<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1995
REGISTRATION NO. 33-57873
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 SERIES-1Y
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
<TABLE>
<S> <C> <C>
MERRILL LYNCH, PIERCE, FENNER & SMITH BARNEY INC. PAINEWEBBER INCORPORATED
SMITH INCORPORATED TWO WORLD TRADE CENTER 1285 AVENUE OF THE AMERICAS
DEFINED ASSET FUNDS 101ST FLOOR NEW YORK, N.Y. 10019
P.O. BOX 9051 NEW YORK, N.Y. 10048
PRINCETON, N.J. 08543-9051
PRUDENTIAL SECURITIES INCORPORATED DEAN WITTER REYNOLDS INC.
ONE SEAPORT PLAZA TWO WORLD TRADE CENTER--59TH FLOOR
199 WATER STREET NEW YORK, N.Y. 10048
NEW YORK, N.Y. 10292
</TABLE>
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
<TABLE>
<S> <C> <C>
TERESA KONCICK, ESQ. LAURIE A. HESSLEIN ROBERT E. HOLLEY
P.O. BOX 9051 388 GREENWICH STREET 1200 HARBOR BLVD.
PRINCETON, N.J. 08543-9051 NEW YORK, N.Y. 10013 WEEHAWKEN, N.J. 07087
COPIES TO:
LEE B. SPENCER, JR. DOUGLAS LOWE, ESQ. PIERRE DE SAINT PHALLE, ESQ.
ONE SEAPORT PLAZA 130 LIBERTY STREET--29TH 450 LEXINGTON AVENUE
199 WATER STREET FLOOR NEW YORK, N.Y. 10017
NEW YORK, N.Y. 10292 NEW YORK, N.Y. 10006
</TABLE>
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 June 14, 1995 pursuant to Rule 487.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
Defined Asset FundsSM
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Government 6.47% ESTIMATED CURRENT RETURN shows the estimated annual
Securities cash to be received from interest-bearing securities in
Income Fund the Portfolio (net of estimated annual expenses) divided
by the Public Offering Price (including the maximum sales
charge).
GNMA SERIES--1Y
6.61% ESTIMATED LONG TERM RETURN is a measure of the
estimated return over the estimated life of the Fund
A UNIT INVESTMENT (about 10 years). This represents an average of the
TRUST yields to
maturity (or in certain cases, to an earlier call date)
of the
- --------------------
individual securities in the Portfolio, adjusted to
reflect the maximum sales charge and estimated expenses.
/ /MONTHLY INCOME The aver-
age yield for the Portfolio is derived by weighting each
security's yield by its market value and the time
remaining to the call or maturity date, depending on how
the security is priced. Unlike Estimated Current Return,
/ /AAA RATED Estimated
6.47%
ESTIMATED CURRENT Long Term Return takes into account maturities, discounts
RETURN and premiums of the underlying securities.
No return estimate can be predictive of your actual
return because returns will vary with purchase price
(including
sales charges), how long units are held, changes in
6.61% Portfolio composition, changes in interest income and
ESTIMATED LONG TERM changes in fees and expenses. Therefore, Estimated
RETURN Current Return
and Estimated Long Term Return are designed to be com-
parative rather than predictive. A yield calculation
which is more comparable to an individual security may be
higher or lower than Estimated Current Return or
Estimated Long Term Return which are more comparable to
AS OF JUNE 13, 1995 return calculations used by other investment products.
</TABLE>
<TABLE>
<S> <C>
SPONSORS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
Merrill Lynch, DISAPPROVED BY THE SECURITIES AND EXCHANGE
Pierce, Fenner & COMMISSION OR ANY STATE SECURITIES COMMISSION
Smith Incorporated NOR HAS THE COMMISSION OR ANY STATE SECURITIES
Smith Barney Inc. COMMISSION PASSED UPON THE ACCURACY OR ADE-
Prudential QUACY OF THIS DOCUMENT. ANY REPRESENTATION
Securities TO THE CONTRARY IS A CRIMINAL OFFENSE.
Incorporated Inquiries should be directed to the Trustee at
Dean Witter Reynolds 1-800-323-1508.
Inc. Prospectus dated June 14, 1995.
PaineWebber Investors should read this prospectus carefully and
Incorporated retain it for future reference.
</TABLE>
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $95 billion sponsored since 1971. Each Defined Asset Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
Municipal portfolios
Corporate portfolios
Government portfolios
Equity portfolios
International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
- ---------------------------------------------------------------
Defined GNMA Series
- ---------------------------------------------------------------
Our defined portfolio of mortgage-backed GNMA Securities offers you a simple and
convenient way to participate in the GNMA market and obtain monthly income while
earning an attractive return as well as the assurance of an investment in
securities that are guaranteed by GNMA, a federal agency.
Investment Objectives
To obtain safety of capital and current monthly income distributions through
investment in a portfolio of interest-bearing GNMA securities. The full faith
and credit of the United States is pledged to the payment of the Securities but
the units of the Fund, as such, are not directly backed.
- ---------------------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------------------
Professional Selection and Supervision
The Portfolio of Securities is selected by experienced buyers and research
analysts. The Fund is not actively managed; however it is regularly reviewed and
a Security can be sold if retaining it is considered detrimental to investors'
interests.
Portfolio Composition
The Portfolio consists of 2 different issues of mortgage-backed Securities of
the modified pass-through type guaranteed by the Government National Mortgage
Association (GNMA): 6.5% Ginnie Maes maturing 8/15/14 to 6/15/25, 50%; 7% Ginnie
Maes maturing 8/15/14 to 6/15/25, 50%. All of the Ginnie Maes in the Fund are
backed by pools of long term mortgages on 1-to 4-family dwellings. The Ginnie
Maes are fully guaranteed as to payment of principal and interest by GNMA. Based
on the creditworthiness of the U.S. government, Standard & Poor's has rated
units of the Fund AAA, its highest rating.
Tax Information
Distributions of ordinary income or capital gain from the Fund will be included
in a U.S. investor's gross income, but will not be eligible for the
dividends-received deduction for corporations. Distributions to investors who
are not U.S. citizens or residents will generally be subject to withholding tax
at the statutory rate of 30% (or a lesser treaty rate). (See Taxes in Part B.)
- ---------------------------------------------------------------
Defining Your Investment
- ---------------------------------------------------------------
Public Offering Price per 1,000 Units $1,019.21
The Public Offering Price as of June 13, 1995, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying Securities in the Fund ($489,217.50), the price at which they can be
directly purchased by the public assuming they were available, divided by the
number of units outstanding (500,000) times 1,000 plus a maximum sales charge of
4.00%. The Public Offering Price on any subsequent date will vary. An amount
equal to net accrued but undistributed interest on the unit is added to the
Public Offering Price. The underlying Securities are evaluated by an independent
evaluator at 3:30 p.m. Eastern time on every business day.
A-2
<PAGE>
<PAGE>
Low Minimum Investment
You can get started with a minimum purchase of about 1,000 Units. There is no
minimum purchase for payroll deduction plans.
Principal Distributions
Principal from sales, redemptions and maturities of Securities in the Fund will
be distributed to investors periodically when the amount to be distributed is
more than $5.00 per 1,000 units.
Reinvestment Option
You can elect to automatically reinvest your distributions into a separate
portfolio of mortgage-backed securities. Reinvesting helps to compound your
income.
Termination Date
The Fund will generally terminate no later than one year following the maturity
date of the last maturing Security listed in the Portfolio. The Fund may be
terminated earlier if the value is less than 40% of the face amount of
Securities deposited.
Sponsors' Profit or Loss
The Sponsors' profit or loss associated with the Fund will include the receipt
of applicable sales charges, fluctuations in the Public Offering Price or
secondary market price of units, a loss of $1.26 on the initial deposit of the
Securities and a gain or loss on subsequent deposits of additional Securities
(see Underwriters' and Sponsors' Profits in Part B).
- ---------------------------------------------------------------
Defining Your Risks
- ---------------------------------------------------------------
Risk Factors
U.S. Government securities are not affected by credit risk but are subject to
changes in market value resulting from changes in interest rates. Unit price
fluctuates and the value of units will decline if interest rates increase. The
mortgages underlying the GNMA Securities are amortized, and there is no
prepayment protection. The potential for appreciation that might otherwise
result from a decline in interest rates would be limited by any increase in
prepayments by mortgagors as interest rates decline. Investors may also receive
payments of principal sooner than anticipated, and interest payments will
decrease as principal is returned. Because regular payments of principal will be
received over the life of the Fund and because of the possible maturity, sale or
other disposition of Securities, the size, composition and return of the
Portfolio may change at any time. Because of the sales charges, returns of
principal and fluctuations in unit price, among other reasons, the sale price
will generally be less than the cost of your units. There is no guarantee that
the Fund will achieve its investment objective.
