<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
GOVERNMENT The objective of this Defined Fund is safety of
SECURITIES capital and a high yield to maturity by investing
INCOME FUND in fixed portfolios of stripped U.S. Treasury
U.S. GOVERNMENT ZERO securities that pay no interest until maturity.
COUPON BOND Units in the Trusts are sold only to employee
SERIES 8 benefit plans established by Merrill Lynch & Co.,
(A UNIT INVESTMENT TRUST) Inc. and its affiliates for their employees. The
- ------------------------------Treasury Securities in the Portfolio, but not Fund
[ ]U.S. GOVERNMENT SECURITIES Units, represent direct obligations of the United
States government.
The value of Units will fluctuate with the value
of the Portfolios, which varies with changes in
interest rates.
--------------------------------------------------
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 COMMISSION PASSED UPON THE
ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
SPONSOR: AND RETAIN IT FOR FUTURE REFERENCE.
Merrill Lynch, INQUIRIES SHOULD BE DIRECTED TO THE TRUSTEE AT
Pierce, Fenner & Smith 1-800-221-7771.
Incorporated PROSPECTUS DATED FEBRUARY 2, 1998.
<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 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:
Municipal portfolios
Corporate portfolios
Government portfolios
Equity portfolios
International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined 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 U.S. Treasury Portfolios
- ---------------------------------------------------
Our defined portfolios of stripped U.S. Treasury Securities offer you a simple
and convenient way to lock in an interest rate when Units are held until
maturity of the underlying Stripped Treasury Securities.
INVESTMENT OBJECTIVES
To obtain safety of capital as well as a high yield to maturity through
investment in a fixed portfolio of stripped U.S. Treasury Securities. For each
10 Units held until maturity of a Trust, the Holder will receive total
distributions of about $1,000. Distributions could change if Securities are paid
or sold before maturity, of if Trust expenses change. Units in the Trusts will
be sold only to employee benefit plans and compensation arrangements of Merrill
Lynch (the 'Plans') as an investment alternative for Plan allocations to help
participants meet their personal retirement needs and goals. The choice of
maturities is offered to enable Plan allocations to be tailored to participants'
retirement planning objectives and financial requirements. Each Plan will invest
in Units of the Trusts in accordance with allocation instructions received from
employees pursuant to the Plan. Accordingly, the interest of an employee in the
Units is subject to the terms of the Plan. The rights of a Plan as a Holder of
Units should be distinguished from the rights of an employee. The term 'Holder'
in this Prospectus shall refer to the Plans, to the Sponsor if it holds Units
(see Market for Units) and to any employee who holds Units distributed from a
Plan.
- ---------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------
PORTFOLIO COMPOSITION
The Fund consists of 2 different Trusts, each designated by the year in which
the Stripped Treasury Securities mature. Each Trust holds primarily Stripped
Treasury Securities, but also an interest-bearing Treasury Note, deposited to
provide cash income to pay Trust expenses. The U.S. Treasury Securities in each
Trust, but not the Portfolios or the Units, represent direct obligations of the
United States.
TAX INFORMATION
The gross interest income on all Securities in a Trust is taxable to Holders.
Each Stripped Treasury Security will be treated for Federal income tax purposes
as having 'original issue discount,' which must be amortized over the remaining
term of the Stripped Treasury Security and included in a Holder's ordinary gross
income before the Holder receives the cash attributable to that income. These
tax consequences would apply to an employee only if he becomes a Holder by
taking Units upon terminating participation in the Plan. See Taxes. The final
distribution will be made in cash following the maturity of the Stripped
Treasury Securities in the Trust, and may include any amount received upon the
sale of Securities to meet redemptions of Units which exceeds the amount
necessary to meet those redemptions and any accumulated net interest income.
Principal from maturity of the Treasury Note will not be distributed until
disposition of the Stripped Treasury Security in the Trust.
- ---------------------------------------------------
Defining Your Risks
- ---------------------------------------------------
U.S. Government securities are not affected by credit risk but are subject to
changes in market value resulting from changes in interest rates. Stripped
Treasury Securities do not make any periodic payments of interest prior to
maturity; accordingly, each Trust's Portfolio as a whole is priced at a deep
discount from face amount and Unit prices may be subject to greater fluctuations
in response to changing interest rates than a fund consisting of debt
obligations of comparable maturities that pay interest currently. This risk is
greater when the period to maturity is longer.
Unit price fluctuates and the value of units will decline if interest rates
increase. Because of the possible maturity, sale or other disposition of
Securities, the size, composition and return of a Portfolio may change at any
time. The sale price of Units may be more or less than the cost of your Units.
There is no assurance that the Trusts will achieve their investment objective.
2
<PAGE>
- ---------------------------------------------------
Defining Your Investment
- ---------------------------------------------------
OFFER PRICE PER UNIT
2004 Trust $71.681
2014 Trust $39.517
The Offer Price as of January 30, 1998, the business day prior to the date of
this prospectus, is based on the net asset value per Unit, determined as
described under Redemption -- Computation of Redemption Price per Unit, plus the
Adjustment Factor, currently $0.118 per Unit on the 2004 Trust and $.0107 on the
2014 Trust. The Adjustment Factor, added in computing the Offer Price and
deducted in computing Redemption Price, represents an estimated of the cost of
buying or selling securities for the Trust (so those costs are not borne by the
Trust). The Offer Price on any subsequent date will vary.
There is no sales charge on purchases of Units. Income on Units is subject to
the Sponsor's administrative fee accrued at the rate shown, which reimburses the
Sponsor for its direct costs (without profit) in creating and administering the
Trust. See the chart on p. 10 for the percentage which the present value of the
administrative fee represents at various Unit Prices. The underlying securities
are valued by the Trustee on the basis of their closing sale prices at 3:30 p.m.
Eastern time on every business day.
INCOME ACCOUNT DISTRIBUTIONS
Interest on the Treasury Notes is designed to equal Trust expenses.
Although no periodic distributions of income are expected, the Sponsor may
direct the Trustee to distribute any accumulated net interest income on any date
during the second full week in June or December of any year, or on any later
date in those months, specified by the Sponsor.
