<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1994
REGISTRATION NO. 33-53181
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------------------------
AMENDMENT NO. 1
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
GOVERNMENT SECURITIES INCOME FUND
GNMA 1W
A UNIT INVESTMENT TRUST
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY SHEARSON INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
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MERRILL LYNCH, PIERCE, FENNER & SMITH BARNEY SHEARSON INC.
SMITH INCORPORATED TWO WORLD TRADE CENTER
UNIT INVESTMENT TRUSTS 101ST FLOOR
P.O. BOX 9051 NEW YORK, N.Y. 10048
PRINCETON, N.J. 08543-9051
PRUDENTIAL SECURITIES INCORPORATED DEAN WITTER REYNOLDS INC. PAINEWEBBER INCORPORATED
ONE SEAPORT PLAZA TWO WORLD TRADE CENTER--59TH FLOOR 1285 AVENUE OF THE AMERICAS
199 WATER STREET NEW YORK, N.Y. 10048 NEW YORK, N.Y. 10019
NEW YORK, N.Y. 10292
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D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
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TERESA KONCICK, ESQ. PHILIP BECKER LEE B. SPENCER, JR.
P.O. BOX 9051 130 LIBERTY STREET--29TH FLOOR ONE SEAPORT PLAZA
PRINCETON, N.J. 08543-9051 NEW YORK, N.Y. 10006 199 WATER STREET
NEW YORK, N.Y. 10292
COPIES TO:
THOMAS D. HARMAN, ESQ. ROBERT E. HOLLEY PIERRE DE SAINT PHALLE,
388 GREENWICH STREET 1200 HARBOR BLVD. ESQ.
NEW YORK, N.Y. 10013 WEEHAWKEN, N.J. 07087 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017
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E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)
/ x /Check box if it is proposed that this filing will become effective at 9:30
a.m. on May 4, 1994 pursuant to Rule 487.
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Defined
Asset FundsSM
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Government This Defined Fund is a portfolio of preselected securities, formed
Securities to obtain safety of capital and current monthly distributions of
Income Fund interest and principal through investment in a portfolio of
mortgage-backed Securities of the modified pass-through type,
fully guaranteed as to principal and interest by the Government
National Mortgage Association. The full faith and credit of the
United States is pledged to the payment of the Securities in the
Fund but the Units of the Fund, as such, are not directly backed.
The value of the Units and the current return will fluctuate with
the value of the Portfolio which will decrease with increases in
interest rates; face amount per Unit will decline as principal is
- ---------------------------------------- paid on the underlying mortgages and payments of principal may
increase if interest rates decline.
GNMA SERIES 1W
(A UNIT INVESTMENT TRUST) The Estimated Current Return and Estimated Long Term Return figures
shown give different information about the return to investors.
Estimated Current Return on a Unit shows a net annual current cash
return based on the Initial Public Offering Price and the maximum
applicable sales charge and is computed by multi-
7.09% plying the estimated net annual interest rate per Unit by $1.00 and
ESTIMATED CURRENT RETURN dividing the result by the Public Offering Price per Unit (in-
AS OF MAY 3, 1994 cluding the sales charge but not including accrued interest). The
estimated net annual interest rate per Unit will vary with changes
in fees and expenses, and with principal prepayment redemption,
maturity, sale or exchange of Securities.
Estimated Long Term Return shows a net annual long-term return
7.41% to investors holding to maturity based on the yield on the individ-
ESTIMATED LONG TERM RETURN ual bonds in the Portfolio, weighted to reflect the estimated aver-
AS OF MAY 3, 1994 age life and market value of each bond in the Portfolio, adjusted to
reflect the Public Offering Price (including the sales charge) and
estimated expenses. Estimated average life for the Fund is
/ / U.S. GOVERNMENT BACKED 11.07 years; this estimate is based upon various assumptions dis-
/ / MONTHLY INCOME cussed more fully under 'Income; Estimated Current Return; Esti-
mated Long Term Return'. The actual average life, and therefore
/ / AAA RATED the actual long term return, will be different. Unlike Estimated
Current Return, Estimated Long Term Return takes into account
estimated average life of the underlying Securities and discounts
and premiums. Distributions of Income on Units are generally subject
to certain delays; if the Estimated Long Term Return figure shown
above took these delays into account, it would be lower. Both
Estimated Current Return and Estimated Long Term Return are subject
to fluctuations with changes in Portfolio composition, principal
payments and prepayments (including the redemption, sale or other
disposition of Securities in the Fund), changes in the market value
of the underlying Securities and changes in fees and expenses.
Estimated cash flows are available upon request at no charge from
the Sponsors.
Minimum purchase in individual transactions: 1,000 Units.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADE-
Pierce Fenner & Smith Incorporated QUACY OF THIS PROSPECTUS. ANY REPRESENTATION
Smith Barney Shearson Inc. TO THE CONTRARY IS A CRIMINAL OFFENSE.
PaineWebber Incorporated Inquiries should be directed to the Trustee 1-800-323-1508.
Prudential Securities Incorporated Prospectus dated May 4, 1994.
Dean Witter Reynolds Inc. Read and retain this Prospectus for future reference.
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Defined Asset Fundssm is America's oldest and largest family of unit investment
trusts, with over $90 billion sponsored since 1970. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.
Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra advantages: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against rising interest rates. Defined Funds are offered by prospectus only.
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Contents
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Investment Summary..................................... A-3
Fee Table.............................................. A-7
Report of Independent Accountants...................... A-8
Statement of Condition................................. A-8
Portfolio.............................................. A-9
Fund Structure......................................... 1
Risk Factors........................................... 1
Description of the Fund................................ 4
Taxes.................................................. 8
Public Sale of Units................................... 10
Market for Units....................................... 13
Redemption............................................. 13
Expenses and Charges................................... 15
Administration of the Fund............................. 15
Resignation, Removal and Limitations on Liability...... 18
Miscellaneous.......................................... 19
Description of Standard & Poor's Rating................ 22
Exchange Option........................................ 22
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A-2
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<PAGE>
INVESTMENT SUMMARY AS OF MAY 3, 1994 (CONTINUED)
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ESTIMATED CURRENT RETURN( B )
(based on Public Offering Price) 7.09%
ESTIMATED LONG TERM RETURN( B )
(based on Public Offering Price) 7.41%
PUBLIC OFFERING PRICE PER 1,000
UNITS (including 4.00% sales
charge) $ 985.84( C )
FACE AMOUNT OF SECURITIES $ 500,000
INITIAL NUMBER OF UNITS( D ) 500,000
FRACTIONAL UNDIVIDED INTEREST IN
FUND REPRESENTED BY EACH UNIT 1/500,000TH
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER 1,000
UNITS( E ) (based on bid side
evaluation) $ 945.16( C )
REDEMPTION PRICE PER 1,000 UNITS
LESS THAN:
Public Offering Price by...... $ 40.68
Sponsors' Initial Repurchase
Price by................... $ 1.25
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CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offering side
evaluation of Securities in
Fund......................... $ 473,203.75
--------------
Divided by Number of Units times
1,000........................ $ 946.41
Plus sales charge of 4.00% of
Public Offering Price (4.167%
of net amount invested in
Securities)( F )............. 39.43
--------------
Public Offering Price per 1,000
Units........................ $ 985.84
Plus accrued interest per 1,000
Units( G )................... 1.94
--------------
Total per 1,000 Units........ $ 987.78
--------------
--------------
CALCULATION OF ESTIMATED NET ANNUAL
INTEREST RATE PER 1,000 UNITS
(based on face amount of $1,000 per
1,000 Units)
Annual interest rate per 1,000
Units........................ 7.125%
Less estimated annual expenses
per 1,000 Units expressed as
a percentage( H )............ .131%
--------------
Estimated net annual interest
rate per 1,000 Units......... 6.994%
--------------
--------------
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DAILY RATE AT WHICH ESTIMATED NET
INTEREST ACCRUES PER 1,000 UNITS....... .0194%
MONTHLY INCOME DISTRIBUTIONS PER 1,000 UNITS
First distribution to be paid on
June 23, 1994 to Holders of
record on June 17, 1994.......... $ 5.82
Second and subsequent distributions
will be paid on or shortly after
the twenty-third day of each
month to Holders of record of
Units on the seventeenth day of
the month.
PREMIUM AND DISCOUNT ISSUES IN
PORTFOLIO
Face amount of Securities with
offering side evaluation at a
discount from par: 100%
SPONSORS' PROFIT ON DEPOSIT............ $ 1,250.62
PORTFOLIO SUPERVISION FEE( I )
Maximum of $0.25 per $1,000 face amount of
underlying Debt Obligations (see
Expenses and Charges)
TRUSTEE'S ANNUAL FEE AND EXPENSES( J )
PER 1,000 UNITS (see Expenses and
Charges)......................... $ 1.31
RECORD DAY--THE SEVENTEENTH DAY OF EACH MONTH
DISTRIBUTION DAY--THE TWENTY-THIRD DAY OF EACH MONTH
CAPITAL DISTRIBUTION
No distribution need be made from Capital
Account if balance is less than $5.00 per 1,000
Units
EVALUATOR'S FEE FOR EACH EVALUATION
Minimum of $10.00 (see Expenses and Charges)
EVALUATION TIME
3:30 P.M. NEW YORK TIME
MANDATORY TERMINATION DATE
Trust must be terminated no later than one year
after the maturity date of the last maturing
Debt Obligation listed under Portfolio (see
Portfolio)
MINIMUM VALUE OF FUND
Trust may be terminated if value of Fund is less
than 40% of the face amount of Securities
deposited in the Portfolio
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(a) The Indenture was signed and the initial deposit was made on the date of
this Prospectus.
(b) Estimated Current Return represents annual interest income after estimated
annual expenses divided by the maximum public offering price including a 4.00%
maximum sales charge. Estimated Long Term Return is the net annual percentage
return based on the yield on each underlying Security weighted to reflect market
value and estimated average life. The estimated average life for the Fund set
forth on the cover of this Prospectus is based on various assumptions discussed
more fully under 'Income; Estimated Current Return; Estimated Long Term Return'.
Estimated Long Term Return is adjusted for estimated expenses and the maximum
offering price but not for delays in the Fund's distribution of income.
Estimated Current Return shows current annual cash return to investors while
Estimated Long Term Return shows the return on Units held to estimated average
life, reflecting prepayments of principal, maturities, discounts and premiums on
underlying Securities. Actual returns will vary with purchase price, principal
payments and prepayments on the underlying mortgages and changes in Fund income
after expenses.
(c) Plus accrued interest.
(d) The Sponsors may create additional Units during the offering period of the
Fund.
(e) During the initial offering period, the Fund's Sponsors intend to offer to
purchase Units at prices based on the offer side value of the underlying
Securities. Thereafter the Sponsors intend to maintain such a market based on
the bid side value of the underlying Securities which will be equal to the
Redemption Price. (See Market for Units.)
( f ) The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of quantity purchases
(see Public Sale of Units--Public Offering Price). The resulting reduction in
the Public Offering Price will increase the effective current and long term
returns on a Unit.
(g) Figure shown represents interest accrued on underlying Securities from the
Initial Date of Deposit to expected date of settlement (normally five business
days after purchase) for Units purchased on the Initial Date of Deposit (see
Description of the Fund--Income; Estimated Current Return; Estimated Long Term
Return).
(h) Assumes the Fund will reach a size estimated by the Sponsors. Expenses
will vary with the size of the Fund relative to this estimate.
( i ) In addition to this amount, the Sponsors may be reimbursed for
bookkeeping or other administrative expenses not exceeding their actual cost,
currently at a maximum of $0.10 per 1,000 Units.
( j ) Of this amount the Trustee receives annually $0.84 per $1,000 face
amount of Securities for its services as Trustee, subject to reduction as the
size of the Fund increases. The Trustee's Annual Fee and Expenses also includes
the Portfolio Supervision Fee and Evaluator's Fee set forth herein.
A-3
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<PAGE>
INVESTMENT SUMMARY AS OF MAY 3, 1994 (CONTINUED)
PORTFOLIO AT A GLANCE--
FUND PORTFOLIO--Two different issues of mortgage-backed securities of the
modified pass-through type ('Ginnie Maes') guaranteed by the Government National
Mortgage Association ('GNMA'). The percentage relationships on the Initial Date
of Deposit are as follows: 7.00% Ginnie Maes maturing 8/15/14 to 5/15/24, 75%
and 7.50% Ginnie Maes maturing 8/15/14 to 5/15/24, 25%. 100% of the Securities
initially deposited has been purchased on a when, as and if issued basis, with
delivery expected to take place 7 days after the settlement date for the
purchase of Units (see Description of the Fund--The Portfolio).
INVESTMENT QUALITY--Based on the creditworthiness of the Federal government,
the Units of the Fund have been rated AAA by Standard & Poor's.
LONG-TERM MATURITIES--The issues have fixed final maturity dates ranging
from 8/15/14 to 5/15/24. Underlying mortgages are amortized and there is no
prepayment protection. Accordingly, payments of principal may be received sooner
than anticipated.
OBJECTIVES OF THE FUND--To obtain safety of capital and current monthly
distributions of interest and principal through investment in fixed portfolios
initially consisting of contracts to purchase mortgage-backed Securities of the
modified pass-through type ('Ginnie Maes') fully guaranteed as to principal and
interest by the Government National Mortgage Association ('GNMA'). All of the
Ginnie Maes in the Fund are backed by pools of long-term mortgages on 1-to
4-family dwellings. A further objective of the Fund is to permit holders to
reinvest income or principal distributions in additional Units of the Fund.
The guaranteed payment of principal and interest afforded by Ginnie Maes may
make investment in the Fund particularly well suited for purchase by Individual
Retirement Accounts ('IRAs'), Keogh plans, and other tax-deferred retirement
plans. In addition, the ability to buy single Units enables these investors to
tailor the dollar amount of their purchases of Units to take maximum possible
advantage of the annual deductions available for contributions to these plans
(see Taxes--Retirement Plans).
Under certain circumstances, the Sponsors may direct the Trustee to sell
portfolio securities and to reinvest the proceeds of the sale in replacement
Ginnie Maes. The Sponsors may deposit additional Ginnie Maes in the Fund (where
additional Units are to be offered to the public), maintaining as closely as
practicable, the original percentage relationships between the principal amounts
of Ginnie Maes of specified interest rates and ranges of maturities in this
Portfolio. Holders of the Fund may elect to reinvest their distributions of
principal and redemption proceeds or of interest, or both, in additional Units
of the Fund at a reduced sales charge by participating in the Reinvestment Plan
(see Administration of the Fund--Reinvestment). Holders of Units in IRAs, Keogh
plans, and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions (see Taxes--
Retirement Plans).
RISK FACTORS--An investment in Units of the Fund should be made with an
understanding of the risks which an investment in fixed-rate long-term debt
obligations without prepayment protection may entail, including the risk that
the value of the Portfolio and hence of the Units will decline with increases in
interest rates and that payments of principal may be received sooner than
anticipated especially if interest rates decline. The potential for
appreciation, which could otherwise be expected to result from a decline in
interest rates, may be limited by any increased prepayments by mortgagors as
interest rates decline. Investors should also note that prepayments of principal
on Ginnie Maes purchased at a premium over par will result in some loss on
investment while prepayments on Ginnie Maes purchased at a discount from par
will result in some gain on investment. Also, if interest rates rise, the
prepayment risk of higher yielding, premium Ginnie Maes and the prepayment
benefit for lower yielding, discount Ginnie Maes will be reduced. The
percentages of the aggregate face amount of the Portfolio currently valued at a
premium over and at a discount from par are set forth under Investment Summary
on page A-3. (See Risk Factors--Special Features of Market Premium
Securities;--Special Features of Market Discount Securities; Description of the
Fund--Life of the Securities and of the Fund.)
The Fund may recognize gain on the payment of principal on an underlying
GNMA or on the sale of a Security. A distribution of such gain will be taxable
to a Holder as ordinary income or capital gain even though as to a particular
Holder the distribution may economically represent a return of capital. (See
Taxes.)
