DEFINED ASSET FUNDS-REGISTERED TRADEMARK-
----------------------------------------------------
GOVERNMENT SECURITIES INCOME FUND
MONTHLY PAYMENT U.S. TREASURY
SERIES--22
(LADDERED MATURITIES)
A UNIT INVESTMENT TRUST
- PORTFOLIO OF U.S. TREASURY NOTES
- LADDERED MATURITIES
- MONTHLY INCOME DISTRIBUTIONS
- U.S. TAX EXEMPT FOR MANY FOREIGN HOLDERS
SPONSORS:
MERRILL LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED -----------------------------------------------------
SALOMON SMITH BARNEY INC. The Securities and Exchange Commission has not
PRUDENTIAL SECURITIES approved or disapproved these Securities or passed
INCORPORATED upon the adequacy of this prospectus. Any
PAINEWEBBER INCORPORATED representation to the contrary is a criminal offense.
DEAN WITTER REYNOLDS INC. Prospectus dated September 22, 2000.
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Defined Asset Funds-Registered Trademark-
Defined Asset Funds-Registered Trademark- is America's oldest and largest family
of unit investment trusts, with over $160 billion sponsored over the last 28
years. Defined Asset Funds has been a leader in unit investment trust research
and product innovation. Our family of Funds helps investors work toward their
financial goals with a full range of quality investments, including municipal,
corporate and government bond portfolios, as well as domestic and international
equity portfolios.
Defined Asset Funds offer a number of advantages:
- A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or
bonds appropriate for a particular fund's objectives.
- Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF THE EVALUATION DATE, MAY
31, 2000.
CONTENTS
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PAGE
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Risk/Return Summary............................... 3
What You Can Expect From Your Investment.......... 5
Monthly Income.................................. 5
Return Figures.................................. 5
Records and Reports............................. 5
The Risks You Face................................ 6
Interest Rate Risk.............................. 6
Reduced Diversification Risk.................... 6
Litigation Risk................................. 6
Selling or Exchanging Units....................... 6
Sponsors' Secondary Market...................... 6
Selling Units to the Trustee.................... 6
Exchange Option................................. 7
How The Fund Works................................ 7
Pricing......................................... 7
Evaluations..................................... 7
Income.......................................... 8
Expenses........................................ 8
Portfolio Changes............................... 8
Fund Termination................................ 9
Certificates.................................... 9
Trust Indenture................................. 9
Legal Opinion................................... 10
Auditors........................................ 10
Sponsors........................................ 10
Trustee......................................... 11
Underwriters' and Sponsors' Profits............. 11
Public Distribution............................. 11
Code of Ethics.................................. 11
Year 2000 Issues................................ 11
Taxes............................................. 11
Supplemental Information.......................... 13
Financial Statements.............................. D-1
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RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks current interest income, safety of capital and flexibility by
investing for approximately five years in a fixed, laddered portfolio of U.S.
Treasury notes maturing each year 2001-2005.
2. WHAT ARE U.S. TREASURY NOTES?
These are directly issued by the U.S. Treasury and are similar to corporate
bonds in that they pay interest semi-annually. They are issued to fund
various government activities. In return, they pay a fixed rate of interest
and principal at maturity.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity five short- and intermediate-term U.S.
Treasury notes with a current aggregate face amount of $31,725,000. The Fund
is a unit investment trust which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
- You will periodically receive your share of the principal received as each
Treasury note matures.
- The securities BUT NOT THE FUND OR THE UNITS are backed by the full faith and
credit of the United States.
- 100% of the Portfolio consists of United States government Treasury notes.
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates can reduce the price of your units.
- Assuming no changes in interest rates, when you sell your units, they will
generally be worth less than your cost because your cost included a sales
fee.
- The Fund will receive early returns of principal if securities are sold
before they mature. If this happens your income will decline and you may not
be able to reinvest the money you receive at as high a yield or as long a
maturity.