The Fund itself and the units are not backed by the full faith and credit of the
U.S. Government (see Risk Factors in Part B).
- ---------------------------------------------------------------
Defining Your Costs
- ---------------------------------------------------------------
Sales Charges
Although the Fund is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
<TABLE>
<CAPTION>
As a %
As a % of Secondary
of Initial Offering Market
Period Public Public Offering
Offering Price Price
<S> <C> <C>
------------------- ---------------
Maximum Sales Charges 4.00% 4.25%
</TABLE>
The Fund (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds. Historically, the Sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
Estimated Annual Fund Operating Expenses
<TABLE>
<CAPTION>
As a %
of Average
Net Assets* Per 1,000 Units
<S> <C> <C>
------------------- ---------------
Trustee's Fee .086% $.84
Maximum Portfolio
Supervision,
Bookkeeping and
Administrative Fees .026% $.25
Organizational
Expenses .020% $.20
Evaluator's Fee .003 $.03
Other Operating
Expenses .020% $.20
TOTAL .155% $1.52
</TABLE>
- ------------
*Based on the mean of the bid and offer side evaluations.
Costs Over Time
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
<TABLE>
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$42 $45 $48 $59
</TABLE>
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option not offered by this Fund) and uses a 5% annual
rate of return as mandated by
A-3
<PAGE>
<PAGE>
Securities and Exchange Commission regulations applicable to mutual funds. The
Costs Over Time above reflect both sales charges and operating expenses on an
increasing investment (because the net annual return is reinvested). 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 the example.
Selling Your Investment
You may sell your units at any time. Your price is based on the Fund's then
current net asset value (based on the offer side evaluation of the Securities
during the initial public offering period and on the lower, bid side evaluation
thereafter, as determined by an independent evaluator), plus accrued interest.
The bid side redemption and secondary market repurchase price per 1,000 units as
of June 13, 1995 was $977.19 ($42.02 less than the Public Offering Price). There
is no fee for selling your units.
- ---------------------------------------------------------------
Defining Your Income
- ---------------------------------------------------------------
Monthly Interest Income
The Fund pays monthly income, even though the Securities generally pay interest
semi-annually.
What You May Expect
(PAYABLE ON THE 23RD DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 17TH DAY OF
THE MONTH):
<TABLE>
<S> <C>
Regular Monthly Income per 1,000 units
(Beginning on July 23, 1995): $5.49
Annual Income per 1,000 units: $65.98
</TABLE>
Estimated distributions of principal and income per 1,000 units are as follows:
ESTIMATED CASH FLOW TO HOLDERS
<TABLE>
<CAPTION>
DATE AMOUNT
<S> <C>
July 1995 $ 8.70
August 1995 9.00
September 1995 9.15
October 1995 9.30
November 1995 9.45
December 1995 9.60
January 1996 9.74
February 1996 9.88
March 1996 10.02
April 1996 10.15
May 1996 10.28
June 1996 10.41
July 1996 10.54
August 1996 10.65
September 1996 10.77
October 1996 10.89
November 1996 11.00
December 1996 10.93
January 1997 10.87
February 1997 10.80
March 1997 10.74
April 1997 10.68
May 1997 10.61
June 1997 10.55
July 1997 10.49
August 1997 10.42
September 1997 10.36
October 1997 10.30
November 1997 10.24
December 1997 10.18
January 1998 10.12
February 1998 10.06
March 1998 10.00
April 1998 9.94
May 1998 9.88
June 1998 9.82
July 1998 9.76
August 1998 9.70
September 1998 9.64
October 1998 9.59
November 1998 9.53
December 1998 9.47
January 1999 9.41
February 1999 9.36
March 1999 9.30
April 1999 9.25
May 1999 9.19
June 1999 9.14
July 1999 9.08
August 1999 9.03
September 1999 8.97
October 1999 $ 8.92
November 1999 8.86
December 1999 8.81
January 2000 8.76
February 2000 8.70
March 2000 8.65
April 2000 8.60
May 2000 8.55
June 2000 8.50
July 2000 8.44
August 2000 8.40
September 2000 8.34
October 2000 8.29
November 2000 8.24
December 2000 8.19
January 2001 8.14
February 2001 8.09
March 2001 8.04
April 2001 7.99
May 2001 7.94
June 2001 7.90
July 2001 7.85
August 2001 7.80
September 2001 7.75
October 2001 7.70
November 2001 7.66
December 2001 7.61
January 2002 7.56
February 2002 7.52
March 2002 7.47
April 2002 7.42
May 2002 7.38
June 2002 7.33
July 2002 7.29
August 2002 7.25
September 2002 7.20
October 2002 7.15
November 2002 7.11
December 2002 7.07
January 2003 7.02
February 2003 6.98
March 2003 6.94
April 2003 6.89
May 2003 6.85
June 2003 6.81
July 2003 6.77
August 2003 6.72
September 2003 6.68
October 2003 6.64
November 2003 6.60
December 2003 6.56
January 2004 $ 6.52
February 2004 6.48
March 2004 6.43
April 2004 6.39
May 2004 6.36
June 2004 6.31
July 2004 6.27
August 2004 6.24
September 2004 6.20
October 2004 6.16
November 2004 6.12
December 2004 6.08
January 2005 6.04
February 2005 6.00
March 2005 5.96
April 2005 5.93
May 2005 5.89
June 2005 5.85
July 2005 5.81
August 2005 5.78
September 2005 5.74
October 2005 5.71
November 2005 5.67
December 2005 5.63
January 2006 5.59
February 2006 5.56
March 2006 5.53
April 2006 5.49
May 2006 5.45
June 2006 5.42
July 2006 5.38
August 2006 5.35
September 2006 5.32
October 2006 5.28
November 2006 5.24
December 2006 5.21
January 2007 5.18
February 2007 5.15
March 2007 5.11
April 2007 5.08
May 2007 5.04
June 2007 5.01
July 2007 4.98
August 2007 4.95
September 2007 4.91
October 2007 4.88
November 2007 4.85
December 2007 4.82
January 2008 4.79
February 2008 4.76
March 2008 4.72
April 2008 $ 4.69
May 2008 4.66
June 2008 4.63
July 2008 4.60
August 2008 4.57
September 2008 4.54
October 2008 4.51
November 2008 4.48
December 2008 4.45
January 2009 4.42
February 2009 4.39
March 2009 4.36
April 2009 4.33
May 2009 4.30
June 2009 4.27
July 2009 4.24
August 2009 4.21
September 2009 4.19
October 2009 4.16
November 2009 4.13
December 2009 4.11
January 2010 4.08
February 2010 4.05
March 2010 4.02
April 2010 3.99
May 2010 3.96
June 2010 3.94
July 2010 3.91
August 2010 3.89
September 2010 3.86
October 2010 3.84
November 2010 3.81
December 2010 3.78
January 2011 3.75
February 2011 3.73
March 2011 3.70
April 2011 3.67
May 2011 3.65
June 2011 3.63
July 2011 3.60
August 2011 3.58
September 2011 3.65
October 2011 3.53
November 2011 3.50
December 2011 3.48
January 2012 3.45
February 2012 3.43
March 2012 3.40
April 2012 3.38
May 2012 3.35
June 2012 3.33
</TABLE>
A-4
<PAGE>
<PAGE>
ESTIMATED CASH FLOW (CONTINUED)
<TABLE>
<CAPTION>
DATE AMOUNT
<S> <C>
July 2012 $ 3.31
August 2012 3.28
September 2012 3.26
October 2012 3.24
November 2012 3.22
December 2012 3.19
January 2013 3.17
February 2013 3.15
March 2013 3.12
April 2013 3.10
May 2013 3.08
June 2013 3.05
July 2013 3.03
August 2013 3.01
September 2013 2.99
October 2013 2.96
November 2013 2.94
December 2013 2.92
January 2014 2.90
February 2014 2.88
March 2014 2.86
April 2014 2.84
May 2014 2.82
June 2014 2.80
July 2014 2.78
August 2014 2.76
September 2014 2.74
October 2014 2.72
November 2014 2.69
December 2014 2.67
January 2015 2.65
February 2015 2.63
March 2015 2.61
April 2015 2.59
May 2015 2.57
June 2015 2.55
July 2015 $ 2.53
August 2015 2.51
September 2015 2.49
October 2015 2.47
November 2015 2.45
December 2015 2.44
January 2016 2.42
February 2016 2.40
March 2016 2.38
April 2016 2.36
May 2016 2.34
June 2016 2.32
July 2016 2.31
August 2016 2.29
September 2016 2.27
October 2016 2.25
November 2016 2.23
December 2016 2.22
January 2017 2.20
February 2017 2.18
March 2017 2.16
April 2017 2.15
May 2017 2.13
June 2017 2.11
July 2017 2.09
August 2017 2.08
September 2017 2.06
October 2017 2.04
November 2017 2.03
December 2017 2.01
January 2018 1.99
February 2018 1.98
March 2018 1.96
April 2018 1.94
May 2018 1.93
June 2018 1.91
July 2018 $ 1.90
August 2018 1.88
September 2018 1.86
October 2018 1.85
November 2018 1.83
December 2018 1.82
January 2019 1.80
February 2019 1.78
March 2019 1.77
April 2019 1.75
May 2019 1.74