A-4
<PAGE>
<PAGE>
Defined
Asset Funds
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Investor's Guide Defined Government Securities Income Funds
Our defined portfolios of mortgage-backed GNMA securities
offer investors a simple and convenient way to
participate in the GNMA market while earning an
attractive current return. And by purchasing GNMA bond
funds, investors avoid the problem of selecting
securities by themselves.
Government
Securities The Safety of U.S. Government-Backed Securities
Income Fund The fund offers an attractive rate of return, convenience
and numerous benefits, plus the assurance of investing
only in securities that are guaranteed by the Government
National Mortgage Association (GNMA), a Federal agency.
The U.S. Government backs, with its full faith and
credit, GNMA's guaranty that the holders of these
securities will be paid every penny of
interest and principal due to them. The fund itself is
not guaranteed by the government, only the securities it
holds. The
GNMA SERIES value of the units will fluctuate with changes in market
conditions and other factors.
Monthly Income Distributions
The fund will distribute income monthly. Principal from
sales, redemptions, prepayments and maturities of bonds
is distributed as it is received. Interest payments, of
course, decrease as principal is returned.
AAA-Rated Investment Quality
Based on the creditworthiness of the Government-backed,
GNMA guarantee, Standard & Poor's has rated units of the
fund AAA, its highest rating. Government backing relates
to the securities in the Fund and not the Fund's units.
A Liquid Investment
Although not legally required to do so, we have
maintained a secondary market for our funds for over 20
years. You can cash in your units at any time. Your price
is based on the market value of the fund's securities at
that time as determined by an independent evaluator.
There is never a fee for cashing in your investment.
Risk Factors
Unit price fluctuates and is affected by interest rates,
market conditions and other factors.
Reinvestment Option
You can elect to reinvest distributions into a separate
portfolio of Ginnie Maes. Reinvesting helps to compound
your income and keeps your capital continuously working
for you.
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This page may not be distributed unless included in a current prospectus.
Investors should refer to the prospectus for further information.
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF MAY 3, 1994 (CONTINUED)
The Securities are generally not listed on a national securities exchange.
Whether or not the Securities are listed, the principal trading market for the
Securities will generally be in the over-the-counter market. As a result, the
existence of a liquid trading market for the Securities may depend on whether
dealers will make a market in the Securities. There can be no assurance that a
market will be made for any of the Securities, that any market for the
Securities will be maintained or of the liquidity of the Securities in any
markets made. In addition, the Fund may be restricted under the Investment
Company Act of 1940 from selling Securities to any Sponsor. The price at which
the Securities may be sold to meet redemptions and the value of the Fund will be
adversely affected if trading markets for the Securities are limited or absent.
PUBLIC OFFERING PRICE--The Fund is offered on the basis that each Unit
represents approximately $1.00 principal amount of deposited securities on the
Initial Date of Deposit. The minimum purchase in individual transactions is
1,000 Units. There is no minimum purchase for payroll deduction plans.
During the initial offering period, the Public Offering Price per 1,000
Units is based on the aggregate offering side evaluation of the underlying
Securities (the price at which they could be purchased directly by the public
assuming they were available), divided by the number of Units outstanding times
1,000, plus a sales charge of 4.167%* of the offering side evaluation per 1,000
Units (the net amount invested); this results in a sales charge of 4.00%* of the
Public Offering Price. The secondary market Public Offering Price is based on
the bid side evaluation of the underlying Securities plus a sales charge of
4.439%* of the bid side evaluation per Unit; this results in a sales charge of
4.25%* of the secondary market Public Offering Price. Units are offered at the
Public Offering Price computed as of the Evaluation Time for all sales made
subsequent to the previous evaluation, plus cash per Unit in the Capital Account
not allocated to the purchase of specific securities and net interest accrued.
The Public Offering Price on the Date of Deposit, and on subsequent dates, will
vary from the Public Offering Price set forth above (see Public Sale of
Units--Public Offering Price and Redemption).
The figures above assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated simply by dividing the Public
Offering Price per 1,000 Units above, by 1,000, and multiplying by the number of
Units.
ESTIMATED CURRENT RETURN; ESTIMATED LONG TERM RETURN--Estimated Current
Return on a Unit shows the return based on the Public Offering Price and the
maximum applicable sales charge of 4.00%* and is computed by multiplying the
estimated net annual interest rate per Unit (which shows the return per Unit
based on $1.00 face amount) by $1.00 and dividing the result by the Public
Offering Price per Unit (not including accrued interest). Estimated Current
Return does not take into account timing of distributions of income and other
amounts (including delays) on Units, and it only partially reflects the effect
of premiums paid and discounts realized in the purchase price of Units.
Estimated Long Term Return on a Unit of the Fund shows a net annual long-term
return to investors holding to maturity based on the yield on the individual
Securities in the Portfolio weighted to reflect the estimated life and market
value of each Security in the Portfolio, adjusted to reflect the Public Offering
Price (including the maximum applicable sales charge of 4.00%*) and estimated
expenses.
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
Ginnie Maes 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 Description of the
Fund--Income; Estimated Current Return; Estimated Long Term Return.
- ---------------
* This sales charge will be reduced on a graduated scale in the case of quantity
purchases of Units (see Public Sale of Units--Public Offering Price).
A-5
<PAGE>
<PAGE>
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1W
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the GNMA Fund Investment
Accumulation Program, Inc. Please send me information about the Program and a
current Prospectus.
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My name (please print) Registered Holder
My address, including
Zip Code (please print)
Registered Holder
(two signatures required
if joint tenancy)
</TABLE>
1 2 3 4 5 6 7 8
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NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS PERMIT NO. 644 NEW YORK, N.Y.
POSTAGE WILL BE PAID BY ADDRESSEE
THE CHASE MANHATTAN BANK, N.A. (GNMA-1W)
UNIT TRUST DEPARTMENT
BOX 2051
NEW YORK, NY 10081
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(Fold along this line.)
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(Fold along this line.)
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF MAY 3, 1994 (CONTINUED)
The estimated average life for the Fund provided on the cover of this
Prospectus is subject to change with alterations in the data used in any of the
underlying assumptions. The actual average lives of the Securities and the
actual long term returns will be different from the estimated average lives and
the estimated long term returns. The net annual interest rate per Unit and the
net annual long-term return to investors will also vary with changes in the fees
and expenses of the Trustee and Sponsors and the fees of the Evaluator which are
paid by the Fund and with the prepayment, exchange, redemption, sale or maturity
of underlying Securities; the Public Offering Price will vary with any reduction
in sales charges paid in the case of quantity purchases of Units, as well as
with fluctuations in the offering side evaluation of the underlying Securities.
Therefore, it can be expected that the Estimated Current Return and Estimated
Long Term Return will fluctuate in the future. (See Description of the
Fund--Income; Estimated Current Return; Estimated Long Term Return.)
MONTHLY DISTRIBUTIONS--Monthly cash distributions of principal, premium, if
any, and interest received by the Fund will be made on or shortly after the
twenty-third day of each month to Holders of record on the seventeenth day of
the month commencing with the first distribution on the date indicated on page
A-3 (see Administration of the Fund--Accounts and Distributions). Alternatively,
Holders may elect to have their distributions reinvested in the GNMA Fund
Investment Accumulation Program, Inc. Further information about the program,
including a current prospectus, may be obtained by returning the enclosed form
(see Administration of the Fund--Investment Accumulation Program).
TAXATION--Distributions of ordinary income or capital gain from the Fund
will be included in a U.S. Holder's gross income, but will not be eligible for
the dividends-received deduction for corporations. Distributions to Holders 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.)
MARKET FOR UNITS--The Sponsors intend to maintain a secondary market for
Units based on the aggregate bid side evaluation of the underlying Securities
(see Market for Units). If this market is not maintained a Holder will be able
to dispose of his Units through redemption at prices also based on the aggregate
bid side evaluation of the underlying Securities (see Redemption). Market
conditions and principal amortization of the underlying Securities may cause the
prices available in the market maintained by the Sponsors or available upon
exercise of redemption rights to be more or less than the amount paid for Units
plus accrued interest.
UNDERWRITING ACCOUNT
The names and addresses of the Underwriters are:
<TABLE>
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated P.O. Box 9051, Princeton, N.J. 08543-9051
Shearson Lehman Brothers Inc. Two World Trade Center, 101st Floor,
New York, N.Y. 10048
Prudential Securities Incorporated One Seaport Plaza, 199 Water Street, New York, N.Y.
10292
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor,
New York, N.Y. 10048
A.G. Edwards & Sons Inc. One North Jefferson, St. Louis, Missouri 63103
First of Michigan Corporation Two Wall Street, New York, N.Y. 10005
Gruntal & Co. Incorporated 14 Wall Street, New York, N.Y. 10001
</TABLE>
Each Underwriter's interest in the Underwriting Account will depend upon the
number of Units acquired through the issuance of additional Units.
A-6
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF MAY 3, 1994 (CONTINUED)
FEE TABLE
THIS FEE TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS AND
EXPENSES THAT AN INVESTOR IN THE FUND WILL BEAR DIRECTLY OR INDIRECTLY. SEE
PUBLIC SALE OF UNITS AND EXPENSES AND CHARGES. ALTHOUGH THE FUND IS A UNIT
INVESTMENT TRUST RATHER THAN A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO
PERMIT A COMPARISON OF FEES.
<TABLE>
<S> <C>
UNITHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases during the Initial Offering Period (as a
percentage
of Public Offering Price)............................................................... 4.00%
Maximum Sales Charge Imposed on Purchases during the Secondary Offering Period (as a
percentage of Public Offering Price).................................................... 4.25%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
Trustee's Fee.............................................................................. .089%
Portfolio Supervision, Bookkeeping and Administrative Fees................................. .026%
Other Operating Expenses................................................................... .024%
------
Total........................................................................................ .139%
------
------
</TABLE>
1 Based on the mean of the bid and the offer side evaluations; this figure may
differ from that set forth as estimated annual expenses per 1,000 Units
expressed as a percentage on page A-3.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE CUMULATIVE EXPENSES PAID FOR PERIOD OF:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- ---------
An investor would pay the following expenses on a $1,000
investment, assuming the Fund's estimated operating
expense
ratio of .139% and a 5% annual return on the investment
throughout the periods.................................. $41.37 $44.31 $47.53 $57.08
</TABLE>
The Example assumes reinvestment of all distributions into additional Units
of the Fund (an option different from that offered by the Fund--see
Administration of the Fund--Investment Accumulation Program) and utilizes a 5%
annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. In addition to the charges described
above, a Holder selling or redeeming his Units in the secondary market (before
the Fund terminates) will receive a price based on the then-current bid side
evaluation of the underlying securities. The difference between this bid side
evaluation and the offer side evaluation (the basis for the Public Offering
Price), as of the day before the Initial Date of Deposit, is $1.25 per 1,000
Units. Of course, this difference may change over time. The Example should not
be considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the Example.
A-7
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Government Securities Income Fund, GNMA
Series 1W, Defined Asset Funds:
We have audited the accompanying statement of condition, including the
portfolio, of Government Securities Income Fund, GNMA Series 1W, Defined Asset
Funds, as of May 4, 1994. This financial statement is the responsibility of the
Trustee. Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. The deposit on May 4,
1994 of an irrevocable letter or letters of credit for the purchase of
securities, as described in the statement of condition, was confirmed to us by
The Chase Manhattan Bank, N.A., 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Government Securities Income
Fund, GNMA Series 1W, Defined Asset Funds at May 4, 1994 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
May 4, 1994
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1W
DEFINED ASSET FUNDS
STATEMENT OF CONDITION AS OF INITIAL DATE OF DEPOSIT, MAY 4, 1994
<TABLE>
<S> <C> <C>
TRUST PROPERTY
Investment in Securities--
Contracts to purchase Securities(1)................................... $ 473,203.75
Accrued interest to Initial Date of Deposit on underlying Securities............ 296.88
-------------
Total.............................................................. $ 473,500.63
-------------
-------------
LIABILITY AND INTEREST OF HOLDERS
Liability--Accrued interest to Initial Date of Deposit on underlying
Securities(2)................................................................... 296.88
500,000 Units of fractional undivided interest
outstanding:
Cost to investors(3)................................ $ 492,918.75
Gross underwriting commissions(3)................... (19,715.00)
-------------
Net amount applicable to investors.............................................. 473,203.75
-------------
Total.............................................................. $ 473,500.63
-------------
-------------
</TABLE>
- ------------
(1) Aggregate cost to the Fund of the Securities listed under Portfolio is based
on the offering side evaluation determined by the Evaluator at the
Evaluation Time on the business day prior to the Initial Date of Deposit as
set forth under Public Sale of Units--Public Offering Price. See also the
column headed Cost of Securities to Fund under Portfolio. Irrevocable letter
or letters of credit in the aggregate amount of $473,734.38 has been
deposited with the Trustee. The amount of such letter or letters of credit
includes $471,953.13 (equal to the purchase price to the Sponsors) for the
purchase of $500,000 face amount of Securities pursuant to contracts to
purchase Securities, plus $1,781.25 covering accrued interest to the date of
delivery of the Securities. The letter or letters of credit has been issued
by Development Bank of Singapore, New York Branch.
(2) Aggregate public offering price (exclusive of interest) computed on the
basis of the offering side evaluation of the underlying Securities as of the
Evaluation Time on the Business Day prior to the Date of Deposit.
(3) Assumes sales charge of 4.00% computed on the basis set forth under Public
Sale of Units--Public Offering Price.
A-8
<PAGE>
<PAGE>
PORTFOLIO OF GOVERNMENT ON THE INITIAL DATE OF DEPOSIT,
SECURITIES INCOME FUND, GNMA SERIES 1W May 4, 1994
DEFINED ASSET FUNDS
<TABLE>
<CAPTION>
COST OF
PORTFOLIO NO. AND TITLE OF FACE RANGE OF STATED SECURITIES
SECURITIES CONTRACTED FOR AMOUNT COUPON MATURITIES(1) TO FUND(2)
<C> <S> <C> <C> <C> <C>
----------- ------- -------------------- --------------
1. Government National Mortgage Association, $ 375,000 7.00% 8/15/14 to 5/15/24 $ 352,031.25
Modified Pass-Through Mortgage-Backed
Securities
2. Government National Mortgage Association, 125,000 7.50% 8/15/14 to 5/15/24 121,171.50
Modified Pass-Through Mortgage-Backed
Securities
----------- --------------
$ 500,000 $ 473,203.75
----------- --------------
----------- --------------
</TABLE>
- ---------------
NOTES
(1) The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying ranges of
maturities within that shown. They are listed as one category of Securities
with a single range of maturities because of current market conditions that
accord no difference in price among the Securities grouped together on the
basis of the difference in their maturity ranges. At some time in the
future, however, the difference in maturity ranges could affect the market
value of the individual Securities.
(2) The cost of the Securities to the Fund represents the offering side
evaluation of the Securities as determined by the Evaluator. The offering
side evaluation is greater than the current bid side evaluation of the
Securities which is the basis on which Redemption Price per Unit is
determined (see Redemption). The aggregate value of the Portfolio based on
the bid side evaluation on the Initial Date of Deposit was $472,578.75 which
is $625.00 (approximately .13% of the aggregate principal amount) lower than
the aggregate Cost of Securities to Fund based on the offering side
evaluation. Price of Securities was computed on the basis of the offering
side evaluation at the Evaluation Time on the business day prior to the
Initial Date of Deposit.
----------------------------------
All Securities are represented by contracts to purchase such Securities. The
contracts to purchase Securities were acquired on May 3, 1994 and are
expected to be settled 8 days after the initial settlement date for Units.
Interest will begin accruing to the benefit of Holders on the settlement
date for the Units.
In addition to the information as to the GNMA modified pass-through
mortgage-backed Securities set forth under Portfolio, the Trustee will
furnish Holders a statement listing the name of issuer, pool number,
interest rate, maturity date and principal amount for each Security in the
Portfolio upon written request.