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want current monthly income exempt from state and local personal
income taxes in all states. You will benefit from a professionally selected
and supervised portfolio of U.S. government backed securities.
The Fund is NOT appropriate for you if you want a speculative investment that
changes to take advantage of market movements.
DEFINING YOUR INCOME
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WHAT YOU MAY EXPECT (Payable on the 25th day each
month):
Regular Monthly Income per 1,000 units: $5.20
Annual Income per 1,000 units: $62.51
RECORD DAY: 10th day of each month
THESE FIGURES ARE ESTIMATES ON THE EVALUATION DATE; ACTUAL
PAYMENTS MAY VARY.
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6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay, directly or indirectly,
when you invest in the Fund.
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INVESTOR FEES
Maximum Sales Fee (Load) on new purchases (as a
percentage of $1,000 invested) 2.25%
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Employees of some of the Sponsors and their affiliates may be charged a
reduced sales fee of no less than $5.00 per 1,000 Units.
The maximum sales fee is reduced if you invest at least $500,000, as follows:
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YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
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Less than $500,000 2.25%
$500,000-999,999 1.75%
$1,000,000 and over 1.25%
Maximum Exchange Fee 2.25%
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ESTIMATED ANNUAL FUND OPERATING EXPENSES
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AMOUNT
PER
1,000 UNITS
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Trustee's Fee $0.48
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating expenses) $0.47
Organization costs $0.20
Evaluator's Fee $0.03
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TOTAL $1.14
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The Sponsors historically paid organization costs and updating expenses.
7. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and securities are not sold
because of market changes. Rather, experienced Defined Asset Funds financial
analysts regularly review the securities in the Fund. The Fund may sell a
security if certain adverse credit or other conditions exist.
8. HOW DO I BUY UNITS?
The minimum investment is $250.
You can buy units from any of the Sponsors and other broker-dealers. The
Sponsors are listed later in this prospectus. Some banks may offer units for
sale through special arrangements with the Sponsors, although certain legal
restrictions may apply.
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UNIT PRICE PER UNIT $1,012.79
(as of May 31, 2000)
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Unit price is based on the net asset value of the Fund plus the up-front
sales fee. An amount equal to any principal cash, as well as net accrued but
undistributed interest on the unit, is added to the unit price. An
independent evaluator prices the bonds at 3:30 p.m. Eastern time every
business day. Unit price changes every day with changes in the prices of the
bonds in the Fund.
9. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the Trustee for the net
asset value determined at the close of business on the date of sale. You will
not pay any other fee when you sell your units.
10. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly. Interest on the bonds in this Fund is subject
to federal income taxes for U.S. investors, but exempt from state and local
personal income taxes. If you are a non-U.S. investor, your interest may be
exempt from U.S. federal income taxes, including withholding taxes.
You will also receive principal payments when the securities mature or if
they are sold (when the cash available is more than $5.00 per 1,000 units).
You will be subject to tax on any gain realized by the Fund on the
disposition of bonds.
11. WHAT OTHER SERVICES ARE AVAILABLE?
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain other Defined Asset
Funds. You may also exchange into this Fund from certain other funds. We
charge a reduced sales fee on exchanges.
REINVESTMENT
You will receive your monthly income in cash unless you choose to compound
your income by reinvesting into additional units of the Fund at a reduced
sales fee. Contact your broker, dealer or financial institution.
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WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly income may vary
because of:
- elimination of one or more securities from the Fund's portfolio because of
redemptions or sales; or
- a change in the Fund's expenses;
Changes in interest rates generally will not affect your monthly income because
the portfolio is fixed.
Along with your monthly income, you will receive your share of any available
principal.
RETURN FIGURES
We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.