PRINCIPAL DISTRIBUTIONS
As each Stripped Treasury Security matures, the proceeds will be distributed to
investors.
ESTIMATED YIELD TO MATURITY AS OF JANUARY 30, 1998
2004 Trust 5.371%*
2014 Trust 5.784%*
TERMINATION DATE
Each Portfolio will generally terminate following the maturity date of Stripped
Treasury Securities in the Trust. Each Trust must terminate within one year
after the last maturing Security therein.
- ---------
* Represents annual percentage return to investors based on amortization of
discount, compounded semi-annually, divided by the Offer Price per Unit, and
assumes that interest income will equal expenses and other deductions. This
figure will change with changes in the Offer Price and Trust expenses.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
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.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
Amount per 10 Units
-------------------------
2004 Trust 2014 Trust
----------- -----------
Trustee's Fee $ 0.50 $ 0.50
Sponsor's Administrative
Fee $ 0.46 $ 0.36
Evaluator's Fee $ 0.15 $ 0.07
Other Operating Expenses $ 0.10 $ 0.06
----------- -----------
TOTAL $ 1.21 $ 0.99
Maximum Sponsor Administrative Fees per 10 units of $2.89 for the 2004 Trust and
$5.86 for the 2014 Trust, assuming that you hold your units until termination of
the Trust.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
2004 Trust $1 $4 $7 --
2014 Trust $1 $3 $6 $14
Although the Trust is a unit investment trust rather than a mutual fund, this
information is presented to permit a comparison of fees. The example uses a 5%
annual rate of return as mandated by SEC regulations applicable to mutual funds.
Redemptions at the end of each period before termination reflect deduction of
the Adjustment Factor.
These examples should not be considered a representation of past or future
expenses or annual rates of return. The actual expenses and annual rates of
return may be more or less than the example.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time. Your price will be based on the
then current net asset value per Unit minus the Adjustment Factor (see
Redemption--Computation of Redemption Price per Unit in Part B). The redemption
and secondary market repurchase price per unit as of January 30, 1998 was
$71.467 for the 2004 Trust ($0.214 per unit less than the Offer Price) and
$39.281 for the 2014 Trust ($0.236 per unit less than the Offer Price).
3
<PAGE>
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Defined Portfolios
- --------------------------------------------------------------------------------
Government Securities Income Fund
U.S. Government Zero Coupon Bond Series 8 February 2, 1998
<TABLE><CAPTION>
COST TO
PORTFOLIO NO. AND TITLE FACE AMOUNT COUPON MATURITY FUND(1)
- ----------------------------------- ----------- ------- --------- -------------
<S> <C> <C> <C> <C>
2004 TRUST
1. Stripped Treasury Securities
(Note 2) $ 170,000 0.000% 5/15/04 $ 120,584.91
----------- -------------
2. United States Treasury Notes 2,885 7.250 5/15/04 3,155.47
----------- -------------
2014 TRUST
3. Stripped Treasury Securities
(Note 2) 309,000 0.000 5/15/14 118,483.89
----------- -------------
4. United States Treasury Notes 4,277 7.250 5/15/16 4,945.29
----------- -------------
$ 486,162 $ 247,169.56
----------- -------------
----------- -------------
</TABLE>
- ----------------------------
(1) Evaluation of the Securities by the Evaluator is made on the basis of the
mean between current bid and offer side evaluations. All Securities are
represented by contracts to purchase such Securities, which were entered into by
the Sponsor on January 30, 1998. All contracts are expected to be settled on
February 2, 1998.
(2) See Special Characteristics of Stripped Treasury Securities.
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders of Government Securities Income Fund, U.S.
Government Zero Coupon Bond Series 8, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related
portfolios of the 2004 Trust and the 2014 Trust included in the prospectus of
the Fund as of February 2 1998. This financial statement is the responsibility
of the Trustee. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash and an irrevocable letter of credit deposited for the
purchase of securities, as described in the statement of condition, with the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the above referenced Trusts of
the Fund as of February 2, 1998 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
FEBRUARY 2, 1998
STATEMENT OF CONDITION AS OF FEBRUARY 2, 1998
TRUST PROPERTY
<TABLE><CAPTION>
2004 TRUST 2014 TRUST
-------------------- --------------------
<S> <C> <C>
Investments--Securities and Contracts to purchase
Securities(1) $ 123,740.38 $ 123,429.18
Accrued interest to Initial Date of Deposit on underlying
U.S. Treasury Notes 45.65 67.67
-------------------- --------------------
Total $ 123,786.03 $ 123,496.85
-------------------- --------------------
-------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by Trustee for accrued interest $ 45.65 $ 67.67
-------------------- --------------------
Interest of Holders of fractional
undivided
interest outstanding (2004 Trust--1,728.850 Units; 2014
Trust--3,132.770
Units):
Cost to investors(2) $ 123,740.38 $ 123,429.18
-------------------- --------------------
Total $ 123,786.03 $ 123,496.85
-------------------- --------------------
-------------------- --------------------
</TABLE>
- ------------
(1) Aggregate cost to each Trust of the securities under Defined
Portfolio is based upon the mean between the offering and bid quotations
determined by the Evaluator at the evaluation time on the business day prior to
the Initial Date of Deposit. The contracts to purchase the securities are
collateralized by an irrevocable letter of credit which has been issued by DBS
Bank, New York Agency, in the amount of $248,033.15 and deposited with the
Trustee. The amount of the letter of credit includes $247,919.83 for the
purchase of $486,162 face amount of the securities, plus $113.32 for accrued
interest.
(2) Aggregate price computed on the basis set forth under Sale of Units
- -- Unit Offer Price in Part B as of the Evaluation Time on the Business Day
prior to the Initial Date of Deposit. There is no sales charge. Instead, units
are subject to a Sponsor's administrative fee at the annual rates per 10 Units
set forth under Defining Your Costs.
5
<PAGE>
FUND STRUCTURE
This Fund consists of two separate unit investment trusts (each a 'Trust')
created under New York law by one Trust indenture (the 'Indenture') among the
Sponsor, the Trustee and the Evaluator. Holders of Units in a Trust will have
the right to have their Units redeemed (see Redemption) if the Units cannot be
sold in the market which the Sponsor intends to maintain (see Market for Units).