A-9
<PAGE>
<PAGE>
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES
DEFINED ASSET FUNDS
FUND STRUCTURE
This Series (the 'Fund') of Government Securities Income Fund is a 'unit
investment trust' created under New York law by a Trust Indenture (the
'Indenture') among the Sponsors, the Trustee and the Evaluator. Unless otherwise
indicated, when Investors Bank & Trust Company and the First National Bank of
Chicago act as Co-Trustees to the Fund, references to the Trustee in the
Prospectus shall be deemed to refer to Investors Bank and Trust Company and the
First National Bank of Chicago, as Co-Trustees. To the extent that references in
the Prospectus are to articles and sections of the Indenture, which is hereby
incorporated by reference, the statements made herein are qualified in their
entirety by such reference. On the date of this Prospectus (the 'Initial Date of
Deposit') the Sponsors, acting as managers for the underwriters named under
Underwriting Account, deposited the underlying Securities with the Trustee at a
price equal to the evaluation of the Securities on the offering side of the
market on that date as determined by the Evaluator, and the Trustee delivered to
the Sponsors units of interest ('Units') representing the entire ownership of
the Fund. Except as otherwise indicated under Portfolio (the 'Portfolio'), the
Securities so deposited were represented by purchase contracts assigned to the
Trustee together with an irrevocable letter or letters of credit issued by a
commercial bank or banks in the amount necessary to complete the purchase
thereof. The holders ('Holders') of Units will have the right to have their
Units redeemed (see Redemption) at a price based on the aggregate bid side
evaluation of the Securities ('Redemption Price per Unit') if they cannot be
sold in the over-the-counter market which the Sponsors propose to maintain (see
Market for Units).
As used herein, the term 'Securities' means the Ginnie Maes initially
deposited in the Fund and includes all contracts to purchase the Ginnie Maes
accompanied by an irrevocable letter or letters of credit sufficient to perform
the contracts initially deposited in the Fund and described herein under
Portfolio and any additional Ginnie Maes deposited in the Fund following the
Initial Date of Deposit in accordance with the terms of the Indenture.
With the deposit of the Securities in the Fund on the Initial Date of
Deposit, the Sponsors established a percentage relationship between the
principal amounts of Ginnie Maes of specified interest rates and ranges of
maturities in the Portfolios. Following the Initial Date of Deposit, the
Sponsors may deposit additional Securities in the Fund and Units may be
continuously offered for sale to the public by means of this Prospectus (see
Public Sale of Units), resulting in a potential increase in the number of Units
outstanding. The Sponsors anticipate that any additional Securities deposited in
the Fund will maintain as far as practicable the original percentage
relationship between the principal amounts of Ginnie Maes of specified interest
rates and ranges of maturities in the Portfolio. Precise duplication of this
original percentage relationship may not ever be possible because fractions of
Ginnie Maes may not be purchased, but duplication will continue to be the goal
in connection with any such additional Ginnie Maes (see Administration of the
Fund--Portfolio Supervision). The original percentage relationships on the
Initial Date of Deposit are set forth under Investment Summary.
RISK FACTORS
An investment in Units of a Fund should be made with an understanding of
the risks which an investment in fixed rate long-term debt obligations without
prepayment protection may entail, including the risk that the value of the
Portfolio and hence of the Units will decline with increases in interest rates
and that payments of principal may be received sooner than anticipated,
especially if interest rates decline. 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 purchased at a premium over par will result in some loss on
investment while prepayments on Ginnie Maes purchased at a discount from par
will result in some gain on investment. The Sponsors cannot predict future
economic policies or their consequences or, therefore, the course or extent of
interest rate fluctuations in the future.
The Securities are generally not listed in a national securities exchange.
Whether or not the Securities are listed, the principal trading market for the
Securities will generally be in the over-the-counter market. As a result, the
existence of a liquid trading market for the Securities may depend on whether
dealers will
1
<PAGE>
<PAGE>
make a market in the Securities. There can be no assurance that a market will be
made for any of the Securities, that any market for the Securities will be
maintained or of the liquidity of the Securities in any markets made. In
addition, the Fund may be restricted under the Investment Company Act of 1940
from selling Securities to any Sponsor. The price at which the Securities may be
sold to meet redemptions and the value of the Fund will be adversely affected if
trading markets for the Securities are limited or absent.
The Fund may be an appropriate medium for U.S. investors who desire to
participate in a portfolio of taxable fixed income securities offering the
safety of capital provided by an investment backed by the full faith and credit
of the United States but who do not wish to invest the minimum $25,000 that is
required for a direct investment in initially issued GNMA guaranteed securities.
Investors may find it advantageous to elect to reinvest their regular
distributions of principal and interest expected to be made by the Fund in
additional Units of the Fund (see Administration of the Fund--Reinvestment).
SPECIAL FEATURES OF MARKET PREMIUM SECURITIES
Certain of the Securities in the Fund may have been valued at a market
premium (see Premium and Discount Issues in Portfolio under Investment Summary).
Securities trade at a premium because the interest rates on the Securities are
higher than interest on comparable debt securities being issued at currently
prevailing interest rates. If currently prevailing interest rates for newly
issued and otherwise comparable securities increase, the market premium of
previously issued securities will decline and if currently prevailing interest
rates for newly issued comparable securities decline, the market premium of
previously issued securities will increase, other things being equal. The
current returns of securities trading at a market premium are higher than the
current returns of comparably rated debt securities of a similar type issued at
currently prevailing interest rates because premium securities tend to decrease
in market value as they approach maturity when the face amount becomes payable.
Because part of the purchase price is thus returned not at maturity but through
current income payments, early redemption of a premium security at par or early
prepayments of principal will result in a reduction in yield. Prepayments of
principal on securities purchased at a market premium are more likely than
prepayments on securities purchased at par or at a market discount and the level
of prepayments will generally increase if interest rates decline (see Life of
the Securities and of the Fund). Market premium attributable to interest rate
changes does not indicate market confidence in the issue.
SPECIAL FEATURES OF MARKET DISCOUNT SECURITIES
Certain of the Securities in the Fund may have been valued at a market
discount (see Premium and Discount Issues in Portfolio under Investment
Summary). Securities trade at less than par value because the interest coupons
on these Securities are at lower rates than interest coupons of comparable debt
securities being issued at currently prevailing interest rates. The current
returns of securities trading at a market discount are lower than the current
returns of comparably rated debt securities of a similar type issued at
currently prevailing interest rates. However, prepayments of principal on
securities purchased at a discount will result in an increase in yield. If
currently prevailing interest rates for newly issued and otherwise comparable
securities increase, the market discount of previously issued securities will
become deeper and if currently prevailing interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should also note
that the value of Ginnie Maes purchased at a market discount will increase in
value faster than Ginnie Maes purchased at a market premium if interest rates
decrease. Conversely, if interest rates increase, the value of Ginnie Maes
purchased at a market discount will decrease faster than Ginnie Maes purchased
at a premium. In addition, if interest rates rise, the prepayment risk of higher
yielding, premium Ginnie Maes and the prepayment benefit for lower yielding,
discount Ginnie Maes will be reduced. Market discount attributable to interest
rate changes does not indicate a lack of market confidence in the issue.
MORTGAGE-BACKED SECURITIES
Set forth below is a brief description of the current method of origination
of the Ginnie Maes; the nature of the Securities, including the guaranty of
GNMA; the basis of selection and acquisition of the Ginnie Maes included in the
Portfolio; and the expected life of the Ginnie Maes and the Fund. The Portfolio
contains information concerning the coupon rate and range of stated maturities
of the Ginnie Maes in the Fund.
2
<PAGE>
<PAGE>
Ginnie Maes. The Portfolios of GNMA Series consist primarily of
mortgage-backed securities of the modified pass-through type fully guaranteed as
to payment of principal and interest by the Government National Mortgage
Association ('GNMA').
GNMA is a wholly-owned U.S. government corporation within the Department of
Housing and Urban Development. GNMA is authorized by Section 306(g) of Title III
of the National Housing Act to guarantee the timely payment of the principal of,
and interest on, certificates which are based on and backed by a pool of
residential mortgage loans insured or guaranteed by the Federal Housing
Administration ('FHA'), the Farmers' Home Administration ('FMHA') or the
Department of Veteran's Affairs ('VA'). In order to meet its obligation under
its guaranty, GNMA may issue its general obligations to the United States
Treasury. In the event it is called upon at any time to make good its guaranty,
GNMA has the full power and authority to borrow from the Treasury of the United
States, if necessary, amounts sufficient to make payments of principal and
interest on the GNMA Certificates ('GNMA Pass-throughs' or 'Ginnie Maes').
Section 306(g) provides further that 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 any guaranty under that subsection. An opinion of an Assistant Attorney
General of the United States, dated December 9, 1969, states that these
guaranties 'constitute general obligations of the United States backed by its
full faith and credit.' Any statement in this Prospectus that a particular
Security is backed by the full faith and credit of the United States is based
upon the opinion of an Assistant Attorney General of the United States and
should be so construed.
GNMA Pass-throughs. 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, whether or not collected by the issuers, on
account of the mortgages backing these Ginnie Maes, plus any prepayments of
principal of such mortgages received, and interest (net of the servicing and
other charges described above) on the aggregate unpaid principal balance of
these Ginnie Maes, whether or not interest on account of these mortgages has
been collected by the issuers. Ginnie Maes are guaranteed by GNMA as to timely
payment of principal and interest. Funds received by the issuers on account of
the mortgages backing the several issues of the Ginnie Maes are intended to be
sufficient to make the required payments of principal and interest on these
Ginnie Maes but, if these funds are insufficient for that purpose, the guaranty
agreements between the issuers and GNMA require the issuers to make advances
sufficient for these payments. If the issuers fail to make these payments GNMA
will do so. 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
payment cycle of Ginnie Maes is 45 days between the date of security issuance
and the first investor payments.
ORIGINATION OF MORTGAGE-BACKED SECURITIES
The pool of mortgages that is to underlie a particular new issue of Ginnie
Maes, such as the Ginnie Maes in the Fund, is assembled by the proposed issuer
of these Ginnie Maes. This issuer is typically a mortgage banking firm, savings
institution or commercial banks and in every instance must be a mortgagee
approved by and in good standing with the FHA. In addition, GNMA imposes its own
criteria on the eligibility of issuers, including a net worth requirement and a
requirement that a principal element of its business operation be the
origination or servicing of mortgage loans.
The mortgages which are to compose the new pool may have been originated by
the issuer itself in its capacity as a mortgage lender, or they may be acquired
by the issuer from a third party, such as another mortgage banker, a banking
institution, the VA, which in certain instances acts as a direct lender and thus
originates its own mortgages, or one of several other governmental agencies. All
mortgages in any given pool will be insured under the National Housing Act, as
amended ('FHA-insured') or Title V of the Housing Act of 1949 ('FMHA-insured')
or insured or guaranteed under Chapter 37 of Title 38, U.S.C. ('VA-guaranteed');
will have a date for the first scheduled monthly payment of principal that is
not more than 24 months prior to the issue date of the Ginnie Mae to be issued;
will have homogeneity as to interest rate, maturity and type of dwelling (e.g.,
project mortgages on apartment projects and hospitals will not be mixed with
1-to 4-family mortgages); and will meet additional criteria of GNMA. 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.
3
<PAGE>
<PAGE>
In seeking GNMA approval of a new pool, the issuer files with GNMA an
application containing information concerning itself, describing generally the
pooled mortgages, and requesting that GNMA approve the issue and issue its
commitment (subject to its satisfaction with the mortgage documents and other
relevant documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer on the basis of that
pool. If the application is in order, GNMA issues its commitment, assigning a
GNMA pool number to the pool. Upon completion of the required documentation,
including detailed information as to the underlying mortgages, a custodial
agreement with a Federal or state regulated financial institution satisfactory
to GNMA pursuant to which the underlying mortgages will be held in safekeeping,
and a detailed guaranty agreement between GNMA and the issuer, the issuance of
the Ginnie Maes is permitted, and GNMA, upon their issuance, endorses its
guaranty thereon. The aggregate principal amount of Ginnie Maes issued will be
equal to the then aggregate unpaid principal balances of the pooled mortgages.
The interest rate borne by the Ginnie Maes is currently fixed at .5 of 1% below
the interest rate of the pooled 1-to 4-family mortgages, the differential being
applied to the payment of servicing and custodial charges as well as GNMA's
guaranty fee.
The Ginnie Maes are based upon and backed by the aggregate indebtedness
secured by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages
and, except to the extent of funds received by the issuers on account of these
mortgages, the Ginnie Maes do not constitute a liability of nor evidence any
recourse against the issuers, but recourse thereon is solely against GNMA.
Holders of Ginnie Maes have no security interest in or lien on the pooled
mortgages.
The GNMA guaranties referred to herein relate only to payment of principal
of and interest on the Ginnie Maes in the Portfolio and not to the Units offered
hereby.
DESCRIPTION OF THE FUND
THE PORTFOLIO
The Portfolio initially consists of contracts to purchase Ginnie Maes of
the modified pass-through type fully guaranteed as to payments of principal and
interest by GNMA, some of which may have been purchased at a premium (see Risk
Factors--Special Features of Market Premium Securities). Certain Securities may
have been purchased on a when, as and if issued basis (see Investment
Summary--Fund Portfolio). Interest on these Securities begins accruing to the
benefit of Holders on their respective dates of delivery. Holders of Units will
be 'at risk' with respect to these Securities (i.e. may derive either gain or
loss from fluctuations in the offering side evaluation of the Securities) from
the date they commit for Units.
Each group of Ginnie Maes described above as having a specified range of
maturities includes individual Ginnie Maes having varying ranges of maturities
within that mentioned. Each group is described as one category of Securities
with a single range of maturities because of current market conditions that
accord no difference in price among the Securities grouped together on the basis
of the difference in their maturity ranges. Accordingly, as long as this market
condition prevails, a purchase of securities with the same coupon rate and a
maturity date within the range mentioned above will be considered as an
acquisition of the same security.
SELECTION AND ACQUISITION OF SECURITIES
Defined Asset Fund research analysts, with access to thousands of different
issues and extensive research, who are in close contact with the markets for
suitable securities, select securities for deposit in the Fund considering the
following factors, among others: (i) the types of these securities available;
(ii) the prices of the securities relative to other comparable securities and
the extent to which certain of these securities are trading at a discount from
par or premium over par; and (iii) the maturities of these securities.
The discount from par or premium over par on securities of the type
deposited in the Fund is dependent on a variety of factors, including general
money market conditions, general conditions of the corporate and mortgage backed
bond market and prevailing interest rates.
The Fund consists of the unamortized principal amount of the Securities (or
contracts to purchase the Securities) listed under Portfolio as may continue to
be held from time to time in the Fund and any additional Securities deposited in
the Fund in connection with the sale of additional Units to the public as
4
<PAGE>
<PAGE>
described under Structure above, together with the accrued and undistributed
interest thereon and undistributed cash representing payments and prepayments of
principal and uninvested cash realized from the disposition of Securities (see
Administration of the Fund--Portfolio Supervision). Neither the Sponsors nor the
Trustee shall be liable in any way for any default, failure or defect in any of
the Securities. However, should any contract deposited hereunder (or to be
deposited in connection with the sale of additional Units) fail, the Sponsors
shall, on or before the next following Distribution Day, deposit substitute
securities pursuant to the terms of the Indenture, or cause to be refunded the
attributable sales charge, plus the attributable Cost of Securities to Fund
listed under Portfolio, plus interest attributable to the failed obligation.
Because regular payments of principal are to be received over the life of
the Fund and certain of the Securities from time to time may be redeemed or will
mature in accordance with their terms or may be sold under certain circumstances
described herein, a Fund is not expected to retain its present size and
composition (see Life of the Securities and of the Fund below; Redemption).
Because the proceeds from such events received by the Fund (less certain amounts
deducted by the Trustee as described under Expenses and Charges) will be
distributed to Holders or paid out upon redemptions, the aggregate principal
amount of the Securities in the Portfolio, and accordingly the principal amount
of Securities underlying each Unit, will decrease over time. In addition, the
Indenture authorizes the Sponsors to increase the size and the number of Units
of a Trust by the deposit of additional Securities and the issue of a
corresponding number of additional Units.
THE UNITS
Because each Defined Asset Fund is a defined portfolio of preselected
securities, purchasers know in advance what they are investing in. A defined
portfolio is listed, so that generally the securities and their maturities are
known before they buy. Of course, the portfolio will change somewhat over time
as additional securities are deposited, as securities mature or as they are sold
to meet redemptions and in the limited other circumstances described below.
