FENNER & SMITH representation to the contrary is a criminal offense.
INCORPORATED Prospectus dated July 28, 2000.
<PAGE>
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Defined Asset Funds-Registered Trademark-
Defined Asset Funds-Registered Trademark- is America's oldest and largest family
of unit investment trusts, with over $160 billion sponsored over the last 28
years. Defined Asset Funds has been a leader in unit investment trust research
and product innovation. Our family of Funds helps investors work toward their
financial goals with a full range of quality investments, including municipal,
corporate and government bond portfolios, as well as domestic and international
equity portfolios.
Defined Asset Funds offer a number of advantages:
- A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or
bonds appropriate for a particular fund's objectives.
- Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF THE EVALUATION DATE, MARCH
31, 2000.
CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Risk/Return Summary............................... 3
What You Can Expect From Your Investment.......... 6
Distributions at Maturity....................... 6
Records and Reports............................. 6
The Risks You Face................................ 6
Interest Rate Risk.............................. 6
Selling Units..................................... 6
Selling Units to the Trustee.................... 6
How The Trusts Work............................... 7
Pricing......................................... 7
Evaluations..................................... 7
Income.......................................... 7
Expenses........................................ 7
Portfolio Changes............................... 7
Termination..................................... 8
No Certificates................................. 8
Trust Indenture................................. 8
Legal Opinion................................... 9
Auditors........................................ 9
Sponsor......................................... 9
Trustee......................................... 9
Code of Ethics.................................. 9
Year 2000 Issues................................ 9
Taxes............................................. 10
Supplemental Information.......................... 10
Financial Statements.............................. D-1
</TABLE>
2
<PAGE>
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RISK/RETURN SUMMARY
1. WHAT ARE THE TRUSTS' OBJECTIVES?
Each Series seeks safety of capital and a high yield to maturity by investing
in fixed portfolios consisting primarily of stripped U.S. Treasury
securities. Each Trust also holds a treasury note for income to pay trust
expenses.
Units are offered only to employee benefit plans and compensation
arrangements of Merrill Lynch & Co., Inc. and its affiliates--the Plans--as
an investment alternative for Plan allocations to help participants meet
their personal retirement needs and goals. Each Plan will invest in Units in
accordance with allocation instructions received from employees pursuant to
the Plan. Accordingly, the interests of an employee in the units are subject
to the terms of the Plan. The rights of a Plan as a holder of units should be
distinguished from the rights of an employee. The term "you" in this
Prospectus refers to the Plans, to the Sponsor if it holds any units and to
any employee who holds units distributed from a Plan.
2. WHAT ARE STRIPPED U.S. TREASURY SECURITIES?
These are debt obligations issued directly by the U.S. They do not pay
interest periodically, and are priced at a deep discount from face amount.
This discount is your investment return. Stripped securities only pay a fixed
amount of principal at maturity.
3. WHAT IS THE INVESTMENT STRATEGY?
- Each Series consists of one or more separate Trusts, each designated by the
year in which its stripped Treasury security matures. Each Trust plans to
hold to maturity the stripped Treasury securities along with an interest
bearing Treasury note whose interest will pay Trust expenses. Each Trust is a
unit investment trust; unlike a mutual fund, the Trust's portfolio is not
managed.
- The securities in each Trust, BUT NOT THE TRUSTS OR THE UNITS, are direct
obligations of the United States.
- For each 10 units held until maturity of a Trust, you will receive total
distributions of about $1,000. Distributions could change if Securities are
paid or sold before maturity, or if Trust expenses change.
- 100% of each Trust consists of U. S. Treasury securities.
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN A TRUST. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates can reduce the price of your units.
- As each Portfolio is priced at a deep discount, unit prices may be subject to
greater fluctuations in response to changing interest rates than a fund
consisting of debt obligations of comparable maturities that pay interest
currently. This risk increases when the time to maturity is longer.
- If you sell units before the underlying securities mature, their sale price
could be less than your cost. The value of securities before maturity, and
also the units, varies with changes in interest rates and other factors.
5. ARE THE TRUSTS APPROPRIATE FOR YOU?
Yes, if you want safety of capital with a locked-in yield to maturity. You
benefit from a portfolio of U.S. government securities, fixed returns and a
stated maturity.
The Trusts are NOT appropriate for you if you want current income or a
speculative investment that changes to take advantage of market movements.
3
<PAGE>
6. ARE THE TRUSTS MANAGED?
Unlike mutual funds, the Trusts are not managed and securities are not sold
because of market changes. To lock in the yield on the purchase date, the
Trusts hold securities to maturity unless sales are needed to pay
redemptions.