Redemption will be made in securities ('in kind') or in cash at the option of
the Holder.
With the initial deposit in each Trust, a proportionate relationship was
established between the face amounts of Stripped Treasury Securities and the
Treasury Note therein. Additional Units may be issued on deposit of additional
Securities by the Sponsor or on deposit of cash (or a bank letter of credit) to
purchase Securities. In either case, the additional Securities will have
maturities identical to those in the Trust and maintain precisely the original
proportionate relationship among the face amounts of each type of Security.
Units will to the extent practicable continue to represent the identical face
amount of each Security. However, it may not be practicable to maintain this
identical face amount per Unit because of, among other reasons, changes in
prices. Units in the Trusts may be continuously offered for sale by means of
this Prospectus (see Sale of Units--Distribution), resulting in a potential
increase in the number of outstanding Units of each Trust (see Selection and
Acquisition of Securities).
As used herein, 'Securities' includes the Stripped Treasury Securities and
interest-bearing Treasury Note deposited in the Trusts and described under
Portfolios and any additional Treasury Securities deposited thereafter or
contracts for the purchase thereof together with an irrevocable letter or
letters of credit sufficient to perform such contracts.
ML PLANS
As the Sponsor is a 'party in interest' with respect to certain ML Plans, it
is prohibited by ERISA from selling Units to or buying them from these Plans.
Accordingly, these ML Plans will purchase Units directly from the Trustee and
may only tender Units to the Trustee for redemption. The Sponsor is also
prohibited from acting as dealer, and from charging for its services as broker,
for the Trust in acquiring Securities with monies paid for Units, and in selling
Securities to pay redemptions of Units, by ML Plans. In addition, ERISA
prohibits the Sponsor from receiving compensation or other consideration except
for reimbursement of its direct expenses. Therefore, the proceeds of the
Sponsor's administrative fee paid by any ML Plan will be used to reimburse the
Sponsor for these expenses, and the Sponsor will not collect the administrative
fee on Units held by ML Plans at any time when it has no unreimbursed expenses.
RISK FACTORS
An investment in Units should be made with an understanding of the risks
which an investment in deep discount debt obligations may entail, including the
risk that the value of the Trust's portfolio (the 'Portfolio') and hence of the
Units will decline with increases in interest rates. High inflation and
recession, together with the fiscal and monetary measures adopted to attempt to
deal with those and other economic problems, have contributed to recent wide
fluctuations in interest rates and thus in the value of fixed-rate debt
obligations generally. The Sponsor cannot predict future economic policies or
their consequences or, therefore, the course or extent of any similar
fluctuations in the future. Furthermore, a Holder (but not employees before they
terminate Plan participation--see Taxes) will have significant amounts of
taxable income attributable to it before the receipt of the cash attributable to
that income.
SPECIAL CHARACTERISTICS OF STRIPPED TREASURY SECURITIES
Stripped Treasury Securities are sold at a deep discount from their face
amounts payable at maturity because the buyer of those securities receives only
the right to receive a future fixed payment on the security and not any rights
to periodic interest payments thereon. Purchasers of these securities acquire,
in effect, discount obligations that are economically identical to the
zero-coupon bonds that have been issued by corporations. Zero coupon bonds are
debt obligations which do not make any periodic payments of interest prior to
maturity and accordingly are issued at a deep discount. Accordingly, the Trusts
are not a suitable investment for persons seeking current cash distributions.
Because interest on zero coupon debt obligations is not distributed on a
current basis but in effect compounded, the value of securities of this type,
including the value of accrued and reinvested interest (and of a fund comprised
of these obligations), is subject to greater fluctuations than on obligations
which distribute income regularly. Accordingly, while the full faith and credit
of the U.S. government provides a high level of protection against credit risks
on the Securities, sale of Units before maturity of the Securities at a time
when interest rates have increased
6
<PAGE>
would involve greater market risk than in a fund which is invested in debt
obligations of comparable maturity which pay interest currently. This risk is
greater when the period to maturity is longer.
Stripped Treasury Securities held by a Trust shall consist solely of
registered U.S. Treasury debt obligations, which may be held through the Federal
Reserve Bank's book entry system called 'Separate Trading of Registered Interest
and Principal of Securities' ('STRIPS'). STRIPS, while direct obligations of the
United States and issued under programs introduced by the U.S. Treasury, are not
issued directly by the U.S. government. The STRIPS program facilitates secondary
market stripping of selected Treasury notes and bonds into individual principal
and interest components by purchasers with access to a book-entry account at a
Federal Reserve bank. Those obligations may be maintained in the book-entry
system operated by the Federal Reserve in a manner that permits separate trading
and ownership of interest and principal payments. The Federal Reserve does not
charge a fee for this service, but book-entry transfers of interest and
principal components are subject to the same fee schedule generally applicable
to transfers of Treasury securities. The Stripped Treasury Securities are
payable in full at maturity at their stated maturity amount, and are not subject
to redemption prior to maturity. In addition, the Stripped Treasury Securities
do not make any periodic payments of interest.
A Holder of Stripped Treasury Securities will be required to include
annually in gross income an allocable portion of the deemed original issue
discount, prior to receipt of the cash attributable to that income. However, a
qualified retirement plan is not taxed on income.
Under generally accepted accounting principles, a holder of a security
purchased at a discount normally must report as an item of income for financial
accounting purposes the portion of the discount attributable to the applicable
reporting period. The calculation of this attributable income would be made on
the 'interest' method which generally will result in a lesser amount of
includible income in earlier periods and a correspondingly larger amount in
later periods. For Federal income tax purposes, the inclusion will be on a basis
that reflects the effective semi-annual compounding of accrued but unpaid
interest effectively represented by the discount. Although this treatment is
similar to the 'interest' method described above, the 'interest' method may
differ to the extent that generally accepted accounting principles permit or
require the inclusion of interest on the basis of a compounding period other
than the semi-annual period (see Taxes).