On the Initial Date of Deposit each Unit represented the fractional
undivided interest in the Fund set forth under Investment Summary. Thereafter,
if any Units are redeemed by the Trustee the face amount of Securities in the
Fund will be reduced by amounts allocable to redeemed Units, and the fractional
undivided interest represented by each Unit in the balance will be increased.
However, if additional Units are issued by the Fund (through deposit of
Securities by the Sponsors in connection with the sale of additional Units), the
aggregate value of Securities in the Fund will be increased by amounts allocable
to additional Units, and the fractional undivided interest represented by each
Unit in the balance will be decreased. Units will remain outstanding until
redeemed upon tender to the Trustee by any Holder (which may include the
Sponsors) or until the termination of the Indenture (see Redemption;
Administration of the Fund--Amendment and Termination).
RATING OF UNITS
Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. ('Standard
& Poor's') has rated the Units of the Fund AAA. This is the highest rating
assigned by Standard & Poor's (see Description of Standard & Poor's Rating).
Standard & Poor's has been compensated by the Underwriting Account for its
services in rating Units of the Fund.
LIFE OF THE SECURITIES AND OF THE FUND
Monthly payments and prepayments of principal are made to the Fund in
respect of the mortgages underlying the Ginnie Maes (see Income; Estimated
Current Return; Estimated Long Term Return below). All of the mortgages in the
pools relating to the Ginnie Maes in the Portfolio 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, it has
been the experience of the mortgage industry that the average life of comparable
mortgages, owing to prepayments, is much less. Pricing of GNMA Securities has
been based upon yield assumptions grounded in the historical experience of the
FHA relating to 30 year mortgages on 1-to 4-family dwellings at various interest
rates (which, in general, have been lower than the rates of the Ginnie Maes in
the Portfolio). Yield tables for Ginnies Maes utilize a 12-year average life
assumption for Ginnie Mae pools of 30 year mortgages on 1-to 4-family dwellings.
This assumption was derived from the
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FHA experience relating to prepayments on such mortgages during the period from
the mid 1950's to the mid 1970's. This 12-year average life assumption was
calculated in respect of a period during which mortgage lending rates were
fairly stable. That assumption is probably no longer an accurate measure of the
average life of Ginnie Maes or their underlying single family mortgage pools.
Today, research analysts use complex formulae to scrutinize the prepayments of
mortgage pools in an attempt to predict more accurately the average life of
Ginnie Maes. The bases for the calculation of the estimated average life and the
relationship of this calculation to Estimated Long Term Return are more fully
described below under Income; Estimated Current Return; Estimated Long Term
Return.
Generally speaking, a number of factors, including mortgage market interest
rates and homeowners mobility, will affect the average life of the Ginnie Maes
in the Portfolio. Changes in prepayment patterns, as reported by GNMA on a
periodic basis, if generally applicable to the mortgage pools related to
specific mortgage-backed securities, could influence yield assumptions used in
pricing the securities. Shifts in prepayment patterns are influenced by changes
in housing cycles and mortgage refinancing and are also subject to certain
limitations on the gathering of the data; it is impossible to predict how new
statistics will affect the yield assumptions that determine mortgage industry
norms and pricing of GNMA Securities. Moreover, there is no assurance that the
pools of mortgage loans relating to the Ginnie Maes in the Portfolio will
conform to prepayment experience as reported by GNMA on a periodic basis, or the
prepayment experience of other mortgage lenders.
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
(see Administration of the Fund--Amendment and Termination). It is also possible
that, in the absence of a secondary market for the Units or otherwise,
redemptions of Units may occur in sufficient numbers to reduce the Portfolio to
a size resulting in termination (termination for this reason would be delayed if
additional Units are issued).
Early termination of a Fund or early payments of principal may have
important consequences to the Holder; 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. In this connection, attention is directed
to the discussion of reinvestment (see Administration of the Fund--Investment
Accumulation Program) which affords to investors in Units the opportunity to
automatically reinvest Monthly Income Distributions.
Additionally, the size and composition of a Fund will be affected by the
level of redemptions of Units that may occur from time to time and the
consequent sale of Securities (see Redemption). Principally, this will depend
upon the number of Holders seeking to sell or redeem their Units and whether or
not the Sponsors continue to reoffer Units acquired by them in the secondary
market. Factors that the Sponsors will consider in the future in determining to
cease offering Units acquired in the secondary market include, among other
things, the composition of the portfolio remaining at that time, the size of a
Fund relative to its original size, the ratio of Fund expenses to income, the
Fund's current and long-term returns and the degree to which Units may be
selling at a premium over par relative to other funds sponsored by the Sponsors,
and the cost of maintaining a current prospectus for the Fund. These factors may
also lead the Sponsors to seek to terminate a Fund earlier than would otherwise
be the case (see Administration of the Fund--Amendment and Termination).
INCOME; ESTIMATED CURRENT RETURN; ESTIMATED LONG TERM RETURN
Generally. Each unit receives an equal share of monthly distributions of
interest income and of any principal distributions as bonds mature or are
called, redeemed or sold. The estimated net annual interest rate per Unit on the
business day prior to the date of this Prospectus is set forth under Investment
Summary. This rate shows the percentage return based on $1,000 face amount per
1,000 Units after deducting estimated annual fees and expenses expressed as a
percentage. It will change as Securities mature, are prepaid, exchanged,
redeemed, paid or sold, as replacement or additional Securities are purchased
and deposited in the Fund or as the expenses of the Fund change.
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In actual operation, payments received in respect of the mortgages
underlying the Ginnie Maes will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment made by
the obligor on each mortgage remains constant (aside from optional prepayments
of principal), in the early years the larger proportion of each payment will
represent interest, while in later years, the proportion representing interest
will decline and the proportion representing principal will increase, although,
of course, the interest rate remains constant. Moreover, by reason of optional
prepayments, payments in the earlier years on the mortgages in the pools may be
substantially in excess of those required by the amortization schedules of these
mortgages; conversely, payments in later years may be substantially less since
the aggregate unpaid principal balances of the underlying mortgages may have
been greatly reduced--ultimately even sufficiently reduced to accelerate
termination of a Fund. To the extent that those underlying mortgages, bearing
the higher interest rates represented in a Portfolio are prepaid faster than the
other underlying mortgages, the net annual interest rate per Unit and the return
on the Units can be expected to decline. Monthly payments to the Holder will
reflect all of the foregoing factors.
Interest on the Securities in the Fund, less estimated fees of the Trustee,
Sponsors and Evaluator and certain other expenses, is expected to accrue at the
daily rate (based on a 360-day year) shown under Investment Summary. This rate
will change as securities are prepaid, exchanged, redeemed, paid or sold or as
the expenses of the Fund change.
Estimated Current Return and the Estimated Long Term Return give different
information about the return to investors. Estimated Current Return on a Unit
represents the return based on the Public Offering Price and the maximum
applicable sales charge and is computed by multiplying the estimated net annual
interest rate per Unit (which shows the return per Unit based on $1.00 face
amount) by $1.00 and dividing the result by the Public Offering Price per Unit
(not including accrued interest). Estimated Current Return does not take into
account timing of distributions of income and other amounts (including delays)
on Units, and it only partially reflects the effect of premiums paid and
discounts realized in the purchase price of Units.
Unlike Estimated Current Return, Estimated Long Term Return is a measure of
the estimated return to the investor earned over the estimated life of the Fund.
The Estimated Long Term Return represents an average of the yields to estimated
average life of the Securities in the Portfolio and adjusted to reflect expenses
and sales charges. The estimated long-term return figure is calculated using an
estimated average life for the Securities as set forth under Investment Summary.
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, if
the Fund has a longer average life than is estimated, Estimated Long Term Return
will be lower when the Securities are priced at a discount and higher if the
Securities are priced at a premium. In order to calculate estimated average
life, an assumption is made about the present average life of the Securities
available in the marketplace with the same coupon. With this profile, an
annualized prepayment rate for the mortgages underlying the Securities can be
estimated using actual prepayment data reported by GNMA for recent periods. An
industry model is also used to make assumptions about the impact of aging on the
prepayment of mortgage pools. Because recent prepayment data and the industry
model afford limited assumptions for calculating estimated average life,
analysis of several other factors is included, among other things, the coupon,
the housing environment, the present interest rate (no change in interest rate
is assumed) and historical trends. Based upon these adjustments, an estimated
prepayment rate for the remaining term of the mortgage pool is determined, which
is the basis for calculating the estimated average life. The estimated average
life for the Fund set forth on the cover of this Prospectus is subject to change
with alterations in the data used in any of the underlying assumptions. The
actual average lives of the Securities and the actual long term returns will be
different from the estimated average lives and the estimated long term returns.
In calculating Estimated Long Term Return, the average yield for the Portfolio
is derived by weighing each Security's yield by the market value of the Security
and by the amount of time remaining to the estimated average life. Once the
average Portfolio yield is computed, this figure is then adjusted for estimated
expenses and the effect of the maximum sales charge paid by investors. The
Estimated Long Term Return calculation does not take into account certain delays
in distributions of income and the timing of other receipts and distributions on
Units and may, depending on maturities, over or understate the impact of sales
charges. Both of these factors may result in a lower figure.
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Both Estimated Current Return and Estimated Long Term Return are subject to
fluctuation with changes in Portfolio composition (including the redemption,
sale or other disposition of Debt Obligations in the Portfolio), principal
payments and prepayments and changes in market value of the underlying
Securities and changes in fees and expenses, including sales charges, and
therefore can be materially different than the figures set forth herein. The
size of any difference between Estimated Current Return and Estimated Long Term
Return can also be expected to fluctuate at least as frequently. In addition,
both return figures may not be directly comparable to yield figures used to
measure other investments, and since the return figures are based on certain
assumptions and variables the actual returns received by a Holder may be higher
or lower.
Accrued Interest. In addition to the Public Offering Price, the price of a
Unit of a Fund includes accrued interest on the Securities from the Initial Date
of Deposit. The accrued interest that is added to the Public Offering Price
represents the amount of accrued interest on the Securities from the Initial
Date of Deposit to, but not including, the settlement date for Units. However,
Securities deposited in a Fund also include accrued but unpaid interest up to
the Initial Date of Deposit. To avoid having Holders pay this additional accrued
interest (which earns no return) when they purchase Units, the Trustee is
responsible for the payment of accrued interest on the Securities to the Initial
Date of Deposit and then recovers this amount from the earliest interest
payments received by the Fund. Thus, the Sponsors can sell the Units at a price
that includes interest from the Initial Date of Deposit to the settlement date
for the Units. If a Holder sells all or a portion of his Units, he will receive
his proportionate share of the accrued interest from the purchaser of his Units.
Similarly, if a Holder redeems all or a portion of his Units, the Redemption
Price per Unit will include accrued interest on the Securities. And, if a
Security is sold, redeemed or otherwise disposed of, accrued interest will be
received by the Fund and will be distributed periodically to Holders.
With sales charges ranging from 5.5% to less than 0.5%, less than you might
pay to buy a comparable 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 unit investment trusts are not actively managed
and have limited transactions, costs are generally less than 0.25% per year.
Keeping costs low increases earnings. When compounded annually, small
differences in expense ratios can make a big difference in earnings.
Record Days and Distribution Days are as set forth under Investment
Summary.
TAXES
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 Holders 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 distribute to Holders 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 Holders 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 Holders during the
calendar year.
DISTRIBUTIONS
Distributions to Holders 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
Holders 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 Holder's basis in his Units
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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 Holders.
Distributions that are taxable as ordinary income to Holders 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 Holders as long-term capital gain, regardless of the time the
Units have been held by a Holder. A Holder may recognize taxable gain or loss if
the Holder 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. The deduction of capital losses is subject to limitations.
Payments of principal on underlying GNMA 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 Holder purchases his Units. Such gain must be distributed to
Holders 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 Holders. Any such distribution will be taxable to Holders as
discussed above (i.e., as ordinary income or long-term capital gain), even if as
to a particular Holder the distribution economically represents a return of
capital. Since such distributions do not reduce a Holder's tax basis in his
Units, a Holder 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
Holders 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. Holders. Holders 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
Holders should consult their own tax advisers in this regard.
Holders will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the Holder or are
automatically reinvested (see Administration of the Fund--Investment
Accumulation Program).
RETIREMENT PLANS
This Series of Defined Asset Funds--Government Securities Income Fund may
be well suited for purchase by 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 these 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. Holders of units in IRAs,
Keogh plans and other tax-deferred retirement plans should consult their plan
custodian as to the 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 advisers with respect
to the establishment and maintenance of any of these plans. These plans are
offered by brokerage firms, including each of the Sponsors of the Fund, and
other financial institutions. Fees and charges with respect to these plans may
vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units of a Fund may be
purchased by retirement plans established pursuant to the Self-Employed
Individuals Tax Retirement Act of 1962 ('Keogh plans') for self-employed
individuals, partnerships or unincorporated companies. Qualified individuals may
generally make annual tax-deductible contributions up to the lesser of 20% of
annual compensation or $30,000 in a Keogh plan. The assets of the plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Generally there are penalties for premature distributions from a plan
before attainment of age 59 1/2, except in the case of a participant's death or
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disability. 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 (including one covered
by a qualified private or government retirement plan) can establish an IRA or
make use of a qualified IRA arrangement set up by an employer or union for the
purchase of Units of the Fund. Any individual can make a contribution to 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 filing a separate return). A married individual who files a
separate return will not be entitled to any deduction if the individual is
covered by an employer-maintained retirement plan without regard to whether the
individual's spouse is an active participant in an employer-maintained
retirement plan. 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. It should be noted
that 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. A participant's entire interest in
an IRA must be, or commence to be, distributed to the participant not later than
the April 1 following the the taxable year during which the participant attains
age 70 1/2. 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.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of Units during the initial offering period is
computed by dividing the offering side evaluation of the Securities (as
determined by the Evaluator) by the number of Units outstanding and adding
thereto the sales charge in effect during the initial offering period at the
applicable percentage of the offering side evaluation per Unit (the net amount
invested). For 'secondary market' sales the Public Offering Price of Units will
be equal to the Evaluator's determination of the aggregate bid side evaluation
of the Securities in the Fund, adding thereto the applicable sales charge in
effect for the secondary market and dividing the sum by the number of the Units
outstanding. A proportionate share of any cash held in the Capital Account not
allocated to the purchase of specific Securities and net accrued and
undistributed interest on the Securities to the date of delivery of the Units to
the purchaser is added to the Public Offering Price. The Public Offering Price
of the Units will vary from day to day in accordance with fluctuations in the
evaluations of the underlying Securities.
The following tables set forth, where applicable, for both the initial
offering period and for secondary market sales the applicable percentage of
sales charge, the concession to dealers and the concession to introducing
dealers (i.e., dealers that buy and clear directly through a Sponsor or an
Underwriter who is an affiliate of a Sponsor). These amounts are reduced on a
graduated scale for sales to any purchaser of at least 100,000 Units and will be
applied on whichever basis is more favorable to the purchaser. To qualify for
the reduced sales charge and concession applicable to quantity purchases, the
dealer must confirm that the sale is to a single purchaser as defined below or
is purchased for its own account and not for distribution. Sales charges and
dealer and introducing dealer concessions are as follows:
INITIAL OFFERING PERIOD
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
---------------------------------- CONCESSION PRIMARY MARKET
AS PERCENT OF AS PERCENT OF AS PERCENT OF CONCESSIONS
OFFER SIDE PUBLIC NET AMOUNT PUBLIC TO INTRODUCING
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE DEALERS
<S> <C> <C> <C> <C>
----------------- ------------- -------------------- -------------------
Less than 100,000.... 4.00% 4.167% 2.600% $ 28.80
100,000-499,999...... 3.00 3.093 1.950 21.60
500,000-749,999...... 2.50 2.564 1.625 18.00
750,000-999,999...... 2.00 2.041 1.300 14.40
1,000,000 or more.... 1.50 1.523 0.975 10.80
</TABLE>
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SECONDARY MARKET SALES
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
-------------------------------- CONCESSION
AS PERCENT OF AS PERCENT OF AS PERCENT OF
BID SIDE PUBLIC NET AMOUNT PUBLIC
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE
<S> <C> <C> <C>
--------------- ------------- --------------------
Less than 100,000...................... 4.25% 4.439% 2.763%
100,000-499,999........................ 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
</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. For this purpose
purchases during the initial offering period will not be aggregated with
concurrent purchases of any other unit trusts sponsored by the Sponsors.