June 2019 1.72
July 2019 1.71
August 2019 1.69
September 2019 1.68
October 2019 1.66
November 2019 1.65
December 2019 1.63
January 2020 1.62
February 2020 1.60
March 2020 1.59
April 2020 1.57
May 2020 1.56
June 2020 1.54
July 2020 1.53
August 2020 1.52
September 2020 1.50
October 2020 1.49
November 2020 1.47
December 2020 1.46
January 2021 1.44
February 2021 1.43
March 2021 1.42
April 2021 1.40
May 2021 1.39
June 2021 1.38
July 2021 $ 1.36
August 2021 1.35
September 2021 1.34
October 2021 1.32
November 2021 1.30
December 2021 1.30
January 2022 1.29
February 2022 1.27
March 2022 1.26
April 2022 1.25
May 2022 1.24
June 2022 1.22
July 2022 1.21
August 2022 1.20
September 2022 1.19
October 2022 1.17
November 2022 1.16
December 2022 1.15
January 2023 1.14
February 2023 1.13
March 2023 1.11
April 2023 1.10
May 2023 1.09
June 2023 1.08
July 2023 1.07
August 2023 1.05
September 2023 1.04
October 2023 1.03
November 2023 1.02
December 2023 1.01
January 2024 0.99
February 2024 0.98
March 2024 0.97
April 2024 0.96
May 2024 0.95
</TABLE>
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
A-5
<PAGE>
<PAGE>
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1Y
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.
<TABLE>
<S> <C>
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
<PAGE>
<PAGE>
<TABLE>
<S> <C>
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-1Y)
(A NATIONAL BANKING ASSOCIATION)
DEFINED ASSET FUNDS
BOX 2051
NEW YORK, NY 10081
</TABLE>
- --------------------------------------------------------------------------------
(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Government Securities Income Fund, GNMA
Series--1Y, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related
portfolio included in the prospectus of the Fund as of June 14, 1995. 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. Our procedures included
confirmation of an irrevocable letter of credit deposited for the purchase of
securities, as described in the statement of condition, with 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 the Fund as of June 14, 1995 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
June 14, 1995
STATEMENT OF CONDITION AS OF JUNE 14, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Investments in Securities and Contracts to Purchase Securities(1) $ 489,217.50
Accrued interest to initial date of deposit on underlying Securities 1,218.75
Organizational Costs(2) 100,000.00
--------------
Total $ 590,436.25
--------------
--------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Accrued interest to Initial Date of Deposit on underlying
Securities(3) $ 1,218.75
Accrued Liability (2) 100,000.00
--------------
Subtotal 101,218.75
--------------
Interest of Holders of 500,000 Units of fractional undivided interest
outstanding:
Cost to investors(4) 509,602.50
Gross underwriting commissions(5) (20,385.00)
--------------
Subtotal 489,217.50
--------------
Total $ 590,436.25
--------------
--------------
</TABLE>
- ------------
(1) Aggregate cost to the Fund of the securities listed under Defined
Portfolio is based upon the offer side evaluation determined by the Evaluator at
the evaluation time on the business day prior to the Initial Date of Deposit.
The contracts to purchase the securities are collateralized by an irrevocable
letter of credit which has been issued by Banca Popolare DiMilano, New York
Branch, in the amount of $491,093.76 and deposited with the Trustee. The amount
of the letter of credit includes $489,218.76 for the purchase of $500,000 face
amount of the securities, plus $1,875.00 for accrued interest.
(2) This represents a portion of the Fund's organizational costs, which
will be deferred and amortized over a five year period. Organizational costs
have been estimated based on projected total assets of $100,000,000. To the
extent the Fund is larger or smaller, the amount paid may vary.
(3) Representing a special distribution by the Trustee to the Sponsors
of an amount equal to the accrued interest on the securities as of the initial
date of deposit.
(4) Aggregate public offering price (exclusive of interest) computed on
the basis of the offer side evaluation of the underlying securities as of the
evaluation time on the business day prior to the initial date of deposit.
(5) Assumes the maximum sales charge of 4.00%.
A-7
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
Defined Portfolio
- --------------------------------------------------------------------------------
Government Securities Income Fund
GNMA Series--1Y June 14, 1995
<TABLE>
<CAPTION>
FACE RANGE OF STATED COST
PORTFOLIO NO. AND TITLE AMOUNT COUPON MATURITIES(1) TO FUND(2)
<C> <S> <C> <C> <C> <C>
----------- ------- -------------------- --------------
1. Government National Mortgage Association, $ 250,000 6.50% 8/15/14 to 6/15/25 $ 241,640.00
Modified Pass-Through Mortgage-Backed
Securities
2. Government National Mortgage Association, 250,000 7.00 8/15/14 to 6/15/25 247,577.50
Modified Pass-Through Mortgage-Backed
Securities
----------- --------------
$ 500,000 $ 489,217.50
----------- --------------
----------- --------------
</TABLE>
- ---------------
(1)_ The face 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. In addition to the information as to
the GNMA modified pass-through mortgage-backed Securities set forth above,
the Trustee will furnish investors a statement listing the name of issuer,
pool number, interest rate, maturity date and above amount for each
Security in the Portfolio upon written request.
(2) Evaluation of the Securities by the Evaluator is made on the basis of
current offer side evaluation. On this basis, 100% of the Securities were
deposited at a discount from par. On the business day prior to the Initial
Date of Deposit, the bid side evaluation was .13% lower than the offer side
evaluation.
A-6
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DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES
THIS PART B OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED OR
PRECEDED BY PART A.
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE, AT THE ADDRESS
AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
Index
<TABLE>
<S> <C>
PAGE
Fund Description.......................... 1
Risk Factors.............................. 2
How to Buy Units.......................... 4
How to Sell Units......................... 4
Income and Distributions.................. 5
Fund Expenses............................. 6
Taxes..................................... 6
Records and Reports....................... 8
PAGE
Trust Indenture........................... 8
Miscellaneous............................. 9
Supplemental Information.................. 10
Appendix A--Description of Rating......... a-1
Appendix B--Sales Charge Schedules........ b-1
</TABLE>
FUND DESCRIPTION
PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Securities for the Portfolio after
considering the Fund's investment objectives as well as the availability of the
Securities, the price of the Securities compared to similar securities and the
extent to which they were trading at discounts or premiums to par, and the
maturities of the Securities. Only issues meeting these stringent criteria of
the Defined Asset Funds team of dedicated research analysts are included in the
Portfolio. No leverage or borrowing is used nor does the Portfolio contain other
kinds of securities to enhance yield. A summary of the Securities in the
Portfolio appears in Part A of the Prospectus.
The deposit of the Securities in the Fund on the initial date of deposit
established a proportionate relationship between the face amounts of the
Securities. Following the initial date of deposit the Sponsors may deposit
additional Securities in order to create new Units, maintaining to the extent
possible that original proportionate relationship.
Yields on GNMA mortgage-backed securities depend on many factors including
general money market conditions, general conditions of the corporate and
mortgage-backed bond markets and prevailing interest rates.