DESCRIPTION OF THE FUND
THE PORTFOLIO
The Portfolio of each Trust consists of different issues of Stripped
Treasury Securities, with fixed maturity dates and not having any equity or
conversion features, that do not pay interest before maturity and as such were
purchased at a deep discount (see above) and of the Treasury Note deposited in
order to provide cash income with which to pay the expenses of the Trust and the
Sponsor's administrative fee.
SELECTION AND ACQUISITION OF SECURITIES
In selecting Securities for deposit in a Trust, the following factors, among
others, were considered by Defined Asset Funds of Merrill Lynch, Pierce, Fenner
& Smith Incorporated: (i) the types of securities available; (ii) the prices of
those securities relative to other comparable securities; (iii) the extent to
which those securities trade at a discount from par once the interest coupons
are stripped; (iv) the yield to maturity of those securities; and (v) the
maturities of those securities.
The yield to maturity and discount from par on securities of the type
deposited in the Trusts are dependent on a variety of factors, including general
money market conditions, general conditions of the bond market, prevailing
interest rates and the maturities of the securities.
Each Trust consists of the Securities (or contracts to purchase the
Securities) listed under Defined Portfolios and any additional Securities
acquired pursuant to the terms of the Indenture (including provisions with
respect to deposit of Securities in connection with the sale of additional
Units) as long as they may continue to be held from time to time in the Trust
together with accrued and undistributed interest on any interest-bearing
securities deposited in order to pay the expenses of the Trust and the Sponsor's
administrative fee, undistributed cash representing payments of principal and
cash realized from the disposition of Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities. In the event of a failure
to deliver any Security that has been purchased for a Trust under a contract
('Failed Security'), the Sponsor is authorized under the Indenture to direct the
Trustee to acquire Replacement
7
<PAGE>
Securities to make up the portfolio of the Trust. Replacement Securities for
Securities initially deposited must be deposited into the Trust within 110 days
after the Initial Date of Deposit; Replacement Securities for Securities
deposited thereafter must be deposited within 20 days after delivery of notice
of the Failed Security; the purchase price may not exceed the amount of funds
reserved for the purchase of the Failed Security. The Replacement Securities
must be Securities issued by the U.S. Treasury (or under the STRIPS program),
that (i) make no periodic payments of interest (or, in the case of an
interest-bearing Treasury Note used to pay expenses, are of the same issue),
(ii) have a fixed maturity identical to that of the Failed Security, (iii) are
purchased at a price that results in a yield to maturity as of the date of
deposit of the Failed Security which is equivalent (taking into consideration
then-current market conditions) to the yield to maturity of the Failed Security
and (iv) are not when, as and if issued obligations. If this right of
substitution is not utilized to acquire Replacement Securities in the event of a
failed contract, the Sponsor will cause to be refunded any attributable sales
charge plus the attributable Cost of Securities to Trust, plus accrued interest
and amortization attributable to the relevant Security.
Because certain of the Securities from time to time may be sold under
certain circumstances described herein, each Trust is not expected to retain its
present size and composition (see Redemption). The Indenture also authorizes the
increase of the size and number of Units of any Trust by the deposit of
additional Securities or cash and the issue of a corresponding number of
additional Units, provided that the maturity and proportionate relationship of
any additional Securities so acquired is identical to those of the Securities
initially deposited in the Trust.
INCOME AND ESTIMATED YIELD TO MATURITY
The estimated yield to maturity per Unit of each Trust is the annual
percentage return to the investor based on amortization of discount, compounded
semi-annually, divided by the Unit Offer Price. It is assumed that interest
income on the Treasury Note will equal expenses and other deductions. If the
price of the Units is less than stated under Defining Your Investment, the yield
to maturity will be greater; if the price is greater (other than additional
accrued original discount), the yield to maturity will be less.
The economic effect of purchasing Units is that the investor who holds his
Units until maturity of the underlying Securities should receive approximately a
fixed yield, not only on his original investment but on all earned discount
during the life of the Securities. The assumed or implicit automatic
reinvestment at market rates at the time of purchase of the portion of the yield
represented by earned discount differentiates the Trusts from funds consisting
of customary securities on which current periodic interest is paid at market
rates at the time of issue. Accordingly, an investor in the Units, unlike an
investor in a fund comprised of customary securities, virtually eliminates his
risk of being unable to invest distributions at a rate as high as the yield on
his Trust, but will forgo the ability to reinvest at higher rates in the future.
The price per Unit of each Trust will vary in accordance with fluctuations
in the prices of the Securities held by the Trust. Changes in the Offer and
Redemption Price per Unit or in a Trust's expenses will result in changes in the
yields to maturity.
TAXES
While Units are held by a Plan, neither it nor any participating employee
will be taxable on income from the Trust. An employee who elects to receive his
pro rata portion of Units held by a Plan that is qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the 'Code') when he terminates
participation in such Plan and does not roll over those Units to an eligible
retirement plan as described in Section 402(c) of the Code, will be taxable
under rules applicable to qualified plan distributions as described in Section
402 of the Code. Thereafter, the employee will be taxable as a Holder as
described below and should consult his tax adviser in this regard.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsor,
under existing law:
Each Trust will not be taxed as a corporation for federal income tax
purposes or for New York State or City purposes, and each Holder will be
considered to own directly a share of each Security in the Trust. Each
Holder will be considered to have received the income on his pro rata
portion of each Security in the Trust in the manner set forth below.
The total cost to a Holder for its Units (in the case of an individual
Holder the fair market value of his Units on the date the Plan distributes
them to him) is allocated among the Holder's pro rata portion of each
Security in its Trust (in proportion to the fair market value thereof on
that date) in order to determine its tax cost for the pro rata portion of
each Security. A Holder will be entitled to add to its tax cost of its pro
rata portion of each Security that portion of the administrative fee which
is not characterized as imputed interest (see below).
8
<PAGE>
Each Trust consists primarily of Stripped Treasury Securities. A Holder
is required to treat its pro rata portion of each Stripped Treasury Security
in its Trust as a bond that was originally issued on the date the Holder
purchased its Units (for an individual Holder, the date of distribution) at
an original issue discount equal to the excess of the stated redemption
price at maturity over the Holder's tax cost therefor as discussed above,
and to include annually in income a portion of such original issue discount
determined under a formula which takes into account the compounding of
interest. Holders are required for Federal income tax purposes to include
amounts in ordinary gross income in advance of the receipt of the cash
attributable to such income. The amount of accrued original issue discount
so included in income in respect of a Holder's pro rata portion of a
Security is added to the Holder's tax basis therefor.