ESTIMATED CURRENT RETURN equals the estimated annual cash to be received from
the securities in the Fund less estimated annual Fund expenses, divided by the
Unit Price (including the maximum sales fee):
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Estimated Annual Estimated
Interest Income - Annual Expenses
------------------------------------
Unit Price
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ESTIMATED LONG TERM RETURN is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the securities in the
Fund. It is an average of the yields to maturity of the individual securities in
the portfolio, adjusted to reflect the Fund's maximum sales fee and estimated
expenses. We calculate the average yield for the portfolio by weighting each
security's yield by its market value and the time remaining to the maturity
date.
Yields on individual securities depend on many factors including general
conditions of the bond markets, the size of a particular offering and the
maturity and quality rating of the particular issues. Yields can vary among
bonds with similar maturities, coupons and ratings.
These return quotations are designed to be comparative rather than predictive.
RECORDS AND REPORTS
You will receive:
- a monthly statement of income payments and any principal payments;
- a notice from the Trustee when new securities are deposited in exchange or
substitution for securities originally deposited;
- an annual report on Fund activity; and
- annual tax information. THIS WILL ALSO BE SENT TO THE IRS. YOU MUST REPORT THE
AMOUNT OF INTEREST RECEIVED DURING THE YEAR.
You may request:
- copies of evaluations to enable you to comply with federal and state tax
reporting requirements; and
- audited financial statements of the Fund.
You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
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THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, securities with longer maturities
will change in value more than securities with shorter maturities. Of course, we
cannot predict how interest rates may change.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell securities. This
could increase your share of Fund expenses.
LITIGATION RISK
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
- ADDING the value of the securities, net accrued interest, cash and any other
Fund assets;
- SUBTRACTING accrued but unpaid Fund expenses, unreimbursed Trustee advances,
cash held to buy back units or for distribution to investors and any other
Fund liabilities; and
- DIVIDING the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge. We may resell the units to other buyers or to
the Trustee. You should consult your financial professional for current market
prices to determine if other broker-dealers or banks are offering higher prices.
We have maintained a secondary market continuously for over 28 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
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If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select securities to be sold. Securities will be
selected based on market and credit factors. These sales could be made at times
when the securities would not otherwise be sold and may result in your receiving
less than the unit par value and also reduce the size and diversity of the Fund.
There could be a delay in paying you for your units:
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
- for any other period permitted by SEC order.
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund or
you may exchange units of this Fund for units of certain other funds, at a
reduced sales fee, if your investment goals change. In addition, you may
exchange into this Fund from certain other Defined Asset Funds and unit trusts.
To exchange units, you should talk to your financial professional about what
funds are exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
We may amend or terminate this exchange option at any time without notice.
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the securities, less expenses,
from the most recent Record Day up to, but not including, the settlement date,
which is usually three business days after the purchase date of the unit.
A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.
In addition, as with mutual funds, the Fund (and therefore the investors) pay
all or some of the costs of organizing the Fund including:
- cost of initial preparation of legal documents;
- federal and state registration fees;
- initial fees and expenses of the Trustee;
- initial audit; and
- legal expenses and other out-of-pocket expenses.
EVALUATIONS
An independent Evaluator values the securities on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day,
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Thanksgiving and Christmas; and the following federal holidays: Columbus Day and
Veterans Day). Values are based on current bid or offer prices for the
securities or comparable bonds. In the past, the difference between bid and
offer prices of U.S. Treasury securities of the type in this Fund has been about
0.10%.
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
- to reimburse the Trustee for the Fund's operating expenses;
- for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
- costs of actions taken to protect the Fund and other legal fees and
expenses;
- expenses for keeping the Fund's registration statement current; and
- Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 55 CENTS per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a security.
Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
securities in the portfolio even if their credit quality declines or other
adverse financial circumstances occur. However, we may sell a security in
certain cases if we believe that certain adverse credit or certain other
conditions exist.
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which may affect the
composition of the portfolio. Units offered in the secondary
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market may not represent the same face amount of securities that they did
originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
- diversity of the portfolio;
- size of the Fund relative to its original size;
- ratio of Fund expenses to income;
- current and long-term returns;
- degree to which units may be selling at a premium over par; and
- cost of maintaining a current prospectus.