7. HOW DO I BUY UNITS?
The Plan buys units from the Trustee. There is no minimum investment.
Unit price is based on the value of securities in the Trust. We add any
principal cash, and any net accrued but undistributed interest on the unit,
to the unit price.
An Adjustment Factor is added in computing the offer price and deducted in
computing the redemption price. This charge represents the estimated cost of
buying or selling securities for the Trust; these costs are borne by the
purchaser or seller rather than the Trust.
8. HOW DO I SELL UNITS?
A plan may sell units at any time to the Trustee for the net asset value
determined at the close of business on the date of sale, less the adjustment
factor.
9. HOW ARE DISTRIBUTIONS MADE AND TAXED?
Stripped Treasury securities do not pay interest until they mature;
consequently, you should not expect any distributions of interest income.
When the stripped Treasury security matures, the proceeds will be
distributed. Significant amounts of income are attributed to holders
(including the Plans) for tax purposes annually as original issue discount is
accrued on the stripped Treasury securities.
However, the Plans are exempt from Federal income tax.
10. WHAT ARE THE TRUSTS' FEES AND EXPENSES?
The tables below show the costs and expenses the Plans may pay, directly or
indirectly, when they invest in a Trust.
There is no sales fee (load) on purchases, but income on units is subject to
the Sponsor's administrative fee; this reimburses the Sponsor for its direct
costs (without profit) in administering the Trusts.
<TABLE>
<CAPTION>
2004 2009 2014
TRUST TRUST TRUST
----- ----- -----
<S> <C> <C> <C>
Maximum Sponsor's Administrative
Fee per 10 units on units held to
maturity $1.89 $6.75 $5.08
As % of Unit Price
(on March 31, 2000) 0.21% 0.88% 0.78%
</TABLE>
ESTIMATED ANNUAL TRUST OPERATING
EXPENSES PER 10 UNITS
<TABLE>
<S> <C> <C> <C>
Trustee Fee $0.50 $0.50 $0.50
Sponsor's Administrative
Fee $0.46 $0.74 $0.36
Other Operating Expenses $0.25 $0.14 $0.13
----- ----- -----
TOTAL $1.21 $1.38 $0.99
</TABLE>
11. WHAT IS THE PRICE OF A UNIT?
Unit price is based on the net asset value of the Trust plus the adjustment
factor shown below. An amount equal to any principal cash, as well as net
accrued but undistributed interest on the unit, is added to the unit price.
An independent evaluator prices the securities at 3:30 p.m. Eastern time
every business day. Unit price changes every day with changes in the prices
of the securities.
UNIT OFFER PRICE 10 UNITS
(AS OF MARCH 31, 2000)
<TABLE>
<CAPTION>
2004 2009 2014
TRUST TRUST TRUST
----- ----- -----
<S> <C> <C> <C>
Net Asset Value $78.264 $57.619 $41.911
Adjustment Factor .086 .104 .107
------- ------- -------
Offer Price $78.350 $57.723 $43.018
</TABLE>
12. WHAT IS THE EXPECTED RETURN?
The Estimated Yield to Maturity represents the annual percentage return to
you, based on amortization of discount, compounded semi-annually, divided by
Unit Offer Price. It assumes that interest income from the Treasury note will
equal expenses.
4
<PAGE>
ESTIMATED YIELD TO MATURITY
(AS OF MARCH 31, 2000)
<TABLE>
<CAPTION>
2004 2009 2014
TRUST TRUST TRUST
----- ----- -----
<S> <C> <C> <C>
6.017% 6.120% 6.066%
</TABLE>
Your actual return will vary with unit price, how long you hold your
investment and changes in the portfolio and expenses.
If the price of the units is less than stated, the yield to maturity will be
greater; if the price is greater (other than additional accrued original
discount), the yield to maturity will be less.
The economic effect of purchasing units if you hold your units until maturity
of the securities is that you should receive approximately a fixed yield, not
only on your original investment but on all earned discount during the life
of the securities. The assumed or implicit automatic reinvestment at market
rates at the time of purchase of the portion of the yield represented by
earned discount differentiates the Trusts from funds consisting of customary
securities on which current periodic interest is paid at market rates at the
time of issue. Accordingly, you virtually eliminate your risk of being unable
to invest distributions at a rate as high as the yield on your Trust, but
will forgo the ability to reinvest at higher rates in the future.
5
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
DISTRIBUTIONS AT MATURITY
Each Trust normally holds any net income and principal received until the
stripped Treasury security matures. Although no distributions of income are
expected, the Trustee may distribute any available balances in the Income and
Capital Account in June or December of any year, as instructed by the Sponsor.
