<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1996
REGISTRATION NO. 33-57873
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES--1Y
(A UNIT INVESTMENT TRUST)
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051 SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013
PRUDENTIAL SECURITIES PAINEWEBBER INCORPORATED DEAN WITTER REYNOLDS INC.
INCORPORATED 1285 AVENUE OF THE TWO WORLD TRADE
ONE NEW YORK PLAZA AMERICAS CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10019 NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. LAURIE A. HESSLEIN DOUGLAS LOWE, ESQ.
P.O. BOX 9051 388 GREENWICH STREET 130 LIBERTY STREET--29TH
PRINCETON, NJ 08543-9051 NEW YORK, NY 10013 FLOOR
NEW YORK, NY 10006
COPIES TO:
LEE B. SPENCER, JR. ROBERT E. HOLLEY PIERRE DE SAINT PHALLE,
ONE NEW YORK PLAZA 1200 HARBOR BLVD. ESQ.
NEW YORK, NY 10292 WEEHAWKEN, NJ 07087 450 LEXINGTON AVENUE
NEW YORK, NY 10017
The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on July 17, 1996.
Check box if it is proposed that this filing will become effective on August 23,
1996 pursuant to paragraph (b) of Rule 485. / x /
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<PAGE>
<PAGE>
DEFINED ASSET FUNDSSM
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GOVERNMENT This Defined Fund was formed for the purpose of
SECURITIES obtaining safety of capital and current monthly
INCOME FUND distributions of payments of interest and
GNMA SERIES--1Y principal through investment in a fixed portfolio
A UNIT INVESTMENT consisting primarily of mortgage-backed securities
TRUST of the modified pass-through type (the 'Ginnie
- ------------------------------Maes') fully guaranteed as to principal and
/ / MONTHLY INCOME interest by the Government National Mortgage
/ / MORTGAGE BACKED Association ('GNMA'). The full faith and credit of
SECURITIES the United States is pledged to the payment of the
securities in the Fund but the units of the Fund,
as such, are not backed by said full faith and
credit. The value of the units of the Fund will
fluctuate with the value of the Portfolio of
underlying securities, and the principal amount of
underlying securities represented by each unit
will be reduced as principal is paid on the
underlying mortgages.
Minimum Purchase: $250
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
SPONSORS: COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Merrill Lynch, OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Pierce, Fenner & Smith CONTRARY IS A CRIMINAL OFFENSE.
Incorporated -------------------------------------------------
Smith Barney Inc. INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Prudential Securities AND RETAIN IT FOR FUTURE REFERENCE.
Incorporated INQUIRIES SHOULD BE DIRECTED TO THE TRUSTEE AT
Dean Witter Reynolds Inc. 1-800-323-1508.
PaineWebber Incorporated PROSPECTUS PART A DATED AUGUST 23, 1996.
<PAGE>
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Def ined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $100 billion sponsored over the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined funds are available including: insured funds, double and triple
tax-free funds and funds with 'laddered maturities' to help protect against
changing interest rates. Defined Asset Funds are offered by prospectus only.
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Defined GNMA Series
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Our defined portfolio of mortgage-backed GNMA Securities offers you a simple and
convenient way to participate in the GNMA market and obtain monthly income while
earning an attractive return as well as the assurance of an investment in
securities that are guaranteed by GNMA, a federal agency.
INVESTMENT OBJECTIVES
To obtain safety of capital and current monthly income distributions through
investment in a portfolio of interest-bearing GNMA Securities. The full faith
and credit of the United States is pledged to the payment of the Securities but
the units of the Fund, as such, are not directly backed.
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Defining Your Portfolio
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PROFESSIONAL SELECTION AND SUPERVISION
The Portfolio of Securities is selected by experienced buyers 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): 6.50% Ginnie Maes maturing 8/15/14 to 6/15/25, 50%; 7.00%
Ginnie Maes maturing 8/15/14 to 6/15/25, 50%. Both of the Ginnie Maes in the
Fund are backed by pools of long term mortgages on 1-to 4-family dwellings. The
Ginnie Maes are fully guaranteed as to payment of principal and interest by
GNMA. The Fund was created June 14, 1995. The information in this prospectus is
as of May 31, 1996, the evaluation date.