FUND TERMINATION
The Fund will terminate following the stated maturity or sale of the last
security in the portfolio. The Fund may also terminate earlier with the consent
of investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of securities deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining securities, and you will receive your final
distribution. Any security that cannot be sold at a reasonable price may
continue to be held by the Trustee in a liquidating trust pending its final
sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling securities. This may reduce the amount you receive as
your final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
TRUST INDENTURE
The Fund is a "unit investment trust" governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
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The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
- it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- remove it and appoint a replacement Sponsor;
- liquidate the Fund; or
- continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsors, has given an opinion that the units are
validly issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.
SPONSORS
The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PRUDENTIAL SECURITIES INCORPORATED (an
indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza
New York, NY 10292
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to
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many unit investment trusts. As a registered broker-dealer each Sponsor buys and
sells securities (including investment company shares) for others (including
investment companies) and participates as an underwriter in various selling
groups.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Departament, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial deposit of the securities. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.
In maintaining a secondary market, 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 or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
The Fund and the Agent for the Sponsors have each adopted a code of ethics
requiring reporting of personal securities transactions by its employees with
access to information on Fund transactions. Subject to certain conditions, the
codes permit employees to invest in Fund securities for their own accounts. The
codes are designed to prevent fraud, deception and misconduct against the Fund
and to provide reasonable standards of conduct. These codes are on file with the
Commission and you may obtain a copy by contacting the Commission at the address
listed on the back cover of this prospectus.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the "Year
2000 Problem"). To date we are not aware of any major operational difficulties
resulting from the computer system changes necessary to prepare for the Year
2000. However, there can be no assurance that the Year 2000 Problem will not
adversely affect the issuers of the bonds contained in the Portfolio. We cannot
predict whether any impact will be material to the Fund as a whole.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances or subject to
special rules.
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You should consult your own tax adviser about your particular circumstances.
The Sponsors believe that individual investors will not be subject to any state
or local personal income taxes on interest received by the Fund. However, you
may be subject to alternative minimum tax, state and local taxes on capital
gains (or "market discount"), and possibly other state and local taxes on your
units. Also, you probably will not be entitled to a deduction for state and
local tax purposes for your share of fees and expenses paid by the Fund, for any
amortized "bond premium" or for any interest on money borrowed to purchase your
units. You should consult your tax adviser in this regard.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each security in the Fund.
You will be considered to receive interest when that interest is received by the
Fund, regardless of whether the interest is reinvested or a portion is used to
pay Fund expenses. You will recognize original issue discount (if any) as it
accrues on the underlying securities.
GAIN OR LOSS UPON DISPOSITION
When all or part of your share of a security is disposed of (for example, when
the Fund sells, exchanges or redeems a security or when you sell or exchange
your units), you will generally recognize capital gain or loss. Your gain,
however, will generally be ordinary income to the extent of any accrued "market
discount". Generally you will have market discount to the extent that your basis
in a security when you purchase a unit is less than its stated redemption price
at maturity (or, if it is an original issue discount security, the issue price
increased by original issue discount that has accrued on the security before
your purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each security for more than one year and short-term
otherwise. Because the deductibility of capital losses is subject to
limitations, you may not be able to deduct all of your capital losses. You
should consult your tax adviser in this regard.
YOUR BASIS IN THE SECURITIES
Your aggregate basis in the securities will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of "original issue discount," "acquisition premium" and
"bond premium". You should consult your tax adviser in this regard.
EXPENSES
If you are an individual who itemizes deductions, you may deduct your share of
Fund expenses, but only to the extent that such amount, together with your other
miscellaneous deductions, exceeds 2% of your adjusted gross income. Your ability
to
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deduct Fund expenses will be limited further if your adjusted gross income
exceeds a specified amount, currently $128,950 ($64,475 for a married person
filing separately).