Because each Defined Asset Fund is a preselected portfolio of securities,
you know the terms of the Securities before you invest. Of course, the Portfolio
will change somewhat over time, as additional Securities are deposited in order
to create new Units, and as Securities mature, are redeemed or are sold to meet
Unit redemptions or in other limited circumstances.
GINNIE MAES
_____The Ginnie Maes in the Portfolio have been issued by the Government
National Mortgage Association (GNMA), which is a wholly-owned U.S. government
corporation within the Department of Housing and Urban Development.
_____The Ginnie Maes are of the 'modified pass-through' type, the terms of which
provide for timely monthly payments by the issuers to the registered holders
(including the Fund) of their pro rata shares of the scheduled principal
payments on account of the mortgages backing these Ginnie Maes, plus any
prepayments of principal of such mortgages received, and interest on the
aggregate unpaid principal balance of these Ginnie Maes. Ginnie
1
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Maes are guaranteed by GNMA as to timely payment of principal and interest. The
full faith and credit of the United States is pledged to the payment of all
amounts which may be required to be paid under the guaranty.
_____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.
_____The GNMA guaranty described above relate only to payment of principal of
and interest on the Ginnie Maes in the Portfolio and not to the Units of the
Fund.
PORTFOLIO SUPERVISION
The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. Experienced financial analysts regularly review the Portfolio
and a Security may be sold in certain circumstances including the occurrence of
a default in payment on the Security or any other securities backed by the full
faith and credit of the United States, institution of certain legal proceedings,
if the Security becomes inconsistent with the Fund's investment objectives, a
decline in the price of the Security or the occurrence of other market or credit
factors that, in the opinion of Defined Asset Funds research analysts, makes
retention of the Security detrimental to the interests of investors.
The Sponsors and the Trustee are not liable for any default or defect in a
Security. If a contract to purchase any Security fails, the Sponsors may
generally deposit a replacement security so long as it is a security issued and
guaranteed by GNMA, has a fixed maturity date substantially similar to the
failed Security and does not cause the Fund to cease to be rated AAA by Standard
& Poor's. A replacement security must be deposited within 110 days after deposit
of the failed contract, at a cost that does not exceed the funds reserved for
purchasing the failed Security and at a yield to maturity and current return
substantially equivalent (considering then current market conditions and
relative creditworthiness) to those of the failed Security, as of the date the
failed contract was deposited.
FUND RATING
Units of the Fund have been rated AAA by Standard & Poor's (see Appendix
A). Standard & Poor's has been compensated by the Underwriters for its services.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline with increases in interest rates and
that payments of principal may be received sooner than anticipated, especially
if interest rates decline. Generally speaking, securities with longer maturities
will fluctuate in value more than securities with shorter maturities. In recent
years there have been wide fluctuations in interest rates and in the value of
fixed-rate bonds generally. The Sponsors cannot predict the direction or scope
of any future fluctuations.
Certain of the Securities may have been deposited at a market discount or
premium principally because their interest rates are lower or higher than
prevailing rates on comparable debt securities. The current returns of market
discount securities are lower than comparably rated securities selling at par
because discount securities tend to increase in market value as they approach
maturity. The current returns of market premium securities are higher than
comparably rated securities selling at par because premium securities tend to
decrease in market value as they approach maturity. Because part of the purchase
price is returned through current income payments and not at maturity, an early
redemption at par of a premium security will result in a reduction in yield to
the Fund. 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. 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. Market premium or discount attributable
to interest rate changes does not indicate market confidence or lack of
confidence in the issue.
The Securities in the Portfolio, though backed by GNMA, are subject to
changes in market value when interest rates fluctuate. The Fund seeks to protect
against declining interest rates by investing a portion of the
2
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Portfolio in longer-term Securities, while if interest rates rise investors will
be able to reinvest the proceeds of principal returned each year in higher
yielding obligations. It is anticipated that equal portions of principal
invested will be returned annually as Securities mature.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the date of this
Prospectus which might reasonably be expected to have a material adverse effect
upon the Fund. At any time after the initial date of deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, affecting the
Securities in the Fund.
PAYMENT OF THE SECURITIES AND LIFE OF THE FUND
_____Monthly payments and prepayments of principal are made to the Fund in
respect of the mortgages underlying the Ginnie Maes. 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. 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 which are influenced by changes in housing cycles and
mortgage refinancing could influence yield assumptions used in pricing the
securities.
_____While the value of these mortgage backed securities generally fluctuates
inversely with changes in interest rates, it should be noted that their
potential for appreciation, which could otherwise be expected to result from a
decline in interest rates, may tend to be limited by any increased prepayments
by mortgagors as interest rates decline. Accordingly, the termination of the
Fund might be accelerated as a result of prepayments made as described above.
The size and composition of the Fund will also be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units and
whether or not the Sponsors are able to sell the Units acquired by them in the
secondary market. As a result, Units offered in the secondary market may not
represent the same face amount of Securities as on the initial date of deposit.
Factors that the Sponsors will consider in determining whether or not to sell
Units acquired in the secondary market include the size of the Fund relative to
its original size, the ratio of Fund expenses to income, the Fund's current and
long-term returns, the degree to which Units may be selling at a premium over
par and the cost of maintaining a current prospectus for the Fund. These factors
may also lead the Sponsors to seek to terminate the Fund earlier than its
mandatory termination date.
_____Early termination of a Fund or early payments of principal may have
important consequences to the investor; e.g., to the extent that Units were
purchased with a view to an investment of longer duration, the overall
investment program of the investor may require readjustment; or the overall
return on investment may be less or greater than anticipated, depending in part
on whether the purchase price paid for Units represented the payment of an
overall premium or a discount, respectively, above or below the stated principal
amounts of the underlying mortgages.
FUND TERMINATION
The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Security or upon the consent of investors holding 51% of
the Units. The Fund may also be terminated earlier by the Sponsors once the
total assets of the Fund have fallen below the minimum value specified in Part A
of the Prospectus. A decision by the Sponsors to terminate the Fund early will
be based on factors similar to those considered by the Sponsors in determining
whether to continue the sale of Units in the secondary market.
Notice of impending termination will be provided to investors and
thereafter Units will no longer be redeemable. On or shortly before termination,
the Fund will seek to dispose of any Securities remaining in the Portfolio
although any Security unable to be sold at a reasonable price may continue to be
held by the Trustee in a liquidating trust pending its final disposition. A
proportional share of the expenses associated with termination, including
brokerage costs in disposing of Securities, will be borne by investors remaining
at that time. This may have the effect of reducing the amount of proceeds those
investors are to receive in any final distribution.
3
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HOW TO BUY UNITS
PUBLIC OFFERING PRICE
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund. In the initial
offering period, the Public Offering Price is based on the next offer side
evaluation of the Securities, and includes a sales charge based on the number of
Units (see Initial Offering sales charge schedule in Appendix B). In the
secondary market (after the initial offering period), the Public Offering Price
is based on the bid side evaluation of the Bonds, and includes a sales charge
based on the number of Units of the Fund purchased in the secondary market on
the same day by a single purchaser (see Secondary Market sales charge schedule
in Appendix B). Purchases in the secondary market of one or more Series
sponsored by the Sponsors that have the same rates of sales charge may be
aggregated.
To qualify for a reduced sales charge, the dealer must confirm that the
sale is to a single purchaser or is purchased for its own account and not for
distribution. For these purposes, Units held in the name of the purchaser's
spouse or child under 21 years of age are deemed to be purchased by a single
purchaser. A trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account is also considered a single purchaser. This
procedure may be amended or terminated at any time without notice.
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per 1,000 Units.
Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the interest
accrued on the Securities, net of Fund expenses, from the initial date of
deposit to, but not including, the settlement date for Units (less any prior
distributions of interest income to investors). Securities deposited also carry
accrued but unpaid interest up to the initial date of deposit. To avoid having
investors pay this additional accrued interest (which earns no return) when they
purchase Units, the Trustee advances and distributes this amount to the
Sponsors; it recovers this advance from interest received on the Securities.
Because of varying interest payment dates on the Securities, accrued interest at
any time will exceed the interest actually received by the Fund.
EVALUATIONS
Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and the
following Federal holidays: Martin Luther King's Birthday, Columbus Day and
Veterans Day. Securities evaluations are generally determined on the basis of
current bid or offer prices for the Securities or comparable securities or by
appraisal or by any combination of these methods. Under current market
conditions the bid price for the Ginnie Maes of the type deposited in the
Portfolio are expected to be 1/4 to 1/2 of 1% less than the offer price. Neither
the Sponsors, the Trustee or the Evaluator will be liable for errors in the
Evaluator's judgment. The fees of the Evaluator will be borne by the Fund.
CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.
HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the
Securities, the sale price may be less than the cost of your Units. You should
consult your financial professional for current market prices to determine if
other broker-dealers or banks are offering higher prices for Units.
4
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<PAGE>
The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates must be properly endorsed
or accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. The Fund has no back-end load or 12b-1 fees,
so there is never a fee for cashing in your investment (see Appendix B). If they
do not purchase Units tendered, the Trustee is authorized in its discretion to
sell Units in the over-the-counter market if it believes it will obtain a higher
net price for the redeeming investor.
_____By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Securities, net accrued interest, cash and the value of any other Fund
assets; deducting unpaid taxes or other governmental charges, accrued but unpaid
Fund expenses, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units. Securities are evaluated
on the offer side during the initial offering period and on the bid side
thereafter.
_____If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Agent for the
Sponsors, based on market and credit factors determined to be in the best
interest of the Fund. These sales are often made at times when the Securities
would not otherwie be sold and may result in lower prices than might be realized
otherwise and will also reduce the size and diversity of the Fund.
Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Securities not reasonably
practicable, or for any other period permitted by the SEC.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME
_____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 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 is credited
to an Income Account and other receipts to a Capital Account. A Reserve Account
may be created by withdrawing from the Income and Capital Accounts amounts
considered appropriate by the Trustee to reserve for any material amount that
may be payable out of the Fund.
DISTRIBUTIONS
Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Along with the Monthly Income Distributions,
the Trustee will distribute the investor's pro rata share of principal received
from any disposition of a Security to the extent available for distribution. As
each Security in the Portfolio matures, the balance in the Capital Account will
be distributed on or about the second business day following the maturity date
to investors of record on the business day immediately preceding the
distribution day.
The initial estimated annual income per Unit, after deducting estimated
annual Fund expenses as stated in Part A of the Prospectus, will change as
prepayments occur on the underlying mortgages, as Securities mature, are called
or sold or otherwise disposed of, as replacement obligations are deposited and
as Fund expenses change. Because the Portfolio is not actively managed, income
distributions will generally not be affected by changes in interest rates and
the amount of income should be substantially maintained as long as the Portfolio
remains unchanged; however, optional prepayments or other Portfolio changes may
occur more frequently when interest rates decline, which would result in early
returns of principal and possibly earlier termination of the Fund.
5
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REINVESTMENT
_____Distributions will be paid in cash unless you elect to have your
distributions reinvested in The GNMA Fund Investment Accumulation Program, Inc.
The Program is an open-end management investment company whose primary
investment objective is to obtain a high level of current income through
investment in a portfolio of Ginnie Maes. Investors participating in the Program
will be taxed on their reinvested distributions in the manner described in Taxes
even though distributions are reinvested in the Program. For more complete
information about the Program, including charges and expenses, return the
enclosed form for a prospectus. Read it carefully before you decide to
participate. Notice of election to participate must be received by the Trustee
in writing at least ten days before the Record Day for the first distribution to
which the notice is to apply.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for maintaining
the Fund's registration statement current with Federal and State authorities,
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts and may sell Securities
for this purpose if cash is not available. The Sponsors receive an annual fee of
a maximum of $0.25 per $1,000 face amount to reimburse them for the cost of
providing Portfolio supervisory services to the Fund. While the fee may exceed
their costs of providing these services to the Fund, the total supervision fees
from all Series of Government Securities Income Fund will not exceed their costs
for these services to all of those Series during any calendar year. The Sponsors
may also be reimbursed for their costs of providing bookkeeping and
administrative services to the Fund, currently estimated at $0.10 per Unit. The
Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation without
investors' approval.
All or some portion of the expenses incurred in establishing the Fund,
including the cost of the initial preparation of documents relating to the Fund,
Federal and State registration fees, the initial fees and expenses of the
Trustee, legal expenses and any other out-of-pocket expenses will be paid by the
Fund and amortized over five years. Any balance of the expenses incurred in
establishing the Fund, as well as advertising and selling expenses will be paid
from the Underwriting Account at no charge to the Fund. Sales charges on Defined
Asset Funds range from under 1.0% to 5.5%. This may be less than you might pay
to buy and hold a comparable managed fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results.
TAXES
TAXATION OF THE FUND
_____The Fund intends to qualify for and elect the special tax treatment
applicable to 'regulated investment companies' under Sections 851-855 of the
Internal Revenue Code of 1986, as amended (the 'Code'). Qualification and
election as a 'regulated investment company' involve no supervision of
investment policy or management by any government agency. If the Fund qualifies
as a 'regulated investment company' and distributes to investors 90% or more of
its taxable income without regard to its net capital gain (net capital gain is
defined as the excess of net long-term capital gain over short-term capital
loss), it will not be subject to Federal income tax on the portion of its
taxable income (including any net capital gain) it distributes to investors in a
timely manner. In addition, the Fund will not be subject to the 4% excise tax on
certain undistributed income of 'regulated investment companies' to the extent
it distributes to investors in a timely manner at least 98% of its taxable
income (including any net capital gain). It is anticipated that the Fund will
not be subject to Federal income tax or the excise tax because the Indenture
requires the distribution of the Fund's taxable income (including any net
capital gain) in a timely manner. Although all or a portion of the Fund's
taxable income (including any net capital gain) for a calendar year may be
distributed shortly after the end of the calendar year, such a distribution will
be treated for Federal income tax purposes as having been received by investors
during the calendar year.
DISTRIBUTIONS
_____Distributions to investors of the Fund's interest income, gain that is
treated as ordinary income under the market discount rules, and any net
short-term capital gain in any year will be taxable as ordinary income to
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investors to the extent of the Fund's taxable income (without regard to any net
capital gain) for that year. Any excess will be treated as a return of capital
and will reduce the investor's basis in his Units and, to the extent that they
exceed his basis, will be treated as a gain from the sale of his Units as
discussed below. It is anticipated that substantially all of the distributions
of the Fund's interest income, ordinary gain and any net short-term capital gain
will be taxable as ordinary income to investors.
_____Distributions that are taxable as ordinary income to investors will
constitute dividends for Federal income tax purposes but will not be eligible
for the dividends-received deduction for corporations. Distributions of the
Fund's net capital gain (designated as capital gain dividends by the Fund) will
be taxable to investors as long-term capital gain, regardless of the time the
Units have been held by an investor. An investor will recognize taxable gain or
loss if the investor sells or redeems his Units. Any gain or loss arising from
(or treated as arising from) the sale or redemption of Units will be capital
gain or loss, except in the case of a dealer. Capital gains are currently taxed
at the same rate as ordinary income. However, the excess of net long-term
capital gains over net short-term capital losses may be taxed at a lower rate
than ordinary income for certain noncorporate taxpayers. A capital gain or loss
is long-term if the asset is held for more than one year and short-term if held
for one year or less. However, any capital loss on the sale or redemption of a
Unit that an investor has held for six months or less will be a long-term
capital loss to the extent of any capital gain dividends previously distributed
to the investor by the Fund. The deduction of capital losses is subject to
limitations.
_____Payments of principal on underlying 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 investor purchases his Units. Such gain must be distributed to
Investors to avoid Federal income (or excise) taxation to the Fund. In the case
of sales to meet redemptions, some or all of such gain must be so distributed to
nonredeeming investors. Any such distribution will be taxable to investors as
discussed above (i.e., as ordinary income or long-term capital gain), even if as
to a particular investor the distribution economically represents a return of
capital. Since such distributions do not reduce an investor's tax basis in his
Units, an investor will have a corresponding capital loss (or a reduced amount
of gain) on a subsequent sale or redemption of his Units.
_____The Federal tax status of each year's distributions will be reported to
investors and to the Internal Revenue Service. The foregoing discussion relates
only to the Federal income tax status of the Fund and to the tax treatment of
distributions by the Fund to U.S. investors. Investors who are not U.S. citizens
or residents should be aware that distributions from the Fund generally will be
subject to a withholding tax of 30%, or a lower treaty rate, and should consult
their own tax advisers to determine whether investment in the Fund is
appropriate. Distributions may also be subject to state and local taxation and
investors should consult their own tax advisers in this regard.