Each Holder will be considered to have received the income on its pro
rata portion of the Treasury Note in its Trust when interest on the Note is
received by its Trust even though the interest is used to pay Trust
expenses. An individual Holder who itemizes deductions may deduct his pro
rata share of the fees and expenses of his Trust only to the extent that
such amount, together with the Holder's other miscellaneous deductions,
exceeds 2% of his adjusted gross income. The Internal Revenue Code further
restricts the ability of an individual Holder with an adjusted gross income
in excess of specified amounts (for 1998, $124,500 or $62,250 for a married
person filing a separate return) to claim itemized deductions (including his
pro rata share of Trust expenses).
A Holder will generally recognize capital gain or loss upon disposition
of all or part of its pro rata portion of a Security in its units) for an
amount greater or less than its orginal tax cost therefor, increased by the
amount of original issue disccount included in the Holder's gross income as
discussed above.
The excess of a non-corporate Holder's net long-term capital gains over
his net short term capital losses may be subject to tax at a lower rate than
ordinary income. A capital gain or loss is long-term if the investment is
held for more than one year and short-term if held for one year or less.
Because the deduction of capital losses its subject to limitation, a Holder
may not be able to deduct all his capital losses. A Holder who is an
individual and has held his pro rata portions of Securities for more than 18
months may be entitled to a 20% maximum federal tax rate for gains from the
sale of these Securities or corresponding Units. Holders should consult
their tax advisers in this regard.
The Sponsors believe that Holders who are individuals will not be subject
to any state or local personal income taxes on the interest received or
deemed received by the Trust. However, Holders (including individuals) may
be subject to state and local taxes on any capital gains derived from the
Trust and to other state and local taxes (including corporate income or
franchise taxes, personal property or intangibles taxes and estate and
inheritance taxes) on their Units or the income derived therefrom. In
addition, individual Holders (and any other Holders which are not subject to
state and local taxes on the interest income derived from the Trust) will
probably not be entitled to a deduction for state and local tax purposes for
their share of the fees and expenses paid by the Trust or for any interest
on money borrowed to purchase their Units. Holders should consult their tax
advisers regarding the state ane local taxes that may result from an
investment in the Trust.
* * *
After the end of each calendar year, the Trustee will furnish to each Holder
an income report, including the Holder's pro rata portion of the fees and
expenses paid by its Trust. In order to enable them to comply with Federal and
state tax reporting requirements, Holders will be furnished upon request to the
Trustee with evaluations of Securities furnished to it by the Evaluator. The
Trustee will also furnish annual information returns to each Holder and to the
Internal Revenue Service (including a return with respect to original issue
discount).
SALE OF UNITS
UNIT OFFER PRICE
The Offer Price per Unit of a Trust is computed as of the Evaluation Time by
adding the value of the underlying Securities, as determined by the Evaluator as
described under Redemption--Computation of Redemption Price per Unit, plus the
Adjustment Factor, subtracting any liabilities and dividing by the number of
Units outstanding. The Adjustment Factor is initially .0015 for the 2004 Trust
and .0030 for the 2014 Trust. The Adjustment Factor (as determined by the
Sponsor) may be changed for each calendar quarter but in no event will it exceed
.0061 for the 2004 Trust or .0158 for the 2014 Trust. This factor is designed to
cover the Trust's costs, without profit, of buying and selling securities in
connection with sales and redemptions of Units, and is intended to ensure that
the prices for purchases or sales of Units match as closely as possible the
market value of the underlying Securities. A proportionate
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<PAGE>
share of any cash in the Capital Account not allocated to the purchase of
Securities is added. Because the income on the Treasury Note is designed to
exactly equal the Trust expenses, accrued interest on the Note is not reflected
in the offer, repurchase or redemption prices of Units. If there is an expense
deficit at termination of a Trust, either the Trustee will waive part of its fee
or the Sponsor will bear sufficient expenses to eliminate the deficit. The Offer
Price per Unit of a Trust will vary after the date of this prospectus in
accordance with fluctuations in the evaluations of the underlying Securities.
Amortization of discount will increase the the evaluation of the Securities over
time.
No sales charge is payable. Instead, Units are subject to the Sponsor's
administrative fee at the annual rates set forth under Defining Your Costs. If a
Holder sells or redeems Units before the maturity of a Trust, except for the
Adjustment Factor only the administrative fees accrued to the date of sale or
redemption will be payable, and this will have the effect of reducing the rate
of administrative fees. Similarly, if Units are purchased after the Initial Date
of Deposit, the purchaser will not pay fees previously accrued and this will
also have the effect of reducing the rate of administrative fees. The following
chart states the Sponsor's administrative fees as percentages of the prices at
various intervals. It is assumed that the Trust expenses and the accrued
Sponsor's administrative fee will exactly offset any accrued interest. There is
no minimum purchase.
PRESENT VALUE OF SPONSOR'S ADMINISTRATIVE FEE AS
PERCENT OF PRICE PER 10 UNITS AT SELECTED INTERVALS*
<TABLE><CAPTION>
PRICE PER
10
UNITS AS
OF
THE
INITIAL
DATE
$25 LESS OF DEPOSIT $25 MORE $50 MORE $100 MORE
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
2004 TRUST Public Offering Price $ 691.81 $ 716.81 $ 741.81 $ 766.81 $ 816.81
2.35 2.40 2.44 2.49 2.58
Present value of Sponsor's
administrative fee
0.34% 0.33% 0.33% 0.32% 0.32%
Sponsor's administrative fee
2014 TRUST Public Offering Price $ 370.17 $ 395.17 $ 420.17 $ 445.17 $ 495.17
3.63 3.73 3.84 3.94 4.14
Present value of Sponsor's
administrative fee
0.98% 0.94% 0.91% 0.88% 0.84%
Sponsor's administrative fee
</TABLE>
- --------------
* These represent the maximum fees and figures assume that Units are purchased
on the Initial Date of Deposit and are held until maturity of the Trust.