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.
Employees of certain of the Sponsors and their affiliates and non-employee
directors of Merrill Lynch & Co., Inc. may purchase Units of a Fund at prices
based on a reduced sales charge of not less than $5.00 per 1,000 Units. In
addition, certain foreign affiliates of certain of the Sponsors may purchase
Units at a price equal to the offering side evaluation of the Securities divided
by the number of Units outstanding plus a reduced sales charge of 15% of the
otherwise applicable sales charge.
Evaluations of the Securities are determined by the Evaluator, taking into
account the same factors referred to under Redemption--Computation of Redemption
Price per Units. The determinations are made each business day as of the
Evaluation Time set forth under Investment Summary, effective for all sales made
since the last of these evaluations (Section 4.01). The term 'business day', as
used herein and under 'Redemption', shall exclude Saturdays and Sundays; the
following holidays as observed by the New York Stock Exchange: New Year's Day,
Washington's birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas; and the following Federal holidays: Martin Luther
King's birthday, Columbus Day and Veteran's Day.
There is a period of a few days, beginning on the first day of each month,
during which the total amount of payments (including prepayments, if any) of
principal for the preceding month on the various mortgages underlying each of
the Ginnie Maes in the Portfolio will not yet have been reported by the issuer
to GNMA and made generally available to the public. During this period, the
precise principal amount of the underlying mortgages remaining outstanding for
each Ginnie Mae in the Portfolio, and therefore the precise principal amount of
such Security, will not be known, although the precise principal amount
outstanding for the preceding month will be known. Therefore, the precise amount
of principal to be acquired by the Trustee as a holder of these Securities and
distributed to Holders with the next monthly distribution will not be known. The
Sponsors do not expect that the amounts of these prepayments and the differences
in principal amounts from month to month will be material in relation to the
Trusts due to the number of mortgages underlying each Ginnie Mae and the number
of these Securities in a Fund. However, there can be no assurance that they will
not be material. For purposes of the determination by the Evaluator and for
purposes of calculations of accrued interest on the Units, during the period in
each month prior to the time when the precise amounts of principal of the Ginnie
Maes for the month become publicly available, the Evaluator will base its
evaluations and calculations, which are the basis for calculations of the Public
Offering Price, the Sponsors' Repurchase Price and the Redemption Price per
Unit, upon the principal amount outstanding for the preceding month (see
Redemption). The Sponsors expect that the differences in these principal amounts
from month to month will not be material to the Fund. Nevertheless, the Sponsors
will adopt procedures as to pricing and evaluation for Units, with such
modifications, if any, deemed necessary by the Sponsors for the protection of
the Holders, upon notice to the Holders, designed to minimize the impact of
these differences upon the calculation of the Public
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Offering Price per Unit, the Repurchase Price per Unit in the secondary market
or the Redemption Price per Unit.
COMPARISON OF PUBLIC OFFERING PRICE, SPONSORS' INITIAL REPURCHASE PRICE,
SECONDARY MARKET REPURCHASE PRICE AND REDEMPTION PRICE
On the business day prior to the Initial Date of Deposit the Public
Offering Price per Unit (which includes the sales charge) and the Sponsors'
Initial Repurchase Price per Unit (each based on the offering side evaluation of
the Securities--see above) exceeded the Sponsors' Repurchase Price and
Redemption Price per Unit (each based on the bid side evaluation thereof--see
Redemption) by the amounts set forth under Investment Summary.
The Initial Public Offering Price per Unit and the Initial Repurchase Price
are based on the offering side evaluations of the Securities. The secondary
market Public Offering Price and the Sponsors' Repurchase Price in the secondary
market are based on bid side evaluations of the Securities. Under current market
conditions the bid prices for Ginnie Maes are expected to be approximately 1%
lower than the offering prices thereof in the case of Ginnie Maes backed by
project mortgages and 1/4 to 1/2 of 1% lower in the cases of Ginnie Maes backed
by mortgages on 1-to 4-family dwellings. On the business day prior to the date
of this Prospectus, the bid side evaluation was lower than the offering side
evaluation by the amount set forth under Portfolio. For this reason, among
others (including fluctuations in the market prices of these Securities and the
fact that the Public Offering Price includes the 4.00% sales charge), the amount
realized by a Holder upon any sale or redemption of Units may be less than the
price paid by him for those Units.
PUBLIC DISTRIBUTION
During the initial offering period (i) for Units issued on the Initial Date
of Deposit and (ii) for additional Units issued after the Initial Date of
Deposit in respect of additional Ginnie Maes deposited by the Sponsors following
the Initial Date of Deposit, Units will be distributed to the public at the
Public Offering Price through the Underwriting Account set forth herein and
dealers. The initial offering period in each case is 30 days or less if all
Units are sold prior thereto. So long as all Units initially offered have not
been sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods. Upon the completion of the initial
offering Units which remain unsold or which may be acquired in the secondary
market (see Market for Units) may be offered directly to the public by this
Prospectus at the secondary market Public Offering Price determined in the
manner provided above.
The Sponsors intend to qualify Units for sale in any states in the U.S. 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
of the amount per 1,000 Units specified in the table above, but the Agent for
the Sponsors reserves the right to change the amount of the concession to
dealers and the concession to introducing dealers from time to time. Any dealer
or introducing dealer may reallow a concession not in excess of the concession
to dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters named in the Underwriting Account,
including the Sponsors, will receive sales charges at the rates set forth in the
table above. The Sponsors also realized a profit or loss on deposit of the
Securities in the Fund in the amount set forth under Investment Summary. This is
the difference between the cost of the Securities to the Fund (which is based on
the offering side evaluation of the Securities on the Initial Date of Deposit)
and the purchase price of the Securities to the Sponsors. On each subsequent
deposit of Securities with respect to the sale of additional Units to the
public, the Sponsors may realize a profit or loss. In addition, any Sponsor or
Underwriter may realize profits or sustain losses in respect of Securities
deposited in a Fund that were acquired by the Sponsor or Underwriter from
underwriting syndicates of which the Sponsor or Underwriter was a member. During
the initial offering period and thereafter to the extent that additional Units
continue to be offered for sale to the public the Underwriting Account also may
realize profits or sustain losses as a result of fluctuations after the Date of
Deposit in the Public Offering Price of the Units (see Investment Summary).
Cash, if
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any, made available by buyers of Units to the Sponsors prior to the settlement
dates for purchase of Units may be used in the Sponsors' businesses subject to
the limitations of Rule 15c3-3 under the Securities Exchange Act of 1934 and may
be of benefit to the Sponsors.
In maintaining a market for the Units (see Market for Units), the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units (based on the bid side evaluation of
the Securities) and the prices at which they resell the Units (which include the
sales charge and which may include the difference between the bid side and the
offering side evaluation for Units sold pursuant to the Reinvestment Plan) or
the prices at which they redeem the Units (based on the bid side evaluation of
the Securities), as the case may be.
MARKET FOR UNITS
During the initial offering period the Sponsors intend to offer to purchase
Units of this Series at prices based upon the offering side evaluation of the
Securities. Thereafter, while the Sponsors are not obligated to do so, it is
their intention to maintain a secondary market for Units of this Series and
continuously to offer to purchase Units of this Series at prices, subject to
change at any time, which will be computed on the basis of the bid side of the
market, taking into account the same factors referred to in determining the bid
side evaluation of Securities for purposes of redemption (see Redemption). The
secondary market provides Holders with a fully liquid investment. They can cash
in units at any time without a fee. The Sponsors may discontinue purchases of
Units of this Series at prices based on the bid side evaluation of Securities
should the supply of Units exceed demand, or for some other business reason. In
this event the Sponsors may nonetheless purchase Units, as a service to Holders,
at a price based on the current redemption price for those Units (see
Redemption). The Sponsors, of course, do not in any way guarantee the
enforceability, marketability or price of any Securities in the Portfolio or of
the Units. On any given day on which the secondary market is maintained the
price offered by the Sponsors for the purchase of Units shall be an amount not
less than the Redemption Price per Unit, based on the aggregate bid side
evaluation of the Securities on the date on which the Units are tendered for
redemption (see Redemption). Prospectuses relating to certain other unit trusts
indicate an intention, subject to change on the part of the respective sponsors
of such trusts, to purchase units of those trusts on the basis of a price higher
than the bid prices of the bonds in the trusts. Consequently, depending upon the
prices actually paid, the repurchase price of other sponsors for units of their
trusts may be computed on a somewhat more favorable basis than the repurchase
price offered by the Sponsors for Units of this Series in secondary market
transactions. As in this Series, the purchase price per unit of such unit trusts
will depend primarily on the value of the bonds in the portfolio of the trust.
The Sponsors may redeem any Units they have purchased in the secondary
market or through the Trustee in accordance with procedures described below if
they determine it is undesirable to continue to hold these Units in their
inventory. Factors which the Sponsors will consider in making such a
determination will include the number of units of all series of all funds which
they hold in their inventory, the saleability of the units and their estimate of
the time required to sell the units and general market conditions. For a
description of certain consequences of any redemption for remaining Holders, see
Redemption.
A Holder who wishes to dispose of his Units should inquire of his bank or
broker as to current market prices in order to determine if there exist
over-the-counter prices in excess of the redemption price.
REDEMPTION
While it is anticipated that Units in most cases can be sold in the
over-the-counter market for an amount equal to the Redemption Price per Unit
(see Market for Units), Units may be redeemed at the corporate trust office of
the Trustee set forth on the back cover of this Prospectus, upon tender of
Certificates, or, in the case of uncertificated Units, delivery of a request for
redemption, and payment of any relevant tax, without any other fee (Section
5.02). Certificates to be redeemed must be properly endorsed or accompanied by a
written instrument or instruments of transfer. Holders must sign exactly as
their names appear on the face of the Certificate with the signatures guaranteed
by an eligible guarantor institution, or in some other manner as may be
acceptable to the Trustee. In certain instances the Trustee may require
additional documents including, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority.
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On the seventh calendar day following the tender (or if the seventh
calendar day is not a business day on the first business day prior thereto), the
Holder will be entitled to receive in cash an amount per Unit equal to the
Redemption Price per Unit (see below) as determined as of the Evaluation Time
next following the tender. So long as the Sponsors are maintaining a market at
prices not less than the Redemption Price per Unit, the Sponsors will repurchase
any Units tendered for redemption no later than the close of business on the
second business day following the tender (see Market for Units). The Trustee is
authorized in its discretion, if the Sponsors do not elect to repurchase any
Units tendered for redemption or if a Sponsor tenders Units for redemption, to
sell the Units in the over-the-counter market at prices which will return to the
Holder a net amount in cash equal to or in excess of the Redemption Price per
Unit for the Units (Section 5.02).
Securities are to be sold from the Portfolio in order to make funds
available for redemption (Section 5.02) if funds are not otherwise available in
the Capital and Income Accounts to meet redemptions (see Administration of the
Fund--Accounts and Distributions). The Securities will be selected by the
Sponsors in accordance with procedures specified in the Indenture and so as to
maintain, as closely as practicable, the percentage relationship between the
principal amounts of Ginnie Maes of specified interest rates and ranges of
maturities in the Portfolio at the time of sale. Provision is made under the
Indenture for the Sponsors to specify minimum face amounts in which blocks of
Securities are to be sold in order to obtain the best price for the Fund. While
these minimum amounts may vary from time to time in accordance with market
conditions, the Sponsors believe that the minimum face amounts which would be
specified would range from $25,000 to $100,000.
To the extent that Securities are sold, the size of the Fund will be
reduced. Sales will usually be required at a time when Securities would not
otherwise be sold and may result in lower prices than might otherwise be
realized. In addition, because of the minimum face amounts in which Securities
are required to be sold, the proceeds of sale may exceed the amount required at
the time to redeem Units; these excess proceeds will be distributed to Holders.
The price received upon redemption may be more or less than the amount paid by
the Holder depending on the value of the Securities in the Portfolio at the time
of redemption.
The right of redemption may be suspended and payment postponed for any
period (1) during which the New York Stock Exchange, Inc. is closed other than
for customary weekend and holiday closings, or (2) during which, as determined
by the Securities and Exchange Commission ('SEC'), (i) trading on that Exchange
is restricted or (ii) an emergency exists as a result of which disposal or
evaluation of the Securities is not reasonably practicable, or (3) for such
other periods as the SEC may by order permit (Section 5.02).
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed by the Trustee as of the Evaluation
Time on each June 30 and December 31 (or the last business day prior thereto),
on any day on which the New York Stock Exchange is open, as of the Evaluation
Time next following the tender of any Unit for redemption, and on any other
business day desired by the Trustee or the Sponsors, by adding (a) the aggregate
bid side evaluation of the Securities, (b) cash on hand in the Fund (other than
cash covering contracts to purchase Securities), (c) accrued and unpaid interest
on the Securities up to but not including the date of redemption and (d) all
other assets of the Fund; deducting therefrom the sum of (x) taxes or other
governmental charges against the Fund not previously deducted, (y) accrued fees
and expenses of the Trustee (including legal and auditing expenses), the
Evaluator and counsel, and certain other expenses and (z) cash held for
distribution to Holders of record as of a date prior to the evaluation; and
dividing the result by the number of Units outstanding as of the date of
computation (Sections 4.01 and 5.01).
The aggregate current bid or offering price evaluation of the Securities is
determined by the Evaluator in the following manner: (a) on the basis of current
bid or offering prices for the Securities, (b) if bid or offering prices are not
available for any Securities, on the basis of current bid or offering prices for
comparable securities, (c) by determining the value of the Securities on the bid
or offering side of the market by appraisal or (d) by any combination thereof.
The Evaluator may obtain current price information as to the Securities from
investment dealers or brokers (including the Sponsors) which customarily deal in
this type of security.
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While Securities of the type included in the Portfolio involve minimal risk
of loss of principal, due to variations in interest rates the market value of
these Securities, and Redemption Price per Unit, can be expected to fluctuate
during the period of an investment in the Fund.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses incurred in establishing the Fund including the cost of the
initial preparation and printing of documents relating to the Fund, cost of the
initial evaluation, the initial fees and expenses of the Trustee, legal
expenses, advertising and selling expenses and any other out-of-pocket expenses,
will be paid by the Underwriting Account at no charge to the Fund.
FEES
An estimate of the total annual expenses of the Fund is set forth under
Investment Summary. The Sponsors' fee, which is earned for portfolio supervisory
services, is based on the largest face amount of Securities in the Portfolio
during each month of a calendar year in which additional Securities are
deposited, and thereafter, on the largest face amount of Securities in the
Portfolio at any time during the year. The Sponsors' Portfolio Supervision Fee,
which is not to exceed the maximum amount set forth under Investment Summary,
may exceed the actual costs of providing portfolio supervisory services for a
Fund, but at no time will the total amount they receive for supervisory services
rendered to all series of Government Securities Income Fund in any calendar year
exceed the aggregate cost to them of supplying these services in that year
(Section 7.06). In addition, the Sponsors may also be reimbursed for bookkeeping
or other administrative services provided to the Fund in amounts not exceeding
their costs of providing these services (Section 3.04,7.06). The Trustee
receives for its services as Trustee and for reimbursement of expenses incurred
on behalf of the Fund, payable in monthly installments, the amount per Unit set
forth under Investment Summary as Trustee's Annual Fee and Expenses, which
includes the Evaluator's fee, the estimated Sponsors' Portfolio Supervision Fee,
estimated reimbursable bookkeeping or other administrative expenses paid to the
Sponsors and certain mailing and printing expenses. The Trustee also receives
benefits to the extent that it holds funds on deposit in the various
non-interest bearing accounts created under the Indenture. The foregoing fees
may be adjusted for inflation in accordance with the terms of the Indenture
without approval of Holders (Sections 4.02, 7.06 and 8.05).