_____Investors will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the investor or are
automatically reinvested (see Income, Distributions and Reinvestment--
Reinvestment above).
RETIREMENT PLANS
This Series of Government Securities Income Fund may be well suited for
purchase by Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds
and other qualified retirement plans, certain of which are briefly described
below. Generally, capital gains and income received in each of the foregoing
plans are exempt from Federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special 5 or 10 year averaging or tax-deferred rollover treatment. Investors in
IRAs, Keogh plans and other tax-deferred retirement plans should consult their
plan custodian as to the appropriate disposition of distributions. Investors
considering participation in any of these plans should review specific tax laws
related thereto and should consult their attorneys or tax advisors with respect
to the establishment and maintenance of any of these plans. These plans are
offered by brokerage firms, including the Sponsor of this Fund, and any other
financial institutions. Fees and charges with respect to such plans may vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may
be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units of the Fund. Any individual
(including one covered by an employer retirement plan) can
7
<PAGE>
<PAGE>
make a contribution in an IRA equal to the lesser of $2,000 ($2,250 in a spousal
account) or 100% of earned income; such investment must be made in cash.
However, the deductible amount an individual may contribute will be reduced if
the individual's adjusted gross income exceeds $25,000 (in the case of a single
individual), $40,000 (in the case of married individuals filing a joint return)
or $200 (in the case of a married individual filing a separate return). Certain
transactions which are prohibited under Section 408 of the Code will cause all
or a portion of the amount in an IRA to be deemed to be distributed and subject
to tax at that time. Unless nondeductible contributions were made in 1987 or a
later year, all distributions from an IRA will be treated as ordinary income but
generally are eligible for tax-deferred rollover treatment. Taxable
distributions made before attainment of age 59 1/2, except in the case of a
participant's death or disability or where the amount distributed is part of a
series of substantially equal periodic (at least annual) payments that are to be
made over the life expectancies of the participant and his or her beneficiary,
are generally subject to a surtax in an amount equal to 10% of the distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a coproration may purchase Units of the Fund.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Securities and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Securities held by the Fund, which may be inspected by investors at
reasonable times during business hours.
With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Securities in exchange or substitution for Securities (or contracts) previously
deposited, the Trustee will send a notice to each investor, identifying both the
Securities removed and the replacement Securities deposited. The Trustee sends
each investor of record an annual report summarizing transactions in the Fund's
accounts and amounts distributed during the year and Securities held, the number
of Units outstanding and the Redemption Price at year end, the interest received
by the Fund on the Securities, the gross proceeds received by the Fund from the
disposition of any Security (resulting from redemption or payment at maturity or
sale of any Security), and the fees and expenses paid by the Fund, among other
matters. The Trustee will also furnish annual information returns to each
investor. Investors may obtain copies of Security evaluations from the Trustee
to enable them to comply with federal and state tax reporting requirements. Fund
accounts are audited annually by independent accountants selected by the
Sponsors. Audited financial statements are available from the Trustee on
request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to appoint a successor promptly;
however, if upon resignation no successor has accepted appointment within 30
days after notification, the resigning Trustee or Evaluator may apply to a court
of competent jurisdiction to appoint a successor.
Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains and is agreeable to the resignation. A new Sponsor may be
appointed by the remaining Sponsors and the Trustee to assume the
8
<PAGE>
<PAGE>
duties of the resigning Sponsor. If there is only one Sponsor and it fails to
perform its duties or becomes incapable of acting or bankrupt or its affairs are
taken over by public authorities, the Trustee may appoint a successor Sponsor at
reasonable rates of compensation, terminate the Indenture and liquidate the Fund
or continue to act as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been appointed as Agent for the Sponsors by the other
Sponsors.
The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect
wholly-owned subsidiary of The Travelers Inc.; Prudential Securities
Incorporated, an indirect wholly-owned subsidiary of the Prudential Insurance
Company of America; Dean Witter Reynolds, Inc., a principal operating subsidiary
of Dean Witter Discover & Co. and PaineWebber Incorporated, a wholly-owned
subsidiary of PaineWebber Group Inc. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. Each Sponsor has acted as principal underwriter and managing underwriter
of other investment companies. The Sponsors, in addition to participating as
members of various selling groups or as agents of other investment companies,
execute orders on behalf of investment companies for the purchase and sale of
securities of these companies and sell securities to these companies in their
capacities as brokers or dealers in securities.
PUBLIC DISTRIBUTION
In the initial offering period Units will be distributed to the public
through the Underwriting Account and dealers who are members of the National
Association of Securities Dealers, Inc. The initial offering period is 30 days
or less if all Units are sold. If some Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods.
The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.
The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold. Sales to dealers and to introducing
dealers, if any, will initially be made at prices which represent a concession
from the Public Offering Price, but the Agent for the Sponsors reserves the
right to change the rate of any concession from time to time. Any dealer or
introducing dealer may reallow a concession up to the concession to dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges; each Underwriter's interest in the Underwriting Account will depend
upon the number of Units acquired through the issuance of additional Units. The
Sponsors also realize a profit or loss on deposit of the Securities equal to the
difference between the cost of the Securities to the Fund (based on the offer
side evaluation on the initial date of deposit) and the Sponsors' cost of the
Securities. During the initial offering period, the Underwriting Account also
may realize profits or sustain losses as a result of fluctuations after the
initial date of deposit in the Public Offering
9
<PAGE>
<PAGE>
Price of the Units. In maintaining a secondary 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 and the prices at which they resell
these Units (which include the sales charge) or the prices at which they redeem
the Units. Cash, if any, made available by buyers of Units to the Sponsors prior
to a settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.
FUND PERFORMANCE
Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of income and principal
distributions reinvested, may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective investors. Total return figures are not averaged, and may not
reflect deduction of the sales charge, which would decrease the return. Average
annualized return figures reflect deduction of the maximum sales charge. No
provision is made for any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the
Securities in the Portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to performance data from publications such
as Donoghue's Money Fund Report, Lehman Brothers Intermediate Treasury Bond
Index, Lipper Analytical Services, Inc., Morningstar Publications, Inc., Money
Magazine, The New York Times, U.S. News and World Report, Barron's, Business
Week, CDA Investment Technology, Inc., Forbes Magazine or Fortune Magazine. As
with other performance data, performance comparisons should not be considered
representative of the Fund's relative performance for any future period.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio of bonds and the return are relatively fixed) and
'hold with confidence' (because the portfolio is professionally selected and
regularly reviewed). Defined Asset Funds offers an array of simple and
convenient investment choices, suited to fit a wide variety of personal
financial goals--a buy and hold strategy for capital accumulation, such as for
children's education or retirement, or attractive, regular current income
consistent with the preservation of principal. Unit investment trusts are
particularly suited for the many investors who prefer to seek long-term income
by purchasing sound investments and holding them, rather than through active
trading. Few individuals have the knowledge, resources or capital to buy and
hold a diversified portfolio on their own; it would generally take a
considerable sum of money to obtain the breadth and diversity that Defined Asset
Funds offer. One's investment objectives may call for a combination of Defined
Asset Funds.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee shown on the back cover
of this Prospectus, investors will receive at no cost to the investor
supplemental information about the Fund, which has been filed with the SEC. The
supplemental information includes more detailed risk factor disclosure about the
types of Securities that may be part of the Fund's Portfolio and general
information about the structure and operation of the Fund.
10
<PAGE>
<PAGE>
APPENDIX A
DESCRIPTION OF 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 'funds') is a current assessment of
creditworthiness with respect to the investments held by the 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 an investor 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.
Funds rated AAA are composed exclusively of assets that 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.
a-1
<PAGE>
<PAGE>
APPENDIX B
INITIAL OFFERING SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
---------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS PRIMARY MARKET
OFFER SIDE PUBLIC NET AMOUNT PERCENT OF PUBLIC CONCESSION TO
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE INTRODUCING 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>
SECONDARY MARKET SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
--------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS
BID SIDE PUBLIC NET AMOUNT PERCENT OF 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>
b-1
<PAGE>
<PAGE>
Defined
Asset FundsSM
<TABLE>
<S> <C>
Sponsors/Underwriters: Government Securities Income Fund
Merrill Lynch, GNMA Series--1Y
Pierce, Fenner &
Smith Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ
08543-9051
(609) 282-8500
A Unit Investment Trust
Smith Barney Inc.