TAX INFORMATION
Distributions of ordinary income or capital gain from the Fund will be included
in a U.S. investor's gross income, but will not be eligible for the dividends-
received deduction for corporations. Distributions to investors who are not U.S.
citizens or residents will generally be subject to withholding tax at the
statutory rate of 30% (or a lesser treaty rate). (See Taxes in Part B).
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Defining Your Investment
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PUBLIC OFFERING PRICE PER 1,000 UNITS $943.01
The Public Offering Price as of May 31, 1996, the evaluation date, is based on
the aggregate bid side value of the underlying Securities in the Fund
($73,113,189), divided by the number of units outstanding (80,762,759) times
1,000 plus a sales charge of 4.00% of the Public Offering Price (4.167% on the
value of the underlying Securities). The Public Offering Price on any subsequent
date will vary. An amount equal to principal cash, if any, as well as net
accrued but undistributed interest on the unit is added to the Public Offering
Price. The underlying Securities are evaluated by an independent evaluator at
3:30 p.m. Eastern time on every business day.
PREMIUM AND DISCOUNT ISSUES
On the evaluation date, 100% of the Securities were valued at a discount from
par (see Risk Factors in Part B).
LOW MINIMUM INVESTMENT
You can get started with a minimum purchase of $250. There is no minimum
purchase for payroll deduction plans.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities of Securities in the Fund will
be distributed to investors periodically when the amount to be distributed is
more than $5.00 per 1,000 units.
A-2
<PAGE>
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REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into 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. On the evaluation date the value of the fund was 92% of
the face amount of securities deposited.
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Defining Your Risks
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RISK FACTORS
U. S. Government securities are not affected by credit risk but are subject to
changes in market value resulting from changes in interest rates. Unit price
fluctuates and the value of units will decline if interest rates increase. The
mortgages underlying the GNMA Securities are amortized, and there is no
prepayment protection. The potential for appreciation that might otherwise
result from a decline in interest rates would be limited by any increase in
prepayments by mortgagors as interest rates decline. Investors may also receive
payments of principal sooner than anticipated, and interest payments will
decrease as principal is returned. Because regular payments of principal will be
received over the life of the Fund and because of the possible maturity, sale or
other disposition of Securities, the size, composition and return of the
Portfolio may change at any time. Because of the sales charges, returns of
principal and fluctuations in unit price, among other reasons, the sale price
will generally be less than the cost of your units. There is no guarantee that
the Fund will achieve its investment objective.
The Fund itself and the units are not backed by the full faith and credit of the
U.S. Government (see Risk Factors in Part B).
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Defining Your Costs
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SALES CHARGES
Although the Fund is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Secondary
Market
Public Offering
Price
---------------
Maximum Sales Charges 4.25%
The Fund (and therefore the investors) bears all or a portion of its
organizational costs--including costs of preparing registration statements, 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.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
Per 1,000
Units
---------------
Trustee's Fee $ 0.81
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees $ 0.24
Organizational Expenses $ 0.20
Evaluator's Fee $ 0.03
Other Operating Expenses $ 0.04
---------------
TOTAL $ 1.32
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 lower, bid side evaluation of the
Securities, as determined by an independent evaluator), plus principal cash, if
any, as well as accrued interest. The bid side redemption and secondary market
repurchase price per 1,000 units as of the evaluation date was $905.28 ($37.73
less than the Public Offering Price). There is no fee for selling your units.
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Defining Your Income
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MONTHLY INTEREST INCOME
The Fund pays monthly income.
WHAT YOU MAY EXPECT
(PAYABLE ON THE 23RD DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 17TH DAY OF
THE MONTH):
Regular Monthly Income per 1,000 units: $ 5.32
Annual Income per 1,000 units: $ 63.89
These figures are estimates determined as of the evaluation date and actual
payments may vary.