Purchase after that date or sale before maturity will result in lesser
deductions and therefore a lesser rate of administrative fee. The present value
is computed at the same interest rate as the estimated yield to maturity at each
purchase price.
Evaluations of the Securities are determined by the Evaluator taking into
account the same factors referred to under Redemption--Computation of Redemption
Price per Unit. The determinations are made on each business day, effective for
all sales made since the last of these evaluations. The term 'business day', as
used herein and under 'Redemption', shall exclude Saturdays, Sundays and the
following holidays as observed by the New York Stock Exchange: New Year's Day,
Martin Luther King, Jr. Day, Washington's birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas; and the following
Federal holidays: Columbus Day and Veterans Day.
Because of fluctuations in the market prices of the Securities and the fact
that the Adjustment Factor and the accrued portion of the administrative fee
will be deducted from amounts paid to Holders upon redemption, among other
reasons, the amount realized by a Holder upon any sale or redemption of Units
may be less than the price paid for these Units.
SPONSOR'S PROFITS
The Sponsor receives the administrative fee through periodic deductions at
the rates set forth above and through deduction of a pro rata portion of the
accrued administrative fee at the time of any redemption.
10
<PAGE>
The following chart sets forth the estimated maximum dollar amount payable
on account of the Sponsor's administrative fee assuming that Holders hold their
Units for the following periods of time:
MAXIMUM DOLLAR AMOUNT PER 10 UNITS
PAYABLE ON ACCOUNT OF SPONSOR'S ADMINISTRATIVE FEE
YEARS HELD 2004 TRUST 2014 TRUST
- ------------------------------------------------------------
1 $ 0.46$ 0.36
2 0.92 0.72
3 1.38 1.08
4 1.84 1.44
5 2.30 1.80
6 2.76 2.16
7 2.89 2.52
8 2.88
9 3.24
10 3.60
11 3.96
12 4.32
13 4.68
14 5.04
15 5.40
16 5.76
17 5.86
The Sponsor may also realize a profit or loss on each deposit of Securities
in a Trust. This is the difference between the cost of the Securities to the
Trusts (which is based on the mean between the bid and offering side evaluation
of the Securities on the date of deposit) and the purchase price of those
Securities to the Sponsor. To the extent additional Units continue to be offered
for sale, the Sponsor also may realize profits or sustain losses as a result of
fluctuations after the date of deposit in the Offer Price of the Units.
Employees may incur an annual account maintenance fee after termination of Plan
participation--see Expenses and Charges below. Cash, if any, made available by
buyers of Units to the Sponsor prior to the settlement dates for purchase of
Units may be used in the Sponsor's business, subject to the limitations of Rule
15c3-3 under the Securities Exchange Act of 1934, and may be of benefit to the
Sponsor.
In maintaining a market for the Units the Sponsor will also realize profits
or sustain losses in the amount of any difference between the prices at which it
buys Units and the prices at which it resells or redeems those Units, as the
case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, it intends to maintain a
secondary market for Units of each Trust and continuously to offer to purchase
Units of each Trust at the Redemption Price per Unit. Market conditions and the
adjustment factor may cause the prices available in the market maintained by the
Sponsor or upon exercise of redemption rights to be more or less than the amount
paid for Units. The market prices of Stripped Treasury Securities, and hence of
the Units, are subject to greater fluctuations than the prices of securities
making current payments of interest. The Sponsor, of course, does not in any way
guarantee the enforceability, marketability or price of any Securities in the
Trusts or of the Units. The Sponsor may discontinue purchases of Units of any
Trust should the supply of Units exceed demand or for other business reasons.
The Sponsor may redeem any Units it has purchased in the secondary market or
through the Trustee in accordance with the procedures described below if it
determines it is undesirable to continue to hold those Units in its inventory.
REDEMPTION
Units may be redeemed on any business day, as defined under Sale of
Units--Unit Price, by delivery to the Trustee of a request for redemption, and
payment of any relevant tax, without any other fee. Holders' signatures must
11
<PAGE>
be guaranteed by an eligible guarantor institution or in some other manner
acceptable to the Trustee. In certain instances the Trustee may require
additional documents including, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority.
The Trustee will redeem Units either in cash or, at the option of certain
qualified Holders as specified in writing to the Trustee, in kind. Unless
otherwise specified, redemptions will be made in cash. On the seventh calendar
day following the tender (or if the seventh calendar day is not a business day
on the first business day prior thereto), the Holder will be entitled to receive
the proceeds of the redemption in an amount and value of Securities per Unit
equal to the Redemption Price per Unit (see below) as determined as of the
Evaluation Time next following the tender.
The Trustee is empowered to sell Securities from a Trust in order to make
funds available for cash redemptions. The Securities to be sold so as to
maintain, as closely as practicable, the percentage relationship between the
face amounts of Stripped Treasury Securities and the Treasury Note in the Trust
at the time of sale. Provision is made under the Indenture for the Sponsor to
specify minimum face amounts in which blocks of Securities are to be sold in
order to obtain the best price for the Trust. While these minimum amounts may
vary from time to time in accordance with market conditions, the Sponsor
believes that the minimum face amounts which would be specified would range from
$25,000 to $100,000.
Holders tendering Units for redemption may, in lieu of receiving cash,
request the Trustee to distribute in kind an amount and value of Securities per
Unit equal to the Redemption Price per Unit as determined as of the Evaluation
Time next following the tender. The distribution in kind on redemption of Units
will be held by a Distribution Agent for the account of, and for disposition in
accordance with the instructions of, the tendering Holder. If a qualified
tendering Holder requests redemption in kind, the Trustee as Distribution Agent
for the account of the redeeming Holder will sell the Securities and distribute
the net cash proceeds to the Holder (unless he requests that the in kind
redemption be held on a book entry system for his account). In implementing
these redemption procedures, the Trustee and Distribution Agent shall make any
adjustments necessary to reflect differences between the Redemption Price of the
Units and the value of the Securities distributed in kind as of the date of
tender. If funds in the Capital Account are insufficient to cover the required
cash distribution to the tendering Holder, the Trustee may sell Securities
according to the criteria discussed above.