Unit Trust
Department
388 Greenwich
Street--23rd Floor
New York, NY 10013 Units of this Fund may no longer be available and
1-800-223-2532 therefore information contained herein may be subject to
amendment. A registration statement relating to
securities of a future series
PaineWebber has been filed with the Securities and Exchange
Incorporated Commission. These securities may not be sold nor may
1200 Harbor Blvd. offers to buy be accepted prior to the time the
Weehawken, NJ 07087 registration statement becomes
(201) 902-3000
Prudential effective. For more complete information about a future
Securities series, including additional information on charges and
Incorporated expenses, please call or write one of the Sponsors listed
One Seaport Plaza here for a prospectus. Read the prospectus before you
199 Water Street invest or send money.
New York, NY 10292
(212) 776-1000
Dean Witter Reynolds
Inc.
Two World Trade
Center
59th Floor ------------------------------------
New York, NY 10048
(212) 392-2222 This Prospectus does not contain all of the information
with respect to the investment company set forth in its
registration
Additional statement and exhibits relating thereto which have been
Underwriters: filed with the Securities and Exchange Commission,
Gruntal & Co. Washington, D.C. under the Securities Act of 1933 and the
Incorporated Investment Company Act of 1940, and to which reference is
14 Wall Street hereby made.
New York, NY 10005
(212) 000-0000
A. G. Edwards & Sons
Inc.
One North Jefferson
St. Louis, Missouri ------------------------------------
63103
No person is authorized to give any information or to
make
Evaluator: any representations with respect to this investment
Kenny S&P Evaluation company not contained in this Prospectus; and any
Services information or representation not contained herein must
65 Broadway not be relied upon
New York, NY 10006
Trustee: as having been authorized. This Prospectus does not
The Chase Manhattan constitute an offer to sell or a solicitation of an offer
Bank, N.A. to buy securities in any state in which such offer,
(a National Banking solicitation or sale would be unlawful prior to
Association) registration or qualification under the securities laws
Defined Asset Funds of any such state.
P.O. Box 2051
New York, NY 10081
1-800-323-1508
</TABLE>
15115-6/95
<PAGE>
<PAGE>
PART II
Additional Information Not Included in the Prospectus
<TABLE>
<C> <S> <C> <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 DATE FILED
---------------------- -----------------
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 1/17/95
Prudential Securities Incorporated.................... 2-61418 6/29/89
Smith Barney Inc...................................... 33-29106 11/18/83
Dean Witter Reynolds Inc.............................. 2-60599 4/26/78
PaineWebber Incorporated.............................. 2-87965 1/4/78
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 5/26/94, 6/29/92
Prudential Securities Incorporated.................... 8-12321 8/29/94, 8/2/93
Smith Barney Inc...................................... 8-8177 4/20/94, 7/31/86
Dean Witter Reynolds Inc.............................. 8-14172 6/30/94, 6/20/88
PaineWebber Incorporated.............................. 8-16267 2/23/94, 4/9/91
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 9/22/81, 6/15/82
Prudential Securities Incorporated.................... 2-86941 3/30/88
Smith Barney Inc...................................... 33-20499 11/18/83
Dean Witter Reynolds Inc.............................. 2-60599, 2-86941 3/4/75
PaineWebber Incorporated.............................. 2-87965 1/4/78
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 Inc...................................... 13-1912900
Dean Witter Reynolds Inc.............................. 94-1671384
PaineWebber Incorporated.............................. 13-2638166
The Chase Manhattan Bank, N.A., Trustee............... 13-2633612
</TABLE>
II-1
<PAGE>
<PAGE>
SERIES OF GOVERNMENT SECURITIES INCOME FUND,
MUNICIPAL INVESTMENT TRUST FUND,
EQUITY INCOME FUND AND DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
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
Defined Asset Funds Municipal Insured Series............................................ 33-54565
Equity Income Fund, Select Ten Portfolio--1995 Series................................... 33-55807
</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 Defined Asset Funds, Municipal Insured Series, 1933 Act File No.
33-54565).
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 heading 'Miscellaneous--Legal Opinion' in the
Prospectus.
4.1.1 -- Consent of the Evaluator.
4.1.2 -- Consent of Rating Agency.
5.1 -- Consent of Independent Accountants
9.1 -- Information Supplement
</TABLE>
R-1
<PAGE>
<PAGE>
SIGNATURES
The registrant hereby identifies the series numbers of Government
Securities Income Fund, Municipal Investment Trust Fund, Equity Income Fund and
Defined Asset Funds Municipal Insured Series 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 14TH DAY OF
JUNE, 1995.
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 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 Numbers:
Fenner & Smith Incorporated: 33-43466 and 33-51607
</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>
SMITH BARNEY 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 Inc.: following 1933 Act File Numbers: 33-56722
and 33-51999
</TABLE>
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT F. GREENHILL
JEFFREY LANE
ROBERT H. LESSIN
JACK L. RIVKIN
GINA LEMON
------------------------
By: GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-4
<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: 33-55073
</TABLE>
JOSEPH J. GRANO, JR.
DONALD B. MARRON
ROBERT E. HOLLEY
---------------------------------
By: ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated and
Attorney-in-fact for the persons listed above)
R-5
<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-6
<PAGE>
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
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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
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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-7
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EXHIBIT 1.1
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES--1Y
DEFINED ASSET FUNDS
REFERENCE TRUST INDENTURE
DATED AS OF JUNE 14, 1995
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 'Defined 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 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, a Division of J.J.
Kenny Co., Inc.
(e) The Trust is organized as a Regulated Investment Company for Federal
tax purposes.
(f) Units may be held in certificated form.
(g) Section 3.18 is amended to read as follows:
Section 3.18. Expenses Borne by the Trustee. The following organization and
regular and recurring expenses of the Trust shall be borne by the Trustee:
(a) to the extent not borne by the Sponsors, expenses incurred in
establishing the Trust, including the cost of the initial preparation and
typesetting of the registration statement, prospectuses (including
preliminary prospectuses), the indenture, and other documents relating to
the Trust, SEC and state blue sky registration fees, the cost of the
initial valuation of the portfolio and audit of the Trust, the initial fees
and expenses of the Trustee, and legal and other out-of-pocket expenses
related thereto, but not including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred in the
preparation and printing of brochures and other advertising materials and
any other selling expenses, (b) the compensation of the Evaluator provided
for in Section 4.03, (c) auditing fees and, to the extent not borne by
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the Sponsors, expenses incurred in connection with maintaining the Trust's
registration statement current with Federal and state authorities, (d)
postage, stationery, printing and reproduction charges incurred in
preparing and mailing the statements and reports furnished pursuant to
Sections 3.07 and 8.03, and the distributions made pursuant to Section 3.05
and the Certificates issued after the Date of Deposit pursuant to Section
6.01; and (e) expenses of any Distribution Agent; provided that the Trustee
shall not be obligated to bear expenses pursuant to clauses (a) through (e)
of this Section for any calendar year of the Trust in excess of the Trustee
Expense Limit (or in excess of a prorated portion of such amount for any
period of less than one year). Expenses of the Trust for any calendar year
in excess of the Trustee Expense Limit shall be deemed to be non-routine
expenses of the Trust payable by the Trustee in accordance with Section
8.05(b).
The 'Trustee Expense Limit' shall initially mean $ per 1,000 Units,
provided that the amount of the Trustee Expense Limit shall be reviewed at
least annually by the Trustee and the Sponsors and adjusted by the mutual
written agreement of the Trustee and the Sponsors to reflect estimated
expenses of the Trust for the succeeding year (and the 'Trustee Expense
Limit' shall mean thereafter such amount as so adjusted). In connection
with any such review, the Trustee shall furnish to the Sponsors records in
reasonable detail indicating for calendar years ended prior to such review
actual expenses incurred by the Trustee and the Trust and the amounts paid
to the Trustee pursuant to Section 3.04 (a) (1) in such calendar years.
(h) Paragraph (b) of Section 7.06 is amended to read as follows:
(b) The Sponors shall receive on or promptly after the Date of deposit
upon written certification to the Trustee, reimbursement for any
organization expenses of the Trust included in Section 3.18 (a) as payable
by the Trustee but which were paid by the Sponsors, without profit. The
Sponsors shall also receive as reimbursement for any loss, liability or
expense referred to in Section 7.05 (b) such amounts as they shall from
time to time certify to the Trustee in writing to be their losses,
liabilities and expenses without profit, directly attributable to providing
services to the Trust, increased by the cost of such services provided
directly by the Sponsors, as determined in accordance with generally
accepted accounting principles consistently applied.