RECORDS AND REPORTS
You will receive:
- an annual report on Trust activity; and
- annual tax information. THIS IS ALSO SENT TO THE IRS. YOU MUST REPORT THE
AMOUNT OF INTEREST RECEIVED DURING THE YEAR.
You may request:
- copies of evaluations to enable you to comply with federal and state tax
reporting requirements; and
- audited financial statements of the Trusts.
You may inspect records of Trust transactions at the Trustee's office during
regular business hours.
THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment before
maturity will decline in value if interest rates rise. Generally, the price of
stripped Treasury securities fluctuates more widely than prices of debt
securities that pay interest currently. Also, securities with longer maturities
will change in value more than securities with shorter maturities. Of course, we
cannot predict how interest rates may change.
SELLING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
- ADDING the value of the securities, net accrued interest, cash and any other
Trust assets;
- SUBTRACTING accrued but unpaid Trust expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors and
any other Trust liabilities;
- DIVIDING the result by the number of outstanding units; and
- deducting the adjustment factor per unit.
Your net asset value when you sell may be more or less than your cost because of
market movements and changes in the portfolio.
SELLING UNITS TO THE TRUSTEE
The account can sell units to the Trustee at any time.
Within seven days after receiving a redemption request in proper form, the
Trustee will transmit the proceeds as directed by the request. Contact the
Trustee for additional information.
If a Trust does not have cash available to pay you for units received, the
Sponsor will select securities to be sold, based on market and credit factors.
These sales could be made at times when the securities would not otherwise be
sold and may result in your
6
<PAGE>
receiving less than the unit par value and also reduce the size of the Trust.
There could be a delay in paying for your units:
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
securities not reasonably practicable; and
- for any other period permitted by SEC order.
HOW THE TRUSTS WORK
PRICING
The price of a unit includes interest accrued on the securities, less expenses,
up to, but not including, the settlement date, which is usually the business day
after the purchase date of the unit.
EVALUATIONS
An independent Evaluator values the securities on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas;
and the following federal holidays: Columbus Day and Veterans Day). Values are
based on current prices for the securities or comparable security.
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid semiannually. It also benefits when it holds cash for the
Trusts in non-interest bearing accounts. The Trustee may also receive additional
amounts:
- to reimburse the Trustee for the Trusts' operating expenses;
- for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
- costs of actions taken to protect the Trusts and other legal fees and
expenses;
- termination expenses and any governmental charges.
The Sponsor is paid an administrative fee to reimburse it for certain direct
expenses. The Sponsor will not collect the administrative fee on units held by
any Plan at any time when it has no reimbursable expenses. The Trusts also pay
the Evaluator's fees.
If Trust expenses exceed initial estimates, the Trust will owe the excess. The
Trustee has a lien on Trust assets to secure reimbursement of Trust expenses and
may sell securities if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a security.
7
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Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
securities in the portfolio even if adverse financial circumstances occur.
However, we may sell a security in certain cases if we believe that certain
adverse credit or certain other conditions exist.
TERMINATION
Each Trust terminates following the stated maturity or sale of the last security
in the portfolio. A Trust may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Trust are less
likely 40% of the face amount of securities deposited. We will decide whether to
terminate a Trust early.
When a Trust is about to terminate the Plans will receive a notice, and they
will be unable to sell units of the Trust after that time. On or shortly before
termination, we will sell any remaining securities, and you will receive your
final distribution. Any security that cannot be sold at a reasonable price may
continue to be held by the Trustee in a liquidating trust pending its final
sale.
You will pay your share of the expenses associated with termination, including
costs in selling securities. This may reduce the amount you receive as your
final distribution.
NO CERTIFICATES
No Certificates will be issued for units. The Trustee will credit your account
with the number of your units.
TRUST INDENTURE
Each Trust is a 'unit investment trust' governed by a Trust Indenture, a
contract among the Sponsor, the Trustee and the Evaluator, which sets forth
their duties and obligations and your rights. A copy of the Indenture is
available to you on request to the Trustee. The following summarizes certain
provisions of the Indenture.
The Sponsor and the Trustee may amend the Indenture without your consent:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsor).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest a Trust without your written consent.
The Trustee may resign by notifying the Sponsor. The Sponsor may remove the
Trustee without your consent if:
- it fails to perform its duties and the Sponsor determines that its
replacement is in your best interest; or
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsor and the Trustee without the consent of
investors. The resignation or removal of either
8
<PAGE>
becomes effective when a successor accepts appointment. The Sponsor will try to
appoint a successor promptly; however, if no successor has accepted within
30 days after notice of resignation, the resigning Trustee or Evaluator may
petition a court to appoint a successor.