A-3
<PAGE>
GOVERNMENT SECURITIES INCONE FUND,
GNMA SERIES - 1Y, DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Government Securities Income Fund,
GNMA Series - 1Y, Defined Asset Funds:
We have audited the accompanying statement of condition of
Government Securities Income Fund, GNMA Series - 1Y,
Defined Asset Funds, including the portfolio, as of
May 31, 1996 and the related statements of operations
and of changes in net assets for the period June 15, 1995
to May 31, 1996. These financial statements are the
responsibility of the Trustee. Our responsibility is to
express an opinion on these financial statements 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 statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. Securities owned at May 31,
1996, as shown in such portfolio, were confirmed to us by
The Chase Manhattan Bank, the Trustee. An audit also includes
assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Government Securities Income Fund,
GNMA Series - 1Y, Defined Asset Funds at May 31, 1996 and
the results of its operations and changes in its net assets
for the above-stated period in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
July 24, 1996
D - 1.
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1Y, DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of May 31, 1996
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 76,165,024 )(Note 1)........ $73,113,189
Accrued interest ............................... 438,922
Deferred Organization Costs (Note 5) ........... 92,535
Cash - income .................................. 6,166
Cash - principal ............................... 33
-----------
Total trust property ......................... 73,650,845
LESS LIABILITIES:
Accrued Sponsors' fees ......................... $ 7,842
Trustee's fees and expenses payable ............ 7,395
Other Liabialities ............................. 92,535 107,772
----------- -----------
NET ASSETS, REPRESENTED BY:
80,762,759 units of fractional undivided
interest outstanding (Note 3)................ 73,113,222
Undistributed net investment income ............ 429,851 $73,543,073
----------- ===========
UNIT VALUE ($ 73,543,073 / 80,762,759 units )..... $ .91061
===========
</TABLE>
See Notes to Financial Statements.
D - 2.
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1Y, DEFINED ASSET FUNDS
STATEMENT OF OPERATIONS
<TABLE><CAPTION>
June 15, 1995
to
May 31,
1996
----
<S> <C>
INVESTMENT INCOME:
Interest income ........................ $ 2,910,111
Trustee's fees and expenses ............ (49,737)
Sponsors' fees ......................... (10,822)
---------------
Net investment income .................. 2,849,552
---------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 37,555
Unrealized depreciation
of investments ....................... (3,051,835)
---------------
Net realized and unrealized
loss on investments ................. (3,014,280)
---------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (164,728)
===============
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1Y, DEFINED ASSET FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
June 15, 1995
to
May 31,
1996
----
<S> <C>
OPERATIONS:
Net investment income .................. $ 2,849,552
Realized gain on
securities sold or redeemed .......... 37,555
Unrealized depreciation
of investments ....................... (3,051,835)
---------------
Net decrease in net assets
resulting from operations ............ (164,728)
---------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (2,419,701)
Principal .............................. (1,478,119)
---------------
Total distributions .................... (3,897,820)
---------------
Deferred Organization costs .............. (5,061)
Subscription amounts .................... 77,121,465
NET INCREASE IN NET ASSETS ............... 73,053,856
NET ASSETS AT BEGINNING OF PERIOD ........ 489,217
---------------
NET ASSETS AT END OF PERIOD .............. $73,543,073
===============
PER UNIT:
Income distributions during
period ............................... $ .05969
===============
Principal distributions during
period ............................... $ .03383
===============
Net asset value at end of
period ............................... $ .91061
===============
TRUST UNITS:
Issued during period ................... 80 262,759
Outstanding at end of period ........... 80,762,759
===============
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1Y, DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities
(see "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B), except that value on June 15,
1995 was based upon offering side evaluations at June 13,
1995, the day prior to the Date of Deposit. Cost of
securities at June 15, 1995 was also based on such offering
side evaluations. Cost of Securities Sold is based on average cost.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
Distributions of combined interest and principal (plus any prepayments and
redemption proceeds) are made to Holders each month. Receipts other than
interest and principal paydowns, after deductions for redemptions and
applicable expenses, are also distributed as explained in "Income and
Distributions - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 80,762,759 units at Date of Deposit ...$80,715,077
Less sales charge ............................. 3,104,395
-----------
Net amount applicable to Holders .............. 77,610,682
Realized gain on securities sold or redeemed .. 37,555
Principal distributions ....................... (1,478,119)
Unrealized depreciation of investments ..... .. (3,051,835)
Organization costs ............................ (5,061)
-----------
Net capital applicable to Holders .............$73,113,222
===========
4. INCOME TAXES
As of May 31, 1996, unrealized depreciation of investments based on average
cost, aggregated $3,051,835, all of which related to depreciated securities.