OTHER CHARGES
These include: (a) fees of the Trustee for extraordinary services (Section
8.05), (b) certain expenses of the Trustee (including legal and auditing
expenses) and of counsel designated by the Sponsors (Sections 3.04, 3.09,
8.01(e), 8.03 and 8.05), (c) various governmental charges (Sections 3.03 and
8.01(h), (d) expenses and costs of any action taken to protect a Trust (Section
8.01(d)), (e) indemnification of the Trustee for any losses, liabilities and
expenses incurred without gross negligence, bad faith or wilful misconduct on
its part (Section 8.05), (f) indemnification of the Sponsors for any losses,
liabilities and expenses incurred without gross negligence, bad faith, wilful
misconduct or reckless disregard of their duties (Section 7.05(b)) and (g)
expenditures incurred in contacting Holders upon termination of a Trust (Section
9.02). The amounts of these charges and fees are secured by a lien on the Trust
and, if the balances in the Income and Capital Accounts (see below) are
insufficient to provide for amounts payable by the Trust, the Trustee has the
power to sell Securities to pay such amounts (Section 8.05).
ADMINISTRATION OF THE FUND
RECORDS
The Trustee keeps a register of the names, addresses and holdings of all
Holders. The Trustee also keeps records of the transactions of the Fund,
including current lists of the Securities and a copy of the Indenture, which are
available to Holders for inspection at reasonable times during business hours
(Sections 6.01, 8.02 and 8.04).
ACCOUNTS AND DISTRIBUTIONS
The terms of the Ginnie Maes provide for payment to the holders thereof
(including the Fund), on the fifteenth day of each month, of amounts collected
by or due to the issuers thereof with respect to the
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underlying mortgages during the preceding month, except for the first payment,
which is not due until 45 days after the initial issue date of the Security.
Interest received, including that part of the proceeds of any disposition of
Securities which represents accrued interest and any late payment penalties, is
credited to an Income Account and other receipts to a Capital Account (Sections
3.01 and 3.02). Distributions for each Holder as of each Record Day will be made
on the following Distribution Day or shortly thereafter and shall consist of an
amount substantially equal to the Holder's pro rata share of the distributable
cash balance to the Income Account, plus his pro rata share of the distributable
cash balance of the Capital Account, computed as of the close of business on the
preceding Record Day. Proceeds received from the disposition of any of the
Securities subsequent to a Record Day and prior to the succeeding Distribution
Day will be held in the Capital Account to be distributed on the second
succeeding Distribution Day. The first distribution for persons who purchase
Units between a Record Day and a Distribution Day will be made on the second
Distribution Day following their purchase of Units. No distribution (other than
distributions of capital gains) need be made from the Capital Account if the
balance therein, exclusive of capital gains therein, is less than the amount set
forth under Investment Summary (Section 3.04). A Reserve Account may be created
by the Trustee by withdrawing from the Income or Capital Accounts, from time to
time, such amounts as it deems requisite to establish a reserve for any taxes or
other governmental charges that may be payable out of the Fund (Section 3.03).
Funds held by the Trustee in the various accounts created under the Indenture do
not bear interest (Section 8.01).
INVESTMENT ACCUMULATION PROGRAM
Monthly Income Distributions of interest and any principal or premium
received by the Fund will be paid in cash. However, a Holder may elect to have
these distributions reinvested in The GNMA Fund Investment Accumulation Program,
Inc. (the 'Program'). 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. Holders 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.
PORTFOLIO SUPERVISION
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Agent for the
Sponsors, may direct the disposition of Securities upon default in payment of
principal or interest which is not promptly cured by the guarantor of the
Securities, institution of certain legal proceedings, default in payment of
principal or of interest on other securities backed by the full faith and credit
of the United States, or decline in price or the occurrence of other market or
credit factors that in the opinion of the Sponsors would make the retention of
such Securities detrimental to the interest of the Holders or if the disposition
of these Securities is necessary in order to enable the Fund to make
distributions of the Funds capital gain net income or desirable in order to
maintain the qualification of the Fund as a regulated investment company under
the Code (Section 3.07).
If a default in the payment of principal or interest on any of the
Securities occurs and if the Sponsors fail to instruct the Trustee to sell or
hold such Securities the Indenture provides that the Trustee may, within 30 days
of such failure by the Sponsors, sell such Securities (Section 3.10). The
Sponsors are authorized by the Indenture to direct the Trustee to accept or
reject certain plans for the refunding or refinancing of any of the Securities
(Section 3.08).
The Sponsors are authorized to direct the Trustee to acquire replacement
obligations ('Replacement Securities') to replace contracts for securities which
have failed. Replacement Securities will be deposited into the Fund at a
purchase price that does not exceed the amount of funds reserved for the
purchase of the failed securities and that results in a yield to maturity and in
a current return, in each case as of that date of deposit, that are
substantially equivalent (taking into consideration then current market
conditions and the relative creditworthiness of the underlying obligation) to
the yield to maturity and current return of the failed securities. The
Replacement Securities shall be Ginnie Maes or other securities backed by the
full faith and credit of the United States, with maturity dates substantially
the same as those of the failed securities and shall not be when, as and if
issued obligations. The Indenture also requires that the purchase
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of Replacement Securities will not disqualify the Fund as a 'regulated
investment company' under the Code.
The Indenture also authorizes the Sponsors to increase the size and number
of Units of the Fund by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with instructions
to purchase Additional Securities, in exchange for the corresponding number of
additional Units subsequent to the Initial Date of Deposit provided that the
original proportionate relationship among the face amounts of each Security
established on the Initial Date of Deposit (the 'Original Proportionate
Relationship') is maintained to the extent practicable. Exact duplication of
percentage relationships may be impossible because fractions of Ginnie Maes may
not be purchased.
REPORTS TO HOLDERS
The Trustee will furnish Holders with each distribution a statement of the
amounts of interest and other receipts which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of time after
the end of each calendar year (normally within 20 to 60 days), the Trustee will
furnish to each person who at any time during the calendar year was a Holder of
record a statement (i) summarizing transactions for such year in the Income,
Capital and Reserve Accounts, (ii) identifying Securities sold and purchased
during and listing Securities held at the end of such year, (iii) stating the
Redemption Price per Unit based upon the computation thereof made on the
thirty-first day of December (or the last business day prior thereto) of such
calendar year, and (iv) specifying amounts actually distributed during such
calendar year from the Income Account and from the Capital Account, separately
expressed both as total dollar amounts and as dollar amounts per Unit
outstanding on the record dates for such distributions (Section 3.06). The
accounts of the Fund shall be audited not less frequently than annually by
independent certified public accountants designated by the Sponsors, and the
report of such accountants shall be furnished by the Trustee to Holders upon
request (Section 8.01(e)).
In order to enable them to comply with Federal and state tax reporting
requirements, Holders will be furnished upon request to the Trustee with
evaluations of Securities furnished to it by the Evaluator (Section 4.02).
CERTIFICATES
Certain of the Sponsors may collect additional charges for registering and
shipping certificates to purchasers. These Certificates are transferable or
interchangeable upon presentation at the corporate trust office of the Trustee,
with a payment of $2.00 if required by the Trustee (or such other amount as may
be specified by the Trustee and approved by the Sponsors) for each new
Certificate and any sums payable for taxes or other governmental charges imposed
upon such transaction (Section 6.01) and compliance with the formalities
necessary to redeem Certificates (see Redemption). Mutilated, destroyed, stolen
or lost Certificates will be replaced upon delivery of satisfactory indemnity
and payment of expenses incurred (Section 6.02).
Alternatively, Holders may elect to hold their Units in uncertificated
form. The Trustee will credit each such Holder's account with the number of
Units purchased by such Holder. This relieves the Holder of the responsibility
of safekeeping of Certificates and of the need to deliver Certificates upon sale
of Units. Uncertificated Units are transferable through the same procedures
applicable to Units evidenced by Certificates (see above), except that no
Certificate need be presented to the Trustee and none will be issued upon
transfer unless requested by the Holder. A Holder may at any time request the
Trustee (at the Trust's cost) to issue Certificates for Units.
AMENDMENT AND TERMINATION
The Sponsors and Trustee may amend an Indenture, without the consent of the
Holders, (a) to cure any ambiguity or to correct or supplement any provision
thereof which may be defective or inconsistent, (b) to change any provision
thereof as may be required by the SEC or any successor governmental agency or
(c) to make such other provisions as shall not materially adversely affect the
interest of the Holders (as determined in good faith by the Sponsors). An
Indenture may also be amended in any respect by the Sponsors and Trustee, or any
of the provisions thereof may be waived, with the consent of the Holders of 51%
of the Units then outstanding, provided that no such amendment or waiver will
reduce the interest in
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the Fund of any Holder without the consent of such Holder or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of all Holders (Section 10.01).
The Indenture will terminate upon the maturity, sale, redemption or other
disposition of the last Security held thereunder but in no event is it to
continue beyond the mandatory termination date set forth under Investment
Summary. The Indentures may be terminated by the Sponsors if the value of the
Fund is less than the minimum value set forth under Investment Summary, and may
be terminated at any time by written instrument executed by the Sponsors and
consented to by the Holders of 51% of the Units (Sections 8.01(g) and 9.01). The
Trustee will deliver written notice of any termination to each Holder within a
reasonable period of time prior to such termination, specifying the times at
which the Holders may surrender their Certificates for cancellation. Within a
reasonable period of time after such termination, the Trustee must sell all of
the Securities then held and distribute to each Holder, upon surrender for
cancellation of his Certificates, and after deductions of accrued and unpaid
fees, taxes and governmental and other charges, such Holder's interest in the
Income and Capital Accounts (Section 9.01). Such distribution will normally be
made by mailing a check in the amount of each Holder's interest in such accounts
to the address of such Holder appearing on the record books of the Trustee.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
THE TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsors. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsors without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities or if for any reason the Sponsors determine in good
faith that the replacement of the Trustee is in the best interest of the
Holders. Such resignation or removal shall become effective upon the acceptance
of appointment by the successor which may, in the case of a resigning or removed
Co-Trustee, be one or more of the remaining Co-Trustees. In case of such
resignation or removal the Sponsors are to use their best efforts to appoint a
successor promptly and if upon resignation of the Trustee no successor has
accepted appointment within thirty days after notification, the Trustee may
apply to a court of competent jurisdiction for the appointment of a successor
(Section 8.06(b)). The Trustee shall be under no liability for any action taken
in good faith in reliance on prima facie properly executed documents or for the
disposition of monies or Securities, nor shall it be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any Security.
This provision, however, shall not protect the Trustee in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsors to act, the
Trustee may act under the Indenture and shall not be liable for any such action
taken in good faith. The Trustee shall not be personally liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
the interest thereon. In addition, the Indenture contains other customary
provisions limiting the liability of the Trustee (Sections 3.04, 3.10 and 8.01).
THE EVALUATOR
The Evaluator may resign or may be removed, effective upon the acceptance
of appointment by its successor, by the Sponsors, who are to use their best
efforts to appoint a successor promptly. If upon resignation of the Evaluator no
successor has accepted appointment within thirty days after notification, the
Evaluator may apply to a court of competent jurisdiction for the appointment of
a successor (Section 4.05). Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information available to
it; provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsors or the Holders for errors in judgment. This provision,
however, shall not protect the Evaluator in cases of wilful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties
(Section 4.04). The Trustee, the Sponsors and the Holders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof.
THE SPONSORS
Any Sponsor may resign if one remaining Sponsor maintains a net worth of
$2,000,000 and is agreeable to such resignation (Section 7.04). 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 shall fail to
perform its duties or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by
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public authorities, then the Trustee may (a) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and as may not
exceed amounts prescribed by the SEC, or (b) terminate the Indenture and
liquidate the Trust or (c) continue to act as Trustee without terminating the
Indenture (Section 8.01(f)). Merrill Lynch has been appointed by the other
Sponsors as agent for purposes of taking action under the Indentures (Section
7.01). If the Sponsors are unable to agree with respect to action to be taken
jointly by them under the Indentures and they cannot agree as to which Sponsor
shall continue to act as sole Sponsor, then Merrill Lynch shall continue to act
as sole Sponsor (Section 7.02(b)). If one of the Sponsors fails to perform its
duties or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, then such Sponsor is automatically discharged
and the other Sponsors shall act as sole Sponsors (Section 7.02(a)). The
Sponsors shall be under no liability to the Fund or to the Holders for taking
any action or for refraining from taking any action in good faith or for errors
in judgment and shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the sale of any Security. This provision, however,
shall not protect the Sponsors in cases of wilful misfeasance, bad faith, gross
negligence or reckless disregard of their obligations and duties (Section 7.05).
The Sponsors and their successors are jointly and severally liable under the
Indenture. A Sponsor may transfer all or substantially all of its assets to a
corporation or partnership which carries on its business and duly assumes all of
its obligations under the Indenture and in such event it shall be relieved of
all further liability under the Indenture (Section 7.03).
MISCELLANEOUS
TRUSTEE
The Trustee is named on the back cover page of this Prospectus and is
either The Bank of New York, a New York banking corporation with its Unit
Investment Trust Department at 101 Barclay Street, New York, New York 10286
(which is subject to supervision by the New York Superintendent of Banks, the
Federal Deposit Insurance Corporation ('FDIC') and the Board of Governors of the
Federal Reserve System ('Federal Reserve')); Bankers Trust Company, a New York
banking corporation with its corporate trust office at 4 Albany Street, 7th
Floor, New York, New York 10015 (which is subject to supervision by the New York
Superintendent of Banks, the FDIC and the Federal Reserve); or The Chase
Manhattan Bank, N.A., a national banking association with its Unit Trust
Department at 1 Chase Manhattan Plaza, 3B, New York, New York 10081 (which is
subject to supervision by the Comptroller of the Currency, the FDIC and the
Federal Reserve) or (acting as Co-Trustees) Investors Bank & Trust Company, a
Massachusetts trust company with its unit investment trust servicing group at
One Lincoln Plaza, Boston, Massachusetts 02111 (which is subject to supervision
by the Massachusetts Commissioner of Banks, the FDIC and the Federal Reserve)
and The First National Bank of Chicago, a national banking association with its
corporate trust office at One First National Plaza, Suite 0126, Chicago,
Illinois 60670-0126 (which is subject to supervision by the Comptroller of the
Currency, the FDIC and the Federal Reserve).
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. Emmet, Marvin & Martin, 48 Wall Street, New York, New York 10005, act
as counsel for The Bank of New York, as Trustee. Bingham, Dana & Gould, 150
Federal Street, Boston, Massachusetts 02110, act as counsel for The First
National Bank of Chicago and Investors Bank & Trust Company, as Co-Trustees.
Hawkins, Delafield & Wood, 67 Wall Street, New York, New York 10005, act as
counsel for Bankers Trust Company, as Trustee.
AUDITORS
The Statement of Condition, including the Portfolio of the Fund, included
herein, has been audited by Deloitte & Touche, independent accountants, as
stated in their opinion appearing herein, and has been included in reliance upon
that opinion given on the authority of that firm as experts in accounting and
auditing.
SPONSORS
Each Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business and is a member of the New York
Stock Exchange, Inc., other major
19
<PAGE>
<PAGE>
securities exchanges and commodity exchanges, and the National Association of
Securities Dealers, Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Merrill Lynch Asset Management, a Delaware corporation each of which is a
subsidiary of Merrill Lynch & Co., Inc., are engaged in the investment advisory
business. Smith Barney Shearson Inc., an investment banking and securities
broker-dealer firm, is an indirect wholly-owned subsidiary of The Travelers Inc.
Prudential Securities Incorporated, a wholly-owned subsidiary of Prudential
Securities Inc. and an indirect wholly-owned subsidiary of the Prudential
Insurance Company of America, is engaged in the investment advisory business.
Dean Witter Reynolds Inc., a principal operating subsidiary of Dean Witter,
Discover & Co., is engaged in the investment advisory business. PaineWebber
Incorporated is engaged in the investment advisory business and is a
wholly-owned subsidiary of PaineWebber Group Inc. 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 such companies
and sell securities to such companies in their capacities as brokers or dealers
in securities.