To the extent that Securities in a Trust are redeemed in kind or sold, the
size of the Trust will be reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. In addition, because of the minimum face amounts in which
Securities are required to be sold, the proceeds of sale may, if the Sponsor
fails to purchase Units tendered for redemption, exceed the amount required at
the time to redeem Units; any excess proceeds will be deposited in the Capital
Account. See Administration of the Fund--Accounts and Distributions. The price
received upon redemption may be more than or less than the amount paid by the
Holder depending on the value of the Securities in the Trust at the time of
redemption.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings or (2) for any period during which, as
determined by the Securities and Exchange Commission, (i) trading on that
Exchange is restricted or (ii) an emergency exists as a result of which disposal
or evaluation of the Securities is not reasonably practicable, or (3) for any
other periods which the Commission may by order permit.
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit of a Trust is computed by the Trustee as of the
Evaluation Time on each June 30 and December 31 (or the last business day prior
thereto), on any business day, as of the Evaluation Time next following the
tender of any Unit for redemption, and on any other business day desired by the
Trustee or the Sponsor, by adding (a) the value of the Securities in the Trust,
(b) cash on hand in the Trust (other than cash covering contracts to purchase
Securities), (c) accrued and unpaid interest on these Securities up to but not
including the date of redemption and (d) all other assets of the Trust;
deducting therefrom the sum of (v) taxes or other governmental charges against
the Trust not previously deducted, (w) accrued fees and expenses of the Trustee
(including legal and auditing expenses), the Evaluator and counsel, and certain
other expenses, (x) the Adjustment Factor at the applicable rate, (y) accrued
administrative fees payable and (z) any cash held for distribution to Holders of
record as of a date prior to the evaluation; and dividing the result by the
number of Units outstanding as of the date of computation. The Adjustment Factor
will not be deducted from a redemption in kind nor from the distribution when a
Trust terminates.
12
<PAGE>
The value of the Securities is determined by the Evaluator in the following
manner: (a) on the basis of the mean between the current bid and offering prices
for the Securities, (b) if bid and offering prices are not available for any
Securities, on the basis of current bid and offering prices for comparable
securities, (c) by appraising the value of the Securities, or (d) by any
combination of the above. The Evaluator may obtain current price information as
to the Securities from investment dealers or brokers (including the Sponsor)
which customarily deal in that type of securities. On the day on which a Holder
is entitled to receive the Redemption Price, the accrued but unpaid
administrative fee will be deducted from the accrued interest on the Securities
to provide funds to meet such redemption and will be distributed to the Sponsor.
While Securities of the type included in the Trusts' Portfolios involve
minimal risk of loss of principal when held to maturity, due to variations in
interest rates the market value of the Securities and Redemption Price per Unit
can be expected to fluctuate during the period of an investment in a Trust.
EXPENSES AND CHARGES
SPONSOR'S ADMINISTRATIVE FEE
An administrative fee, to reimburse the Sponsor for certain expenses
described under Fund Structure--ML Plans, at the rates set forth under
Investment Summary, calculated on a daily basis, will be deducted from interest
income received by the Fund semi-annually and will be distributed to the Sponsor
upon certification of its reimbursable expenses.
FEES
The Trustee's and Evaluator's fees are set forth under Defining Your Costs.
The Trustee's fees for its services as Trustee, payable in semi-annual
installments, are accrued daily based on the number of Units in a Trust. Certain
regular and recurring expenses of each Trust, including the Evaluator's fee and
certain mailing and printing expenses, are also included in the amount set forth
under Defining Your Costs as Trustee's Fee. Expenses in excess of the amount
included for these expenses will be borne by the Trusts. The Trustee also
receives benefits to the extent that it holds funds on deposit in the various
non-interest bearing accounts created under the Indenture.
When an employee receives Units from a Plan, he may establish an individual
account or deposit the Units in an existing account with Merrill Lynch. Merrill
Lynch currently charges annual maintenance fees on some types of accounts. The
individual Holder would be responsible for any such charge. The fee is not
payable if the employee is the record holder of the Units.
OTHER CHARGES
These include: (a) fees of the Trustee for extraordinary services, (b)
certain expenses of the Trustee (including legal and auditing expenses) and of
counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken to protect any Trust, (e) indemnification
of the Trustee for any loss, liabilities and expenses incurred without gross
negligence, bad faith or wilful misconduct on its part, (f) indemnification of
the Sponsor for any losses, liabilities and expenses incurred without gross
negligence, bad faith, wilful misconduct or reckless disregard of its duties and
(g) expenditures incurred in contacting Holders upon termination of a Trust. The
amounts of these charges and fees are secured by a lien on the Trust and, if the
balances in the Income and Capital Accounts (see below) are insufficient, the
Trustee has the power to sell Securities to pay these amounts.
ADMINISTRATION OF THE FUND
RECORDS
The Trustee keeps a register of the names, address and holdings of all
Holders of each Trust. The Trustee also keeps records of the transactions of
each Trust, including a current list of the Securities and a copy of the
Indenture, which are available to record Holders for inspection at the office of
the Trustee at reasonable times during business hours.
ACCOUNTS AND DISTRIBUTIONS
The terms of the Securities provide for payment to the holders thereof
(including the Trusts) upon their maturities. Interest received on any
Securities in a Trust which bear current interest, including that part of the
proceeds of any disposition of any such Security which represents accrued
interest and any late payment penalties, is credited to an Income Account for
the applicable Trust and other receipts to a Capital Account for the Trust.
While
13
<PAGE>
income distributions are not anticipated, the Sponsor is authorized in its
discretion to direct the Trustee to distribute any accumulated net income in
June or December of any year. Distributions for Holders as of the Record Day
normally will be made by mail on the following Distribution Day and shall
consist of an amount substantially equal to each Holder's pro rata share of the
distributable cash balance of the Income Account of the Trust computed as of the
close of business on the Record Day. The balance in the Capital Account shall be
distributed on the business day following the maturity of the Stripped Treasury
Securities in the Trust Portfolio; the Record Day for that distribution shall be
the business day immediately preceding the distribution day. The Trustee will
acquire additional Securities as directed by the Sponsor, in the original
proportionate relationship between face amounts, if there is a sufficient cash
balance in the Capital Account.