The cost of investment securities for Federal income tax purposes approximates
the amount shown in the accompanying financial statements.
5. DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized on a straight line basis
over a period of five years. Included in "Other Liabilities" in the
accompanying Statement of Condition is $92,535 payable to the Trustee for
reimbursement of costs related to the organization of the trust.
D - 5.
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES - 1Y, DEFINED ASSET FUNDS
PORTFOLIO
As of May 31, 1996
<TABLE><CAPTION>
Range of
Interest Stated Face
Security Description Rate Maturities(2) Amount Cost(1) Value(1)
--------------------------------- -------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
1 Government National Mortgage 6.500% 03/15/10 $ 38,916,760 $ 37,527,432 $ 35,912,775
Association, Modified Pass-through to
Mortgage-Backed Securities 09/15/14
2 Government National Mortgage 7.000 05/15/10 39,106,874 38,637,592 37,200,414
Association, Modified Pass-through to
Mortgage-Backed Securities 11/15/14
--------------- --------------- ---------------
TOTAL $ 78,023,634 $ 76,165,024 $ 73,113,189
=============== =============== ===============
</TABLE>
(1) See Note 1 to Financial Statements.
(2) On the Date of Deposit, the ranges of stated maturities were
as follows:
6.50% GNMA - 08/15/14 to 06/15/25
7.00% GNMA - 08/15/14 to 06/15/25
D - 6.
<PAGE>
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES
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.
My Name (please print) Registered Holder
My Address, including
Zip Code (please print)
Registered Holder
(Two signatures required if
joint tenancy)
12345678
<PAGE>
BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 644, NEW YORK, N.Y. NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE CHASE MANHATTAN BANK (GNMA 1Y) UNITED STATES
RETAIL PROCESSING DEPARTMENT
770 BROADWAY--7th FLOOR
NEW YORK, N.Y. 10003-9598
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(Fold along this line.)
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(Fold along this line.)
<PAGE>
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 WRITING OR CALLING THE TRUSTEE, AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK OF THIS PROSPECTUS.
Index
PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 2
How to Buy Units...................................... 4
How to Sell Units..................................... 4
Income, Distributions and Reinvestment................ 5
Return Calculations................................... 6
Fund Expenses......................................... 6
PAGE
---------
Taxes................................................. 7
Records and Reports................................... 9
Trust Indenture....................................... 9
Miscellaneous......................................... 10
Supplemental Information.............................. 11
Appendix Sales Charge Schedules....................... a-1
FUND DESCRIPTION
PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Securities for the Portfolio after
considering the Fund's investment objectives as well as the availability of the
Securities, the price of the Securities compared to similar securities and the
extent to which they were trading at discounts or premiums to par, and the
maturities of the Securities. Only issues meeting these stringent criteria of
the Defined Asset Funds team of dedicated research analysts are included in the
Portfolio. No leverage or borrowing is used nor does the Portfolio contain other
kinds of securities to enhance yield. A summary of the Securities in the
Portfolio appears in Part A of the Prospectus.
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.
1
<PAGE>
The Ginnie Maes are of the 'modified pass-through' type, the terms of which
provide for timely monthly payments by the issuers to the registered holders
(including the Fund) of their pro rata shares of the scheduled principal
payments on account of the mortgages backing these Ginnie Maes, plus any
prepayments of principal of such mortgages received, and interest on the
aggregate unpaid principal balance of these Ginnie Maes. Ginnie Maes are
guaranteed by GNMA as to timely payment of principal and interest. The full
faith and credit of the United States is pledged to the payment of all amounts
which may be required to be paid under the guaranty.
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.
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.
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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 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,
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including brokerage costs in disposing of Securities, will be borne by investors
remaining at that time. This may have the effect of reducing the amount of
proceeds those investors are to receive in any final distribution.
HOW TO BUY UNITS
PUBLIC OFFERING PRICE
Units are available from any of the Sponsors, 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 the Appendix). 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 the Appendix). 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.
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HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the
Securities, the sale price may be less than the cost of your Units. You should
consult your financial professional for current market prices to determine if
other broker-dealers or banks are offering higher prices for Units.