Each Sponsor (or a predecessor) has acted as Sponsor of various series of
Defined Asset Funds. A subsidiary of Merrill Lynch, Pierce, Fenner & Smith
Incorporated succeeded in 1970 to the business of Goodbody & Co., which had been
a co-Sponsor of Defined Asset Funds since 1964. That subsidiary resigned as
Sponsor of each of the Goodbody series in 1971. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been co-Sponsor and the Agent for the Sponsors of each
series of Defined Asset Funds created since 1971. Shearson Lehman Brothers Inc.
('Shearson') and certain of its predecessors were underwriters beginning in 1962
and co-Sponsors from 1965 to 1967 and from 1980 to 1993 of various Defined Asset
Funds. As a result of the acquisition of certain of Shearson's assets by Smith
Barney, Harris Upham & Co. Incorporated and Primerica Corporation (now The
Travelers Inc.), Smith Barney Shearson now serves as co-Sponsor of various
Defined Asset Funds. Prudential Securities Incorporated and its predecessors
have been underwriters of Defined Asset Funds since 1961 and co-Sponsors since
1964, in which year its predecessor became successor co-Sponsor to the original
Sponsor. Dean Witter Reynolds Inc. and its predecessors have been underwriters
of various Defined Asset Funds since 1964 and co-Sponsors since 1974.
PaineWebber Incorporated and its predecessor have co-Sponsored certain Defined
Asset Funds since 1983.
The Sponsors have maintained secondary markets for Defined Asset Funds for
over 20 years. For decades informed investors have purchased unit investment
trusts for dependability and professional selection of investments. Defined
Asset Funds offer 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 a nest egg for
retirement, or attractive, regular current income consistent with relative
protection of capital. There are Defined Asset Funds to meet the needs of just
about any investor.
Unit investment trusts are particularly suited for the many investors who
prefer to seek long-term profits 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 comparable breadth
and diversity. Sometimes it takes a combination of Defined Asset Funds to plan
for an investor's objectives.
One of the most important decisions an investor faces may be how to
allocate his 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 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.
Over time, stock investments have substantially outperformed most other asset
classes. However, stocks also carry greater risks, including the risk that the
value of your investment can go down.
The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
1993, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investments and is no guarantee of
future results, either of these investment categories or of any Defined Fund.
Defined Funds also have sales charges and expenses, which are not reflected in
this chart.
20
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stocks (S&P 500)
20 yr. 12.76%
10 yr. 14.94%
Small-company stocks
20 yr. 18.82%
10 yr. 9.96%
Long-term corporate bonds
20 yr. 10.16%
10 yr. 14.00%
U.S. Treasury bills (short-term)
20 yr. 7.49%
10 yr. 6.35%
Consumer Price Index
20 yr. 5.92%
10 yr. 3.73%
0 2 4 6 8 10 12 14 16 18 20 %
</TABLE>
Source: Ibbotson Associates (Chicago)
Used with permission. All rights reserved.
Instead of having to select individual securities on their own, purchasers
of Defined Funds benefit from the expertise of Defined Asset Funds' experienced
buyers and research analysts. In addition, they gain the advantage of
diversification by investing in units of a Defined Fund holding securities of
several different issuers. Such diversification reduces risk, but does not
eliminate it. While the portfolio of a managed fund, such as a mutual fund,
continually changes, defined bond funds offer a defined portfolio and a schedule
of income distributions identified in the prospectus. Investors know, generally,
when they buy, the issuers, maturities, call dates and ratings of the securities
in the portfolio. Of course, the portfolio may change somewhat over time as
additional securities are deposited, as securities mature or are called or
redeemed or as they are sold to meet redemptions and in certain other limited
circumstances. Investors buy bonds for dependability--they know what they can
expect to earn and that principal is distributed as the bonds mature. Investors
also know at the time of purchase their estimated income and current long-term
returns, subject to credit and market risks and to changes in the portfolio or
fund expenses.
Defined Asset Funds offers a variety of fund types. The tax exemption of
municipal securities, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Municipal Defined Funds
offer a simple and convenient way for investors to earn monthly income free from
regular Federal income tax. Defined Municipal Investment Trust Funds have
provided investors with tax-free income for more than 30 years. Defined
Corporate Income Funds, with higher current returns than municipal or government
funds, are suitable for Individual Retirement Accounts and other tax-
advantaged accounts and provide monthly income. Defined Government Securities
Income Funds provide a way to participate in markets for U.S. government
securities while earning an attractive current return. Defined International
Bond Funds, invested in bonds payable in foreign currencies, offer the potential
to profit from changes in currency values and possibly from interest rates
higher than paid on comparable US bonds, but investors incur a higher risk for
these potentially greater returns. Historically, stocks have offered growth of
capital, and thus some protection against inflation, over the long term. Defined
Equity Income Funds offer participation in the stock market, providing current
income as well as the possibility of capital appreciation. The S&P Index Trusts
offer a convenient and inexpensive way to participate in broad market movements.
Concept Series seek to capitalize on selected anticipated economic, political or
business trends. Utility Stock Series, consisting of stocks of issuers with
established reputations for regular cash dividends, seek to benefit from
dividend increases. Select Ten Portfolios seek total return by investing for one
year in the ten highest yielding stocks on a designated stock index.
21
<PAGE>
<PAGE>
DESCRIPTION OF STANDARD & POOR'S RATING (AS DESCRIBED BY STANDARD & POOR'S
RATINGS GROUP, A DIVISION OF MCGRAW HILL, INC.)
A Standard & Poor's rating on the units of an investment trust (hereinafter
referred to collectively as 'units' and 'fund') is a current assessment of
creditworthiness with respect to the investments held by such fund. This
assessment takes into consideration the financial capacity of the issuers and of
any guarantors, insurers, lessees, or mortgagors with respect to such
investments. The assessment, however, does not take into account the extent to
which fund expenses will reduce payment to the unit holder of the interest and
principal required to be paid on portfolio assets. In addition, the rating is
not a recommendation to purchase, sell, or hold units, as the rating does not
comment as to market price of the units or suitability for a particular
investor.
Units rated AAA represent interests in funds composed exclusively of
securities that, together with their credit support, are rated AAA by Standard &
Poor's and/or certain short-term investments. This AAA rating is the highest
rating assigned by Standard & Poor's to a security. Capacity to pay interest and
repay principal is extremely strong.
EXCHANGE OPTION
ELECTION
Holders may elect to exchange any or all of their Units of this Series for
units of one or more of the series of Funds listed in the table set forth below
(the 'Exchange Funds'), which normally are sold in the secondary market at
prices which include the sales charge indicated in the table. Certain series of
the Funds listed have lower maximum applicable sales charges than those stated
in the table; also the rates of sales charges may be changed from time to time.
No series with a maximum applicable sales charge of less than 3.50% of the
public offering price is eligible to be acquired under the Exchange Option, with
the following exceptions: (1) Freddie Mac Series may be acquired by exchange
during the initial offering period from any of the Exchange Funds listed in the
table and (2) Units of any Select Ten Portfolio may be acquired during their
initial offering period or thereafter by exchange from any Exchange Fund Series,
if available; units of Select Ten Portfolios may be exchanged only for units of
another Select Ten Series, if available. Units of the Exchange Funds may be
acquired at prices which include the reduced sales charge for Exchange Fund
units listed in such table, subject, however, to these important limitations:
First, there must be a secondary market maintained by the Sponsors in
both the Units of this Series being exchanged and a primary or secondary
market in units of the series being acquired, and there must be units of
the applicable Exchange Fund lawfully available for sale in the state in
which the Holder is resident. There is no legal obligation on the part of
the Sponsors to maintain a market for any units or to maintain the legal
qualification for sale of any of the units in any state or states.
Therefore, there is no assurance that a market for units will in fact exist
or that any units will be lawfully available for sale on any given date at
which a Holder wishes to sell his Units of this Series and thus there is no
assurance that the Exchange Option will be available to any Holder.
Second, when units held for less than five months are exchanged for
units with a higher regular sales charge, the sales charge will be the
greater of (a) the reduced sales charge set forth in the table below or (b)
the difference between the sales charge paid in acquiring the units being
exchanged and the regular sales charge for the quantity of units being
acquired, determined as of the date of the exchange.
Third, exchanges will be effected in whole units only. If the proceeds
from the Units being surrendered are less than the cost of a whole number
of units being acquired, the exchanging Holder will be permitted to add
cash in an amount to round up to the next highest number of whole units.
Fourth, the Sponsors reserve the right to modify, suspend or terminate
the Exchange Option at any time without further notice to Holders. In the
event the Exchange Option is not available to a Holder at the time he
wishes to exercise it, the Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Holder.
PROCEDURES
To exercise the Exchange Option, a Holder should notify one of the Sponsors
of his desire to use the proceeds from the sale of his Units of this Series to
purchase units of one or more of the Exchange Funds.
22
<PAGE>
<PAGE>
If units of the applicable outstanding series of the Exchange Fund are at that
time available for sale, the Holder may select the series or group of series for
which he desires his Units to be exchanged. Of course, the Holder will be
provided with a current prospectus or prospectuses relating to each series in
which he indicates interest. The exchange transaction will operate in a manner
essentially identical to any secondary market transaction, i.e., Units will be
repurchased at a price equal to the aggregate bid side evaluation per Unit of
the Securities in the Portfolio plus accrued interest. Units of the Exchange
Fund will be sold to the Holder at a price equal to the bid side evaluation per
unit of the underlying securities in the portfolio plus interest plus the
applicable sales charge listed in the table below. Units of Defined Asset
Funds--Equity Income Fund are sold, and will be repurchased, at a price normally
based on the closing sale prices on the New York Stock Exchange, Inc. of the
underlying securities in the portfolio. The maximum applicable sales charges for
units of the Exchange Funds are also listed in such table. Excess proceeds not
used to acquire whole Exchange Fund units will be paid to the exchanging Holder.
THE EXCHANGE FUNDS
The current return from taxable fixed income securities is normally higher
than that available from tax exempt fixed income securities. Certain of the
Exchange Funds do not provide for periodic payments of interest and are best
suited for purchase by IRA's, Keogh Plans, pension funds or other tax-deferred
retirement plans. Consequently, some of the Exchange Funds may be inappropriate
investments for some Holders and therefore may be inappropriate exchanges for
Units of this Series. The table below indicates certain characteristics of each
of the Exchange Funds which a Holder should consider in determining whether each
such Exchange Fund would be an appropriate investment vehicle and an appropriate
exchange for Units of this Series.
TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange or Conversion Option for
units of a series of another Fund should constitute a 'taxable event' under the
Code, requiring a Holder to recognize a tax gain or loss, subject to the
following limitation. The Internal Revenue Service may seek to disallow a loss
(or a pro rata portion thereof) on an exchange of Units if the Units received by
a Holder in connection with such an exchange represent securities that are not
materially different from the securities that his previous Units represented
(e.g., both Funds contain securities issued by the same obligor that have the
same material terms). Holders are urged to consult their own tax advisers as to
the tax consequences to them of exchanging units in particular cases.
A Holder's tax gain recognized on an exchange of Units for units of an
Exchange Fund which is also a regulated investment company will increase (or a
Holder's tax loss will decrease) by the lesser of (a) the sales charge
applicable to the Units of this series or (b) the reduction in the sales charge
on the Exchange Fund Units, if the exchange is made within 90 days of the
purchase of the Units of this series. Any such increase (or decrease) will be
reflected in a decreased tax gain (or increased tax loss) when the Exchange Fund
Units are sold.
EXAMPLE
Assume that a Holder, who has three units of a fund with a 5.5% sales
charge and a current price (offering side evaluation plus accrued interest) of
$1,100 per unit, sells his units and exchanges the proceeds for units of a
series of an Exchange Fund with a current price of $950 per unit and the same
sales charge. The proceeds from the Holder's units will aggregate $3,300. Since
only whole units of an Exchange Fund may be purchased under the Exchange Option,
the Holder would be able to acquire three units in the Exchange Fund for a total
cost of $3,860 ($3,800 for units and $60 for the $15 per unit sales charge) by
adding an extra $560 in cash. Were the Holder to acquire the same number of
units at the same time in the regular secondary market maintained by the
Sponsors, the price would be $4,021.16 ($3,800 for the units and $221.16 for the
5.50% sales charge).
23
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM REDUCED
NAME OF APPLICABLE SALES CHARGE INVESTMENT
EXCHANGE FUND SALES CHARGE* FOR SECONDARY MARKET** CHARACTERISTICS
<S> <C> <C> <C>
DEFINED ASSET FUNDS--MUNICIPAL
INVESTMENT TRUST FUND
Monthly Payment, State and Multistate
Series 5.50%+ $15 per unit long-term, fixed rate, tax-exempt
income
Intermediate Term Series 4.50%+ $15 per unit intermediate-term, fixed rate,
tax-exempt income
Insured Series 5.50%+ $15 per unit long-term, fixed rate, tax-exempt
income, underlying securities insured
by insurance companies
DEFINED ASSET FUNDS--MUNICIPAL INCOME FUND
Insured Discount Series 5.50%+ $15 per unit long-term, fixed rate, insured, tax-
exempt income, taxable capital gains
DEFINED ASSET FUNDS--
INTERNATIONAL BOND FUND
Multi-Currency Series 5.50% $15 per unit intermediate-term, fixed rate,
payable in foreign currencies,
taxable income
Australian and New Zealand Dollar Bonds 3.75% $15 per unit intermediate-term, fixed rate,
Series payable in Australian and New Zealand
dollars, taxable income
Australian Dollar Bond Series 3.75% $15 per unit intermediate-term, fixed rate,
payable in Australian dollars,
taxable income
Canadian Dollar Bond Series 3.75% $15 per unit short intermediate term, fixed rate,
payable in Canadian dollars, taxable
income.
DEFINED ASSET FUNDS--EQUITY INCOME FUND
Utility Common Stock Series 4.50% $15 per 1,000 dividends, taxable income, underlying
units*** securities are common stocks of
public utilities
Concept Series 4.00% $15 per 100 units underlying securities constitute a
professionally selected portfolio of
common stocks consistent with an
investment idea or concept
Select Ten Portfolios (domestic and 2.75% $17.50 per 1,000 units 10 highest dividend yielding stocks
international) in a given securities index; seeks
higher total return than that index;
terminates after one year
DEFINED ASSET FUNDS--CORPORATE INCOME FUND
Monthly Payment Series 5.50% $15 per unit long-term, fixed rate, taxable income
Intermediate Term Series 4.75% $15 per unit intermediate-term, fixed rate,
taxable income
Cash or Accretion Bond Series and SELECT 3.50% $15 per 1,000 units intermediate-term, fixed rate,
Series underlying securities composed of
compound interest obligations
principally secured by collateral
backed by the full faith and credit
of the United States, taxable income,
appropriate for IRA's or tax-deferred
retirement plans
Select High Yield Series 5.50% $15 per unit non-investment grade, intermediate
and long term, fixed rate, taxable
income
Insured Series 5.50% $15 per unit long term, fixed rate, taxable
income, underlying securities are
insured
</TABLE>
- ----------------------
* As described in the prospectuses relating to certain Exchange Funds, this
sales charge for secondary market sales may be reduced on a graduated scale in
the case of quantity purchases.
** The reduced sales charge for Units acquired during their initial offering
period is: $20 per unit for Series for which the Reduced Sales Charge for
Secondary Market (above) is $15 per unit; $20 per 100 units for Series for
which the Reduced Sales Charge for Secondary Market is $15 per 100 units;
and $20 per 1,000 units for Series for which the Reduced Sales Charge for
Secondary Market is $15 per 1,000 units.
*** The reduced sales charge for the Sixth Utility Common Stock Series of The
Equity Income Fund is $15 per 2,000 units and prior Utility Common Stock
Series is $7.50 per unit.
+ Subject to reduction depending on the maturities of the underlying
securities.
24
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
MARKET**CHARACTERISTICS
DEFINED ASSET FUNDS--GOVERNMENT SECURITIES
INCOME FUND
GNMA Series (other than those below) 4.25% $15 per unit long-term, fixed rate, taxable
income, underlying securities backed
by the full faith and credit of the
United States
GNMA Series E or other GNMA Series having 4.25% $15 per 1,000 units long-term, fixed rate, taxable
units with an initial face value of $1.00 income, underlying securities backed
by the full faith and credit of the
United States, appropriate for IRA's
or tax-deferred retirement plans
Freddie Mac Series 3.50% $15 per 1,000 units intermediate term, fixed rate,
taxable income, underlying securities
are backed by Federal Home Loan
Mortgage Corporation but not by U.S.