If the Sponsor fails to perform its duties or becomes bankrupt the Trustee may:
- remove it and appoint a replacement Sponsor;
- liquidate The Trust; or
- continue to act as Trustee without a Sponsor.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsor and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsor, has given an opinion that the units are validly
issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Financial Statements included in this
prospectus.
SPONSOR
The Sponsor is:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
The Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer the
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Bank of New York,101 Barclay Street--17W, New York, New York 10268, is the
Trustee. It is supervised by the Federal Deposit Insurance Corporation, the
Board of Governors of the Federal Reserve System and New York State banking
authorities.
CODE OF ETHICS
The Fund and the Agent for the Sponsors have each adopted a code of ethics
requiring reporting of personal securities transactions by its employees with
access to information on Fund transactions. Subject to certain conditions, the
codes permit employees to invest in Fund securities for their own accounts. The
codes are designed to prevent fraud, deception and misconduct against the Fund
and to provide reasonable standards of conduct. These codes are on file with the
Commission and you may obtain a copy by contacting the Commission at the address
listed on the back cover of this prospectus.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the "Year
2000 Problem"). To date we are not aware of any major operational difficulties
resulting from the computer system changes
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necessary to prepare for the Year 2000. However, there can be no assurance that
the Year 2000 Problem will not adversely affect the issuers of the bonds
contained in the Portfolio. We cannot predict whether any impact will be
material to the Fund as a whole.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer in securities, financial
institution, insurance company or other investor with special circumstances or
subject to special rules. You should consult your own tax adviser about your
particular circumstances.
In the opinion of our counsel, under existing law:
The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each stripped zero coupon
bond in the Fund.
The zero coupon bonds will be considered to have been issued at an 'original
issue discount' for federal income tax purposes. As a result, you will be
required to include original issue discount in respect of the zero coupon bonds
as it accrues, in accordance with a constant yield method based on a compounding
of interest.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Trusts by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the securities that may be in a Trust's portfolio and general information
about the structure and Trusts. The supplemental information is also available
from the SEC.
10
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DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of Defined Asset Funds - Government Securities Income Fund,
U.S. Government Zero Coupon Bond Series - 3:
We have audited the accompanying statement of condition of the 2009 Trust of
Defined Asset Funds - Government Securities Income Fund, U.S. Government Zero
Coupon Bond Series - 3, including the portfolio, as of March 31, 2000 and the
related statements of operations and of changes in net assets for the years
ended March 31, 2000, 1999 and 1998. 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 auditing standards generally accepted
in the United States of America. 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 March 31, 2000, as shown in such portfolio,
were confirmed to us by The Bank of New York, 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 the above-mentioned Trust of
Defined Asset Funds - Government Securities Income Fund, U.S. Government Zero
Coupon Bond Series - 3 at March 31, 2000 and the results of its operations and
changes in its net assets for the above-stated years in accordance with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, N.Y.
June 30, 2000
D - 1
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
STATEMENT OF CONDITION
AS OF MARCH 31, 2000
<TABLE>
2009
TRUST
<S> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $66,827,845) (Note 1) $64,568,546
Accrued interest receivable 58,330
Cash 215,600
Total trust property 64,842,476
LESS LIABILITY - Accrued expenses 388,542
NET ASSETS (Note 2) $64,453,934
UNITS OUTSTANDING 1,119,355.872
UNIT VALUE $57.58
See Notes to Financial Statements.
</TABLE>
D - 2
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
2009 TRUST
<S> <C> <C> <C>
Years Ended March 31,
2000 1999 1998
INVESTMENT INCOME:
Interest income $ 160,800 $ 170,818 $ 184,791
Accretion of original issue discount 4,029,038 4,013,372 4,044,507
Trustees' fees and expenses (59,585) (61,841) (66,946)
Sponsors' fees (88,185) (91,525) (99,080)
Net investment income 4,042,068 4,030,824 4,063,272
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain (loss) on securities sold or
redeemed (628,632) 568,415 6,780,259
Unrealized appreciation (depreciation) of
investments (3,876,625) 1,175,582 2,451,521
Net realized and unrealized gain (loss) on
investments (4,505,257) 1,743,997 9,231,780
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (463,189) $5,774,821 $13,295,052
See Notes to Financial Statements.