The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates must be properly endorsed
or accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. The Fund has no back-end load or 12b-1 fees,
so there is never a fee for cashing in your investment (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
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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 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.
RETURN CALCULATIONS
Estimated Current Return shows the estimated annual cash to be received
from interest-bearing securities in the Portfolio (net of estimated annual
expenses) divided by the Public Offering Price (including the maximum sales
charge). Estimated Long Term Return is a measure of the estimated return over
the estimated life of the Fund. This represents an average of the yields to
maturity (or in certain cases, to an earlier call date) of the individual
securities in the Portfolio, adjusted to reflect the maximum sales charge and
estimated expenses. The average yield for the Portfolio is derived by weighting
each security's yield by its market value and the time remaining to the call or
maturity date, depending on how the security is priced. Unlike Estimated Current
Return, Estimated Long Term Return takes into account maturities, discounts and
premiums of the underlying securities.
No return estimated can be predictive of your actual return because returns
will vary with purchase price (including sales charges), how long units are
held, changes in Portfolio composition, changes in interest income and changes
in fees and expenses. Therefore, Estimated Current Return and Estimated Long
Term Return are designed to be comparative rather than predictive. A yield
calculation which is more comparable to an individual security may be higher or
lower than Estimated Current Return or Estimated Long Term Return which are more
comparable to return calculations used by other investment products.
The estimated long-term return figure is calculated using an estimated
average life for the Securities. Estimated average life is an essential factor
in the calculation of Estimated Long Term Return. When the Fund has a shorter
average life than is estimated, Estimated Long Term Return will be higher if the
Fund contains Securities priced at a discount and lower if the Securities are
priced at premium. Conversely, when the Fund has a longer average life than is
estimated, Estimated Long Term Return will be lower if the Securities are priced
at a discount and higher if the Securities are priced at a premium. To calculate
estimated average life an assumption of the present average age of available
mortgage-backed Securities in the marketplace with the same coupon is made; the
calculation of estimated average life is based upon actual recent prepayments,
industry assumptions about prepayments and analysis of several factors
including, among other things, the coupon, the housing environment, the present
interest rate (no change in interest rate is assumed) and historical trends.
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,
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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 1,000
Units. 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
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
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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 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
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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 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.
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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 financial statements in the Prospectus were audited by Deloitte &
Touche LLP, independent accountants, as stated in their opinion. They are
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 continue 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 Price of the Units. In
maintaining a
10
<PAGE>
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.
FFUND 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 writing or calling 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.
11
<PAGE>
APPENDIX
INITIAL OFFERING SALES CHARGE
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC
AS PERCENT OF AS PERCENT OF OFFERING PRICE
OFFER SIDE PUBLIC NET AMOUNT ---------------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- --------------------------------------------------------------------- ------------------- -------------
<S> <C> <C> <C>
Less than 100,000.................................................... 4.00% 4.167% 2.600%
100,000-499,999...................................................... 3.00 3.093 1.950
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>
SECONDARY MARKET SALES CHARGE SCHEDULE
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT) DEALER
CONCESSION AS
PERCENT OF
---------------------------------- PUBLIC
AS PERCENT OF AS PERCENT OF OFFERING PRICE
BID SIDE PUBLIC NET AMOUNT ---------------------
NUMBER OF UNITS OFFERING PRICE INVESTED
- --------------------------------------------------------------------- ------------------- -------------
<S> <C> <C> <C>
Less than 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>
a-1
<PAGE>
DEFINED
ASSET FUNDSSM
SPONSORS: GOVERNMENT SECURITIES
Merrill Lynch, INCOME FUND
Pierce, Fenner & Smith Incorporated GNMA Series 1Y
Defined Asset Funds (A Unit Investment Trust)
P.O. Box 9051 PROSPECTUS PART A
Princeton, NJ 08543-9051 This Prospectus does not contain all of
(609) 282-8500 the information with respect to the
Smith Barney Inc. investment company set forth in its
Unit Trust Department registration statement and exhibits
388 Greenwich Street--23rd Floor relating thereto which have been filed
New York, NY 10013 with the Securities and Exchange
(212) 816-4000 Commission, Washington, D.C. under the
PaineWebber Incorporated Securities Act of 1933 and the
1200 Harbor Boulevard Investment Company Act of 1940, and to
Weehawken, NJ 07087 which reference is hereby made. Copies
(201) 902-3000 of such material can be obtained from
Prudential Securities Incorporated the Public Reference Section of the
One New York Plaza Commission, 450 Fifth Street, N.W.,
New York, NY 10292 Washington, D.C. 20549 at prescribed
(212) 778-6164 rates. The Commission also maintains a
Dean Witter Reynolds Inc. Web site that contains information
Two World Trade Center--59th Floor statements and other information
New York, NY 10048 regarding registrants such as Defined
(212) 392-2222 Asset Funds that file electronically
EVALUATOR: with the Commission at
Kenny S&P Evaluation Services, http://www.sec.gov.