Government
</TABLE>
- ----------------------
* As described in the prospectuses relating to certain Exchange Funds, this
sales charge for secondary market sales may be reduced on a graduated scale in
the case of quantity purchases.
** The reduced sales charge for Units acquired during their initial offering
period is: $20 per unit for Series for which the Reduced Sales Charge for
Secondary Market (above) is $15 per unit; $20 per 100 units for Series for
which the Reduced Sales Charge for Secondary Market is $15 per 100 units;
and $20 per 1,000 units for Series for which the Reduced Sales Charge for
Secondary Market is $15 per 1,000 units.
25
<PAGE>
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
<PAGE>
Defined
Asset FundsSM
<TABLE>
<S> <C>
Sponsors: Government
Merrill Lynch, Securities Income Fund
Pierce, Fenner & Smith Incorporated GNMA Series 1W
Unit Investment Trusts
P.O. Box 9051
Princeton, NJ 08543-9051
(609) 282-8500
A Unit Investment Trust
Smith Barney Shearson Inc.
Unit Trust Department
Two World Trade Center
101st Floor
New York, NY 10048
(212) 298-7009 Prospectus
This Prospectus does not contain all of the information with
PaineWebber Incorporated respect to the investment company set forth in its registration
1200 Harbor Blvd. statement and exhibits relating thereto which have been filed with
Weehawken, N.J. 07087 the Securities and Exchange Commission, Washington, D.C., under the
(201) 902-3000 Securities Act of 1933 and the Investment Company Act of 1940, and
to which reference is hereby made.
Prudential Securities Incorporated
One Seaport Plaza
199 Water Street No person is authorized to give any information or to make any
New York, NY 10292 representations not contained in this Prospectus; and any
(212) 776-1000 information or representation not contained herein must not be
relied upon. This Prospectus does not constitute an offer to
Dean Witter Reynolds Inc. sell, or a solicitation of an offer to buy, securities in any state
Two World Trade Center to any person to whom it is not lawful to make such offer in such
59th Floor state.
New York, NY 10048
(212) 392-2222
Evaluator:
Kenny S&P Evaluation Services
65 Broadway
New York, N.Y. 10006
Independent Accountants:
Deloitte & Touche
One World Trade Center
New York, NY 10048
Trustee:
The Chase Manhattan Bank, N.A.
Unit Trust Department
Box 2051
New York, N.Y. 10081
1-800-323-1508
</TABLE>
14833-5/94
<PAGE>
<PAGE>
PART II
Additional Information Not Included in the Prospectus
<TABLE>
<C> <S> <C>
A. The following information relating to the Depositors is incorporated by reference to the SEC filings
indicated and made a part of this Registration Statement.
SEC FILE OR
IDENTIFICATION NUMBER
----------------------------
I. Bonding Arrangements and Date of Organization of the Depositors
filed pursuant to Items A and B of Part II of the Registration
Statement on Form S-6 under the Securities Act of 1933:
Merrill Lynch, Pierce, Fenner & Smith Incorporated................ 2-52691
Prudential Securities Incorporated................................ 2-61418
Smith Barney Shearson Inc......................................... 33-29106
Dean Witter Reynolds Inc.......................................... 2-60599
PaineWebber Incorporated.......................................... 2-87965
II. Information as to Officers and Directors of the Depositors filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and
15b3-1 of the Securities Exchange Act of 1934:
Merrill Lynch, Pierce, Fenner & Smith Incorporated................ 8-7721
Prudential Securities Incorporated................................ 8-12321
Smith Barney Shearson Inc......................................... 8-8177
Dean Witter Reynolds Inc.......................................... 8-14172
PaineWebber Incorporated.......................................... 8-16267
III. Charter documents of the Depositors filed as Exhibits to the
Registration Statement on Form S-6 under the Securities Act of
1933 (Charter, By-Laws):
Merrill Lynch, Pierce, Fenner & Smith Incorporated................ 2-73866, 2-77549
Prudential Securities Incorporated................................ 2-86941, 2-86941
Smith Barney Shearson Inc......................................... 33-20499
Dean Witter Reynolds Inc.......................................... 2-60599, 2-86941
PaineWebber Incorporated.......................................... 2-87965, 2-87965
B. The Internal Revenue Service Employer Identification Numbers of the Sponsors and Trustee are as
follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated................ 13-5674085
Prudential Securities Incorporated................................ 13-6134767
Smith Barney Shearson Inc......................................... 13-1912900
Dean Witter Reynolds Inc.......................................... 94-1671384
PaineWebber Incorporated.......................................... 13-2638166
The Chase Manhattan Bank, N.A..................................... 13-2633612
</TABLE>
II-1
<PAGE>
<PAGE>
SERIES OF GOVERNMENT SECURITIES INCOME FUND
AND MUNICIPAL INVESTMENT TRUST FUND
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
SEC
SERIES NUMBER FILE NUMBER
<S> <C>
Government Securities Income Fund, Monthly Payment U.S. Treasury Series-1............... 2-81969
Municipal Investment Trust Fund, Four Hundred Thirty-Eighth Monthly Payment Series...... 33-16561
Government Securities Income Fund, Monthly Payment U.S. Treasury Series-8............... 33-31728
Municipal Investment Trust Fund, Multistate Series-48................................... 33-50247
Government Securities Income Fund, U.S. Treasury Strategy Trust-1....................... 33-48915
</TABLE>
CONTENTS OF REGISTRATION STATEMENT
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 Cross-Reference
Sheet to the Registration
Statement of The Government Securities Income Fund, GNMA Series R, 1933 Act File
No. 2-88061).
The Prospectus.
Additional Information not included in the Prospectus (Part II). Consent of
independent accountants.
The following exhibits:
<TABLE>
<S> <C> <C>
1.1 --Form of Trust Indenture.
1.1.1 --Form of Standard Terms and Conditions of Trust Effective October 21, 1993
(incorporated by reference to Exhibit 1.1.1 to the Registration Statement of
Municipal Investment Trust Fund, Multistate Series 48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference to Exhibit 1.2
to the Registration Statement of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
2.1 --Form of Certificate of Beneficial Interest (included in Exhibit 1.1.1).
3.1 --Opinion of counsel as to the legality of the securities being issued including their
consent to the
use of their names under the headings 'Taxes' and 'Miscellaneous--Legal Opinion' in
the
Prospectus.
4.1.1 --Consent of the Evaluator.
4.1.2 --Consent of Rating Agency.
</TABLE>
R-1
<PAGE>
<PAGE>
SIGNATURES
The registrant hereby identifies the series numbers of Government
Securities Income Fund and Municipal Investment Trust Fund listed on page R-1
for the purposes of the representations required by Rule 487 and represents the
following:
1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential information for, the
series with respect to which this registration statement is being filed,
this registration statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined
by the Commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
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 4TH DAY OF MAY,
1994.
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 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 Smith Barney
Shearson 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 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.
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.
R-2
<PAGE>
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney have been filed under Form
the Board of Directors of Merrill Lynch, Pierce, SE and the following 1933 Act File Number:
Fenner & Smith Incorporated: 33-43466
</TABLE>
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
ERNEST V. FABIO
-----------------------------
By: ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney have been filed under Form
the Board of Directors of Prudential Securities SE and the following 1933 Act File Number:
Incorporated: 33-41631
</TABLE>
ALAN D. HOGAN
HOWARD A. KNIGHT
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS
RICHARD R. HOFFMANN
---------------------------------------
By: RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-4
<PAGE>
<PAGE>
SMITH BARNEY SHEARSON INC.
DEPOSITOR
<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney have been filed under the
the Board of Directors of Smith Barney Shearson following 1933 Act File Numbers: 33-49753
Inc.: and 33-51607
</TABLE>
RONALD A. ARTINIAN
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
ROBERT K. DIFAZIO
ROBERT DRUSKIN
HERBERT DUNN
TONI ELLIOTT
LEWIS GLUCKSMAN
ROBERT F. GREENHILT
THOMAS GUBA
HENRY U. HARRIS
JOHN B. HOFFMAN
A. RICHARD JANIAK, JR.
ROBERT Q. JONES
ROBERT B. KANE
JEFFREY LANE
JACK H. LEHMAN III
ROBERT H. LESSIN
JOEL N. LEVY
THOMAS A. MAGUIRE, JR.
JOHN J. MCATEE, JR.
HOWARD D. MARSH
JOHN F. MCCANN
WILLIAM J. MILLS II
JOHN C. MORRIS
CHARLES O'CONNOR
HUGH J. O'HARE
JOSEPH J. PLUMERI II
JACK L. RIVKIN
A. GEORGE SAKS
BRUCE D. SARGENT
DON M. SHAGRIN
DAVID M. STANDRIDGE
MELVIN B. TAUB
JACQUES S. THERIOT
STEPHEN J. TREADWAY
PAUL UNDERWOOD
PHILIP M. WATERMAN
GINA LEMON
------------------------
By: GINA LEMON
(As authorized signatory for
Smith Barney Shearson Inc. and
Attorney-in-fact for the persons listed above)
R-5
<PAGE>
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney are being filed under Form
the Board of Directors of Dean Witter Reynolds Inc.: SE and the following 1933 Act File Number:
33-17085
</TABLE>
NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
MICHAEL D. BROWNE
-----------------------------------
By: MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc. and
Attorney-in-fact for the persons listed above)
R-6
<PAGE>
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney are being filed under Form
the Executive Committee of the Board of Directors of SE and the following 1933 Act File Number:
PaineWebber Incorporated: 33-28452
</TABLE>
JOHN A. BULT
PAUL B. GUENTHER
DONALD B. MARRON
JAMES C. TREADWAY
ROBERT E. HOLLEY
---------------------------------
By: ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated and
Attorney-in-fact for the persons listed above)
R-7
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Government Securities Income Fund,
GNMA Series 1W
Defined Asset Funds:
We hereby consent to the use in this Registration Statement No. 33-53181 of our
opinion dated May 4, 1994, relating to the Statement of Condition of Government
Securities Income Fund, GNMA Series 1W, Defined Asset Funds, and to the
reference to us under the heading 'Auditors' in the Prospectus which is a part
of this Registration Statement.
Deloitte & Touche
New York, N.Y.
May 4, 1994
R-8
<PAGE>
<PAGE>
EXHIBIT 1.1
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1W
DEFINED ASSET FUNDS
REFERENCE TRUST INDENTURE
Dated as of May 4, 1994
This Trust Indenture (the 'Indenture') sets forth certain provisions in full
and incorporates other provisions by reference to the document entitled
'Standard Terms and Conditions of Trust Effective October 21, 1993' (the
'Standard Terms and Conditions of Trust') and such provisions as are set forth
in full herein and such provisions as are incorporated by reference constitute a
single instrument. All references herein to Articles and Sections are to
Articles and Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Sponsors, the Trustee and the Evaluator agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained in
the Standard Terms and Conditions of Trust are herein incorporated by reference
in their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent as though said provisions had been set forth in full in
this instrument.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities (or contracts for the purchase of such Securities) listed
under 'Portfolio' in the Prospectus have been deposited with (or assigned to)
the Trustee under this Indenture, and the number of Units specified under
'Investment Summary' in the Prospectus have been delivered to, or assigned in
the name of or on the order of, the Sponsors by the Trustee in exchange
therefor.
(b) The Sponsors are Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Smith Barney Shearson Inc., PaineWebber Incorporated, Prudential Securities
Incorporated and Dean Witter Reynolds Inc.
(c) The Trustee is The Chase Manhattan Bank, N.A.
(d) The Evaluator is Kenny S&P Evaluation Services.
(e) The Trust is organized as a Regulated Investment Company for Federal tax
purposes.
(f) Units may be held in certificated form.
<PAGE>
<PAGE>
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
MAY 4, 1994
Government Securities Income Fund,
GNMA Series 1W
Defined Asset Funds
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Smith Barney Shearson Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
Unit Investment Trusts
P.O. Box 9051
Princeton, N.J. 08543-9051
Dear Sirs:
We have acted as special counsel for you, as sponsors (the 'Sponsors') of
GNMA Series 1W of Government Securities Income Fund, Defined Asset Funds (the
'Fund'), in connection with the issuance of units of fractional undivided
interest in the Fund (the 'Units') in accordance with the Trust Indenture
relating to the Fund (the 'Indenture').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indenture and the issuance of the Units have been duly
authorized by the Sponsors and (ii) the Units, when duly executed and delivered
by the Sponsors and the Trustee in accordance with the Indenture, will be
legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the heading 'Miscellaneous--Legal Opinion.'
Very truly yours,
Davis Polk & Wardwell
<PAGE>
<PAGE>
EXHIBIT 4.1.1
MAY 4, 1994
Kenny S&P Evaluation Services
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, N.Y. 10006
Telephone 212/770-4405
Fax 212/797-8681
F. A. Shinal
Senior Vice President
Chief Financial Officer
Kenny Information Systems, Inc.
<TABLE>
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated The Chase Manhattan Bank, N.A.
Unit Investment Trust Division 1 Chase Manhattan Plaza-3B
P.O. Box 9051 New York, N.Y. 10081
Princeton, N.J. 08543-9051
</TABLE>
RE: GOVERNMENT SECURITIES INCOME FUND, GNMA SERIES 1W
DEFINED ASSET FUNDS
Gentlemen:
We have examined the Registration Statement No. 33-53181 for the above
captioned fund. We hereby acknowledge that Kenny S&P Evaluation Services, a
division of Kenny Information Systems, Inc. is currently acting as the evaluator
for the Trust. We hereby consent to the use in the Registration Statement of the
reference to Kenny S&P Evaluation Services a division of Kenny Information
Systems, Inc. as evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
F. A. Shinal
Senior Vice President
Chief Financial Officer
<PAGE>
<PAGE>
EXHIBIT 4.1.2
MAY 4, 1994
Standard & Poor's Ratings Group
25 Broadway
New York, N.Y. 10004
Telephone 212/208-1061
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Unit Investment Trust Division
P.O. Box 9051
Princeton, N.J. 08543-9051
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza-3B
New York, NY 10081
RE: GOVENMENT SECURITIES INCOME FUND, GNMA SERIES 1W
DEFINED ASSET FUNDS
1933 ACT REGISTRATION NO. 33-53181
Dear Mr. Perini:
Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned trust, we have reviewed the information presented to us and have
assigned a 'AAA' rating to the units in the trust. The rating is a direct
reflection of the portfolio of the trust, which will be composed solely of U.S.
Treasury Debt Obligations fully guaranteed as to principal and interest by the
full faith and credit of the United States.
You have permission to use the name of Standard & Poor's and the
above-assigned rating in connection with your dissemination of information
relating to these units, provided that it is understood that the rating is not a
'market' rating nor recommendations to buy, hold, or sell the units of the
trust. Further, it should be understood that the rating does not take into
account the extent to which fund expenses or portfolio asset sales for less than
the fund's purchase price will reduce payment to the unit holders of the
interest and principal required to be paid on the portfolio assets. S&P reserves
the right to advise its own clients, subscribers, and the public of the rating.
S&P relies on the Sponsor and its counsel, accountants, and other experts for
the accuracy and completeness of the information submitted in connection with
the ratings. S&P does not independently verify the truth or accuracy of any such
information.
This letter evidences our consent to the use of the name of Standard &
Poor's Corporation and the above-assigned rating in the registration statement
or prospectus relating to the units of the trust. However, this letter should
not be construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's Corporation
in connection with the ratings assigned to the securities contained in the
trust. You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Please be certain to send us three copies of your final prospectus as soon
as it becomes available. Should we not receive them within a reasonable time
after the closing or should they not conform to the representations made to us,
we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. Our bill
will be sent to you within one month. If we can be of further help, please do
not hesitate to call upon us.
Very truly yours,
Richard P. Larki
<PAGE>
<PAGE>