FOREIGN INVESTORS
If you are a foreign investor and you are not engaged in a U.S. trade or
business, you generally will not be subject to U.S. federal income tax,
including withholding tax, on the interest or gain on a debt security issued
after July 18, 1984 if you meet certain requirements, including the
certification of foreign status and other matters. You should consult your tax
adviser about the possible application of federal, state and local, and foreign
taxes.
RETIREMENT PLANS
You may wish to purchase units for an Individual Retirement Account (IRA) or
other retirement plan. Generally, capital gains and income received in each of
these plans are exempt from such plans are generally treated as ordinary income
but may, in some cases, be eligible for tax-deferred rollover treatment. You
should consult your attorney or tax adviser about the specific tax rules
relating to these plans. These plans are offered by brokerage firms, including
the Sponsors of this Fund, and other financial institutions. Fees and charges
with respect to such plans may vary.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the securities that may be in the Fund's portfolio and general information
about the structure and operation of the Fund. The supplemental information is
also available from the SEC.
13
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
MONTHLY PAYMENT U.S. TREASURY SERIES - 22 (LADDERED MATURITIES),
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Government Securities Income Fund,
Monthly Payment U.S. Treasury Series - 22 (Laddered Maturities),
Defined Asset Funds:
We have audited the accompanying statement of condition of Government Securities
Income Fund, Monthly Payment U.S. Treasury Series - 22 (Laddered Maturities),
Defined Asset Funds, including the portfolio, as of May 31, 2000 and the related
statements of operations and of changes in net assets for the years ended May
31, 2000, 1999 and 1998. These financial statements are the responsibility of
the Trustee. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Securities owned at May 31, 2000, as shown in such portfolio, were
confirmed to us by The Chase Manhattan Bank, the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Trustee, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Government Securities Income
Fund, Monthly Payment U.S. Treasury Series - 22 (Laddered Maturities), Defined
Asset Funds at May 31, 2000 and the results of its operations and changes in its
net assets for the above-stated years in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, N.Y.
August 4, 2000
D-1
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
MONTHLY PAYMENT U.S. TREASURY SERIES - 22 (LADDERED MATURITIES),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
AS OF MAY 31, 2000
<TABLE>
<S> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $32,676,266) (Note 1) $31,407,750
Accrued interest receivable 376,763
Cash 148,045
Total trust property 31,932,558
LESS LIABILITY - Accrued Sponsors' fees 6,236
NET ASSETS, REPRESENTED BY:
31,725,000 units of fractional undivided interest
outstanding (Note 3) $31,407,750
Undistributed net investment income 518,572 $31,926,322
UNIT VALUE ($31,926,322/31,725,000 units) $1.00635
</TABLE>
See Notes to Financial Statements.
D-2
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
MONTHLY PAYMENT U.S. TREASURY SERIES - 22 (LADDERED MATURITIES),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended May 31,
2000 1999 1998
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $2,152,254 $2,464,742 $2,926,113
Trustee's fees and expenses (26,076) (24,444) (28,814)
Sponsors' fees (13,787) (14,778) (12,318)
Organization costs (7,349) (10,950) (15,960)
Net investment income 2,105,042 2,414,570 2,869,021
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold or
redeemed 38,435 405,353 5,299
Unrealized appreciation (depreciation)
of investments (1,133,870) (605,386) 2,012,010
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (1,095,435) (200,033) 2,017,309
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $1,009,607 $2,214,537 $4,886,330
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
MONTHLY PAYMENT U.S. TREASURY SERIES - 22 (LADDERED MATURITIES),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended May 31,
2000 1999 1998
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 2,105,042 $ 2,414,570 $ 2,869,021
Realized gain on securities sold or
redeemed 38,435 405,353 5,299
Unrealized appreciation (depreciation) of
investments (1,133,870) (605,386) 2,012,010
Net increase in net assets resulting
from operations 1,009,607 2,214,537 4,886,330
INCOME DISTRIBUTIONS TO HOLDERS (Note 2) (2,107,675) (2,422,487) (2,877,070)
CAPITAL SHARE TRANSACTIONS:
Redemptions of 4,075,000, 6,950,000, and
6,000,000 units, respectively (4,142,239) (7,430,700) (6,197,958)
NET DECREASE IN NET ASSETS (5,240,307) (7,638,650) (4,188,698)
NET ASSETS AT BEGINNING OF YEAR 37,166,629 44,805,279 48,993,977
NET ASSETS AT END OF YEAR $31,926,322 $37,166,629 $44,805,279
PER UNIT:
Income distributions during year $0.06254 $0.06270 $0.06275
Net asset value at end of year $1.00635 $1.03817 $1.04808
TRUST UNITS OUTSTANDING AT END OF YEAR 31,725,000 35,800,000 42,750,000
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
MONTHLY PAYMENT U.S. TREASURY SERIES - 22 (LADDERED MATURITIES),
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 accounting
principles generally accepted in the United States of America.