a division of J. J. Kenny Co., Inc. No person is authorized to give any
65 Broadway information or to make any
New York, NY 10006 representations with respect to this
TRUSTEE: investment company not contained in its
The Chase Manhattan Bank registration statement and exhibits
(a New York Banking Corporation) relating thereto; and any information or
Customer Service Retail Department representation not contained therein
770 Broadway--7th Floor must not be relied upon as having been
New York, NY 10003-9598 authorized. This Prospectus does not
1-800-323-1508 constitute an offer to sell, or a
solicitation of an offer to buy,
securities in any state to any person to
whom it is not lawful to make such offer
in such state.
15115--8/96
<PAGE>
DEFINED ASSET FUNDS--
GOVERNMENT SECURITIES INCOME FUND
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet of Form S-6.
The cross-reference sheet (incorporated by reference to the Registration
Statement on Form S-6 of Defined Asset Funds Municipal Insured Series, 1933 Act
File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1--Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multi-state
Series--48, 1933 Act File No. 33-50247).
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
Post Effective Amendment No. 4 to the Registration Statement of
Government Securities Income Fund, Freddie Mac Series 10, 1933 Act
File No. 33-46142).
R-1
<PAGE>
GOVERNMENT SECURITIES INCOME FUND
GNMA SERIES 1Y
DEFINED ASSET FUNDS
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
GOVERNMENT SECURITIES INCOME FUND, GNMA SERIES 1Y, DEFINED ASSET FUNDS (A UNIT
INVESTMENT TRUST), CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR
EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE
SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW
YORK ON THE 14TH DAY OF AUGUST, 1996.
SIGNATURES APPEAR ON PAGES R-3, R-4, R-5, R-6 AND R-7.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Smith Barney Inc.
has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Merrill Lynch, Pierce, have been filed
Fenner & Smith Incorporated: under
Form SE and the
following 1933 Act
File
Number: 33-43466
and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Number:
33-41631
ALAN D. HOGAN
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS
By
WILLIAM W. HUESTIS
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-4
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Number:
33-49753 and
33-51607
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
JEFFREY LANE
ROBERT H. LESSIN
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-5
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Number: 33-17085
Reynolds Inc.:
NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors of PaineWebber Number: 33-55073
Incorporated:
JOSEPH J. GRANO, JR.
DONALD B. MARRON
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-7
<PAGE>
EXHIBIT 4.1
KENNY S&P EVALUATION SERVICES
A DIVISION OF J. J. KENNY CO., INC.
65 BROADWAY
NEW YORK, N.Y. 10006-2551
TELEPHONE (212) 770-4422
FAX 212/797-8681
August 14, 1996
Frank A. Ciccotto
Vice President
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Unit Investment Trust Division
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank
1 Chase Manhattan Plaza--3B
New York, New York 10081
RE: GOVERNMENT SECURITIES INCOME FUND,
GNMA SERIES 1Y, DEFINED ASSET FUNDS (SEC Reg. Pound33-57873)
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-57873 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J. J.
Kenny Co., Inc. as evaluator.
You are hereby authorized to file copies of this letter with the Securities
and Exchange Commission.
Sincerely,
FRANK A. CICCOTTO
<PAGE>
Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Government Securities Income Fund--GNMA Series 1Y, Defined Asset Funds
We consent to the use in this Post-Effective Amendment No. 1 to Registration
Statement No. 33-57873 of our opinion dated July 24, 1996 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading 'Auditors' in such Prospectus.