</TABLE>
D - 3
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
STATEMENTS OF CHANGES IN NET ASSETS
2009 TRUST
<TABLE>
<CAPTION>
Years Ended March 31,
2000 1999 1998
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,042,068 $ 4,030,824 $ 4,063,272
Realized gain (loss) on securities sold or
redeemed (628,632) 568,415 6,780,259
Unrealized appreciation (depreciation) of
investments (3,876,625) 1,175,582 2,451,521
Net increase (decrease) in net assets
resulting from operations (463,189) 5,774,821 13,295,052
INCOME DISTRIBUTIONS (258,100)
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 13,110,356 19,310,001 22,392,825
Redemptions of units (17,377,457) (22,896,109) (28,555,985)
Net capital share transactions (4,267,101) (3,586,108) (6,163,160)
NET INCREASE (DECREASE) IN NET ASSETS (4,730,290) 2,188,713 6,873,792
NET ASSETS AT BEGINNING OF YEAR 69,184,224 66,995,511 60,121,719
NET ASSETS AT END OF YEAR $64,453,934 $69,184,224 $66,995,511
PER UNIT:
Net asset value at end of year $57.58 $57.76 $53.27
Income distribution $0.19
TRUST UNITS OUTSTANDING AT END OF YEAR 1,119,355.872 1,197,716.636 1,257,566.106
See Notes to Financial Statements.
</TABLE>
D - 4
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in accordance with accounting
principles generally accepted in the United States of America.
(a) Securities are stated at value as determined by the Evaluator based on
the mean between bid and offering prices for the securities (see
"Redemption - Computation of Redemption Price Per Unit" in this
Prospectus).
(b) Cost of securities has been adjusted to include the accretion of
original issue discount on the Stripped Treasury Securities.
(c) The Fund is not subject to income taxes. Accordingly, no provision
for such taxes is required.
2. NET ASSETS, MARCH 31, 2000
2009 TRUST
<TABLE>
<S> <C>
Cost of 1,119,355.872 units at Dates of Deposit $41,032,670
Redemption of units - Net cost of 3,880,202.723 units
redeemed less redemption amounts (4,966,280)
Realized gain on securities sold or redeemed 15,009,653
Unrealized depreciation of investments (2,259,299)
Net capital applicable to Holders 48,816,744
Undistributed net investment income - accretion of
original issue discount ($15,749,425) less excess
($112,235) of fees and expenses over interest income 15,637,190
Net assets $64,453,934
</TABLE>
D - 5
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued by the Trust as follows:
Year Ended Year Ended Year Ended
Trust March 31, 2000 March 31, 1999 March 31, 1998
2009 233,047.047 334,594.792 453,892.146
Units were redeemed as follows:
Year Ended Year Ended Year Ended
Trust March 31, 2000 March 31, 1999 March 31, 1998
2009 311,407.811 394,444.262 574,291.983
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day or, in the case of uncertificated units, upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee may redeem units either in cash or in kind at the option of the
Holder as specified in writing to the Trustee.
4. INCOME TAXES
All Trust items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At March 31, 2000, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in the
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that the Trust will make distributions on the first
business day following the maturity of its holdings in the Stripped
Treasury Securities which are non-interest bearing. Any excess of interest
income over fees and expenses may be distributed periodically.
D - 6
<PAGE>
DEFINED ASSET FUNDS - GOVERNMENT SECURITIES INCOME FUND,
U.S. GOVERNMENT ZERO COUPON BOND SERIES - 3
PORTFOLIO
AS OF MARCH 31, 2000
<TABLE>
<CAPTION>
Portfolio No. and Title Interest Face Adjusted
of Securities Rates Maturities Amount Cost(1) Value(1)
<S> <C> <C> <C> <C> <C>
2009 TRUST
1 Stripped Treasury Notes Securities 0.000% 5/15/09 $110,808,000 $64,893,308 $62,723,644
2 U.S. Treasury Bonds 9.125 5/15/09(3) 1,692,085 1,934,537 1,844,902
Total $112,500,085 $66,827,845
$64,568,546
(1) See Notes to Financial Statements.
(2) See "Risk Factors - Special Characteristics of Stripped Treasury Securities" in this Prospectus.
(3) Callable beginning 5/15/04 at par.
</TABLE>
D - 7
<PAGE>
Defined
Asset Funds-Registered Trademark-
<TABLE>
<S> <C>
HAVE QUESTIONS ? GOVERNMENT SECURITIES INCOME FUND
Request the most recent free U.S GOVERNMENT ZERO COUPON BOND SERIES
Information Supplement 3 AND 8
that gives more details about
the Trusts, by calling: (A Unit Investment Trust)
The Bank of New York
1-800-221-7771 ---------------------------------------
This Prospectus does not contain
complete information about the
investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file nos.
33-26716 and 333-36109) and
- Investment Company Act of 1940 (file
no. 811-2810).
- To obtain copies at prescribed
rates--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
11352--7/00
</TABLE>