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EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
JUNE 14, 1995
Government Securities Income Fund,
GNMA Series-1Y
Defined Asset Funds
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Smith Barney Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defined Asset Funds
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--1Y 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
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EXHIBIT 4.1.1
JUNE 14, 1995
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.
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Merrill Lynch, Pierce, Fenner & Smith Incorporated The Chase Manhattan Bank, N.A.
Defined Asset Funds 1 Chase Manhattan Plaza-3B
P.O. Box 9051 New York, N.Y. 10081
Princeton, N.J. 08543-9051
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RE: GOVERNMENT SECURITIES INCOME FUND, GNMA SERIES-1Y, DEFINED ASSET FUNDS
Gentlemen:
We have examined the Registration Statement No. 33-57873 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,
By:
F. A. Shinal
Senior Vice President
Chief Financial Officer
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EXHIBIT 4.1.2
JUNE 14, 1995
Standard & Poor's Ratings Group
25 Broadway
New York, N.Y. 10004
Telephone 212/208-1061
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defined Asset Funds
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-1Y, DEFINED ASSET FUNDS 1933
ACT FILE NO. 33-57873
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
mortgage-backed securities fully guaranteed as to principal and interest by the
Government National Mortgage Association (GNMA) and the full faith and credit of
the United States is pledged to the payment of the securities in the trust.
You have permission to use the name of Standard & Poor's, a division of the
McGraw-Hill Companies 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 a recommendation 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. Standard & Poor's reserves the right to advise its own clients,
subscribers, and the public of the rating. Standard & Poor's relies on the
Sponsor and its counsel, accountants, and other experts for the accuracy and
completeness of the information submitted in connection with the rating.
Standard & Poor's 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, a division of the McGraw-Hill Companies 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, a division of the McGraw-Hill Companies 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
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Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Government Securities Income Fund,
GNMA Series-1Y
Defined Asset Funds:
We hereby consent to the use in this Registration Statement No. 33-57873 of our
opinion dated June 14, 1995, relating to the Statement of Condition of
Government Securities Income Fund, GNMA Series-1Y, 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 LLP
New York, N.Y.
June 14, 1995
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EXHIBIT 9.1
GOVERNMENT SECURITIES INCOME FUND - DEFINED ASSET FUNDS
INFORMATION SUPPLEMENT
This Information Supplement provides additional information concerning the
structure, operations and risks of government securities trusts (each, a 'Fund')
of Defined Asset Funds not found in the prospectuses for the Funds. This
Information Supplement is not a prospectus and does not include all of the
information that a prospective investor should consider before investing in a
Fund. This Information Supplement should be read in conjunction with the
prospectus for the Fund in which an investor is considering investing
('Prospectus'). Copies of the Prospectus can be obtained by calling or writing
the Trustee at the telephone number and address indicated in Part A of the
Prospectus.
This information Supplement is dated June 14, 1995. Capitalized terms have
been defined in the Prospectus.
TABLE OF CONTENTS
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Description of Portfolio Investments......................................................... 1
Mortgage Backed Securities--GNMA Series.................................................... 1
Portfolio Supervision...................................................................... 4
Risk Factors................................................................................. 4
U.S. Treasury Series....................................................................... 4
GNMA Series................................................................................ 5
Public Offering Price........................................................................ 5
GNMA Series................................................................................ 5
Redemption--U.S. Treasury Series only........................................................ 6
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DESCRIPTION OF PORTFOLIO INVESTMENT
MORTGAGE BACKED SECURITIES--GNMA SERIES
_____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.
_____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.
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_____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.
_____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.
_____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
2
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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.
_____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 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 basis 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. 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.
_____Income; Estimated Current Return; Estimated Long Term Return. 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.
3
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_____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.
PORTFOLIO SUPERVISION
Each Fund is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. Traditional methods of
investment management for a managed fund (such as a mutual fund) typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. Because a Fund is not actively managed, the
adverse financial condition of an issuer will not necessarily require the sale
of its securities from the Fund. Defined Asset Funds investment professionals
are dedicated exclusively to selecting and then monitoring securities held by
the various Defined Funds. On an on-going basis experienced financial analysts
regularly review the Portfolio of a Fund and may direct the disposition of
securities under any of the following circumstances; (i) a default in payment of
amounts due on any security, (ii) institution of certain legal proceedings,
(iii) existence of any other legal questions or impediments affecting a security
or the payment of amount due on the security, (iv) default under certain
documents adversely affecting debt service or default in payment of amounts due
on other securities of the same issuer or guarantor, (v) decline in price of the
security or the occurrence of other market or credit factors, including in
advance refunding (i.e., the issuance of refunding bonds and the deposit of the
proceeds therof in trust or escrow to retire the refunded securities on their
respective redemption dates), that in the opinion of the Sponsors would make the
retention of the security detrimental to the interest of investors, (vi) if as
security is not consistent with the investment objective of the Fund or (vii) if
the Trustee has a right to sell or redeem a security pursuant to any applicable
guarantee or other credit support. If a default in the payment of amounts due on
any security occurs and if the Agent for the Sponsors fails to give instructions
to sell or hold the security, the Indenture provides that the Trustee, within 30
days of the failure, shall sell the security.
4
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RISK FACTORS
U.S. TREASURY SERIES
The U.S. Treasury obligations included in the Portfolio of a U.S. Treasury
Series, though backed by the full faith and credit of the United States, are
subject to changes in market value when interest rates fluctuate. The Fund seeks
to protect against declining interest rates by investing a portion of the
Portfolio in longer-term Securities, while if interest rates rise Investors will
be able to reinvest the proceeds of principal returned each year in higher
yielding obligations. It is anticipated that equal portions of principal
invested will be returned annually as Securities mature. In order for the
Securities to be eligible for inclusion in the Fund, they must have been issued
after July 18, 1984. The Portfolio contains information concerning the coupon
rates and maturities of the Securities in the Fund.
GNMA SERIES
_____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.
_____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 below). 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.
PUBLIC OFFERING PRICE
GNMA SERIES
_____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
5
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<PAGE>
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. 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 Offering Price per Unit, the Repurchase Price per
Unit in the secondary market or the Redemption Price per Unit.
REDEMPTION--U.S. TREASURY SERIES ONLY
The Trustee will effect all redemptions in kind, except that the Investor's
pro rata portion of the cash balance in the Fund will be paid in cash. Thus, 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 Investor will
be entitled to receive in kind an amount and value of Securities per Unit equal
to the Redemption Price per Unit as determined as of the Evaluation Time next
following the tender, except that if the Sponsors are maintaining a secondary
market for Units at a price which will return to the Investor an amount in cash,
net after deducting any commissions or expenses, equal to or in excess of the
Redeption Price per Unit, the Trustee will deliver tendered Units for sale to
the Sponsors. The Trustee will then pay the net proceeds of the sale to the
Investor on the day the Investor would otherwise be entitled to receive the
redemption distribution. The value of Securities received upon redemption and
the proceeds received by the Distribution Agent for the account of the redeeming
Investor may be more or less than the amount paid by the Investor depending on
the value of the Securities in the Fund at the time of redemption. In an in kind
redemption the Investor will receive his pro rata portion of the principal
amount of the Portfolio and the net cash in the Fund (Section 5.02).
Distributions in kind on redemption of Units shall be held by the Trustee
as Distribution Agent, for the account, and for disposition in accordance with
the instructions of, the tendering Investor, as follows:
(a) If the tendering Investor requests cash payment, the Distribution Agent
shall sell the Securities distributed as of the close of business on the date of
tender and remit to the Investor not later than seven calendar days thereafter
the net proceeds of sale after deducting brokerage commissions and transfer
taxes, if any, on the sale.
(b) If the tendering Investor requests distribution in kind, the
Distribution Agent shall sell any portion of the Securities distributed
represented by fractional interest in accordance with the foregoing and
distribute net cash proceeds to the tendering Investor together with whole
Securities received on the in kind distribution.
To the extent that the securities are redeemed in kind, the size of the
Fund will be reduced but each remaining Unit will continue to represent the
identical principal amount of Securities with specified interest rates,
maturities and call provisions, if any.
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 any other
periods which the SEC may by order permit (Section 5.02).
6
<PAGE>
<PAGE>
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