DELOITTE & TOUCHE LLP
New York, N.Y.
August 14, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 76,165,024
<INVESTMENTS-AT-VALUE> 73,113,189
<RECEIVABLES> 531,457
<ASSETS-OTHER> 6,199
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 73,650,845
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107,772
<TOTAL-LIABILITIES> 107,772
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 76,165,057
<SHARES-COMMON-STOCK> 80,762,759
<SHARES-COMMON-PRIOR> 500,000
<ACCUMULATED-NII-CURRENT> 429,851
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,051,835)
<NET-ASSETS> 73,543,073
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,910,111
<OTHER-INCOME> 0
<EXPENSES-NET> 60,559
<NET-INVESTMENT-INCOME> 2,849,552
<REALIZED-GAINS-CURRENT> 37,555
<APPREC-INCREASE-CURRENT> (3,051,835)
<NET-CHANGE-FROM-OPS> (164,728)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,419,701
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 1,478,119
<NUMBER-OF-SHARES-SOLD> 80,262,759
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 73,053,856
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
August 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We hereby represent that the Post-Effective Amendments to the registered
unit investment trusts described in Exhibit A attached hereto do not contain
disclosures which would render them ineligible to become effective pursuant to
Rule 485(b) under the Securities Act of 1933.
Very truly yours,
Davis Polk & Wardwell
Attachment
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
1933 ACT 1940 ACT
FUND NAME CIK FILE NO. FILE NO.
- --------- --- -------- --------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-GSIF GNMA SERIES 1C 781280 33-08086 811-2810
DEFINED ASSET FUNDS-GSIF GNMA SERIES 1Y 893062 33-57873 811-2810
DEFINED ASSET FUNDS-GSIF MPUSTS-3 781754 2-97979 811-2810
DEFINED ASSET FUNDS-GSIF MPUSTS-23 893117 33-60021 811-2810
DEFINED ASSET FUNDS-IS-26 DAF 895587 33-54457 811-2295
DEFINED ASSET FUNDS-MITF IS-153 781180 33-34029 811-1777
DEFINED ASSET FUNDS-MITF IS-167 803817 33-39602 811-1777
DEFINED ASSET FUNDS- IS-205 DAF 803932 33-53277 811-1777
DEFINED ASSET FUNDS-CIF ITS-37 883648 33-47080 811-2295
DEFINED ASSET FUNDS-ITS-44 DAF 883655 33-49503 811-2295
DEFINED ASSET FUNDS-MITF ITS-176 868090 33-40238 811-1777
DEFINED ASSET FUNDS-MITF ITS-192 868097 33-47647 811-1777
DEFINED ASSET FUNDS- ITS-207 DAF 868114 33-49567 811-1777
DEFINED ASSET FUNDS- ITS-255 DAF 924347 33-59031 811-1777
DEFINED ASSET FUNDS- ITS-256 DAF 924348 33-59751 811-1777
DEFINED ASSET FUNDS-CIF MPS-307 781811 33-44740 811-2295
DEFINED ASSET FUNDS-MITF MPS-509 803716 33-38625 811-1777
DEFINED ASSET FUNDS- MPS-528 DAF 892746 33-49473 811-1777
DEFINED ASSET FUNDS- MPS-542 DAF 892765 33-53425 811-1777
DEFINED ASSET FUNDS--MPS-558 DAF 924296 33-57975 811-1777
DEFINED ASSET FUNDS- MSS-37 DAF 895624 33-49585 811-1777
DEFINED ASSET FUNDS-MITF MSS-6 881830 33-47807 811-1777
DEFINED ASSET FUNDS- MSS-64 DAF 910013 33-53581 811-1777
DEFINED ASSET FUNDS-MITF MSS 8U 868164 33-40524 811-1777
DEFINED ASSET FUNDS-MITF MSS 8V 868165 33-40704 811-1777
DEFINED ASSET FUNDS- MSS-91 DAF 924273 33-59029 811-1777
DEFINED ASSET FUNDS-MITF NYPUT-4 759756 2-94964 811-1777
TOTAL: 27 FUNDS
</TABLE>