(a) Securities are stated at value as determined by the Evaluator based on
bid side evaluations for the securities. The cost of securities
deposited subsequent to the initial date of deposit is based on
offering side evaluations at dates of purchase. Gains or losses on
sales of securities are computed using the first-in, first-out method.
(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
Net investment income is distributed to Holders each month. Receipts other
than interest, after deductions for redemptions and applicable expenses, are
also distributed periodically.
3. NET CAPITAL
Cost of 31,725,000 units at Dates of Deposit $33,343,128
Less sales charges 666,862
Net amount applicable to Holders 32,676,266
Redemption of units - net cost of 23,025,000 units
redeemed less redemption amounts (318,820)
Realized gain on securities sold or redeemed 318,820
Unrealized depreciation of investments (1,268,516)
Net capital applicable to Holders $31,407,750
4. INCOME TAXES
All Fund items of income received, expenses paid, and realized gains and
losses on securities sold are attributable to the Holders, on a pro rata
basis, for Federal income tax purposes in accordance with the grantor trust
rules of the United States Internal Revenue Code.
At May 31, 2000, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the cost as shown in the fund's
portfolio.
D-5
<PAGE>
GOVERNMENT SECURITIES INCOME FUND,
MONTHLY PAYMENT U.S. TREASURY SERIES - 22 (LADDERED MATURITIES),
DEFINED ASSET FUNDS
PORTFOLIO
AS OF MAY 31, 2000
<TABLE>
<CAPTION>
Portfolio No. and Title of Face Interest
Securities Amount Rate Maturities Cost(1) Value(1)
<S> <C> <C> <C> <C> <C>
1. United States Treasury Notes $ 6,345,000 7.500% 11/15/01 $ 6,903,558 $ 6,408,450
2. United States Treasury Notes 6,345,000 6.375 8/15/02 6,547,767 6,301,378
3. United States Treasury Notes 6,345,000 5.750 8/15/03 6,294,951 6,178,444
4. United States Treasury Notes 6,345,000 5.875 2/15/04 6,332,050 6,194,306
5. United States Treasury Notes 6,345,000 6.500 5/15/05 6,597,940 6,325,172
TOTAL $31,725,000 $32,676,266 $31,407,750
</TABLE>
(1) See note 1 to Financial Statements.
D-6
<PAGE>
Defined
Asset Funds-Registered Trademark-
<TABLE>
<S> <C>
HAVE QUESTIONS ? GOVERNMENT SECURITIES INCOME FUND
Request the most recent free MONTHLY PAYMENT U.S TREASURY SERIES--22
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Chase Manhattan Bank complete information about the
1-800-323-1508 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file no.
33-57173) and
- Investment Company Act of 1940 (file
no. 811-2810).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE
WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD IN ANY
STATE WHERE A SALE WOULD BE ILLEGAL.
15106--9/00
</TABLE>