The amount to be distributed may change as Securities are exchanged, paid
or sold. A Reserve Account may be created by the Trustee by withdrawing from the
Income or Capital Accounts, from time to time, amounts which it deems requisite
to establish a reserve for any taxes or other governmental charges that may be
payable out of the Trust. Funds held by the Trustee in the various accounts
created under the Indenture do not bear interest.
PORTFOLIO SUPERVISION
Each Trust is part of a unit investment trust and its not an actively
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolios of the Trusts, however,
will not be actively managed and therefore the adverse financial condition of an
issuer will not necessarily require the sale of its securities from a Trust.
However, the Sponsor may direct the disposition of Securities upon default in
payment of amounts due on any Securities which is not promptly cured,
institution of certain legal proceedings, default in payment of amounts due on
other Treasury Securities, or decline in price or the occurrence of other market
or credit factors that in the opinion of the Sponsor would make the retention of
these Securities in any Trust detrimental to the interest of the Holders of that
Trust. If a default in payment of amounts due on any Security occurs and if the
Sponsor fails to give instructions to sell or hold the Security the Indenture
provides that the Trustee, within 30 days of that failure by the Sponsor, may
sell the Security.
REPORTS TO HOLDERS
The Trustee will furnish Holders of record with each distribution a
statement of the amounts of interest and other receipts which are being
distributed, expressed in each case as a dollar amount per Unit. After the end
of each calendar year (usually within twenty to sixty days), the Trustee will
furnish to Holders of record a statement (i) summarizing transactions for the
year in the Income, Capital and Reserve Accounts of the Trust, (ii) indentifying
Securities sold and purchased during the year and listing Securities held and
the number of Units oustanding at the end of the year by the Trust, (iii)
stating the Trust's Redemption Price per Unit based upon the computation thereof
made at the end of that year and (iv) specifying the amounts distributed during
that year from the Trust's Income and Capital Accounts. The accounts of each
Trust shall be audited at least annually by independent certified public
accountants designated by the Sponsor, and the report of the accountants shall
be furnished by the Trustee to Holders upon request.
In order to enable them to comply with Federal and state tax reporting
requirements, Holders will be furnished upon request to the Trustee with
evaluations of Securities furnished to it by the Evaluator.
UNCERTIFICATED UNITS
All Holders are required to hold their Units in uncertificated form. The
Trustee will credit a Holder's account with the number of Units held by the
Holder. This relieves the Holder of the responsibility of safekeeping of
certificates and the need to deliver certificates upon sale or redemption of
Units. Units are transferable by the Trustee, with a payment of $2.00 if
required by the Trustee (or such other amount as may be specified by the Trustee
and approved by the Sponsor) for each transfer and any sums payable for taxes or
other governmental charges imposed upon these transactions and compliance with
the formalities necessary to redeem Units.
AMENDMENT AND TERMINATION
The Sponsor and Trustee may amend the Indenture without the consent of
Holders (a) to cure any ambiguity or to correct or supplement any provision
thereof which may be defective or inconsistent, (b) to change any provision
thereof as may be required by the Securities and Exchange Commission or any
successor governmental agency, or (c) to make any other provisions which do not
adversely affect the interest of the Holders (as determined in good faith by the
Sponsor). The Indenture may also be amended in any respect by the Sponsor and
Trustee, or any of the provisions thereof may be waived, with the consent of the
Holders of 51% of the Units then outstanding, provided that none of
14
<PAGE>
these amendments or waivers will reduce the interest in any Trust of any Holder
without the consent of the Holder or reduce the percentage of Units required to
consent to any of these amendments or waivers without the consent of all
Holders.
The Indenture will terminate upon the earlier of the disposition of the last
Security held thereunder or the mandatory termination date. The Indenture as to
any Trust may be terminated at any time by written instrument executed by the
Sponsor and consented to by Holders of 51% of the Units. The Trustee will
deliver written notice of any termination to each Holder within a reasonable
period of time prior to the termination, specifying the times at which the
Holders may surrender their Certificates for cancellation. Within a reasonable
period of time after the termination, the Trustee must sell all of the
Securities then held and distribute to each Holder, upon surrender for
cancellation of his Certificates, and after deductions for accrued but unpaid
fees, taxes and governmental and other charges, the Holder's interest in the
Income and Capital Accounts. This distribution will normally be made by mailing
a check in the amount of each Holder's interest in these accounts to the address
of the Holder appearing on the record books of the Trustee.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
THE TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsor without the consent of any of the Holders, if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities or if for any reason the Sponsor determines in good
faith that the replacement of the Trustee is in the best interests of the
Holders. The resignation or removal shall become effective upon the acceptance
of appointment by the successor. In case of resignation or removal the Sponsor
is to use its best efforts to appoint a successor promptly and if upon
resignation of the Trustee no successor has accepted appointment within thirty
days after notification, the Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The Trustee shall be under no
liability for any action taken in good faith in reliance on prima facie properly
executed documents or for the disposition of monies or Securities, nor shall it
be liable or responsible in any way for depreciation or loss incurred by reason
of the sale of any Security. This provision, however, shall not protect the
Trustee in cases of wilful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties. In the event of the failure of the
Sponsor to act, the Trustee may act under the Indenture and shall not be liable
for any of these actions taken in good faith. The Trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or upon the interest thereon. In addition, the
Indenture contains other customary provisions limiting the liability of the
Trustee.
THE EVALUATOR
The Evaluator may resign or may be removed, effective upon the acceptance of
appointment by its successor, by the Sponsor, who is to use its best efforts to
appoint a successor promptly. If upon resignation of the Evaluator no successor
has accepted appointment within thirty days after notification, the Evaluator
may apply to a court of competent jurisdiction for the appointment of a
successor. Determinations by the Evaluator under the Indenture shall be made in
good faith upon the basis of the best information available to it; provided,
however, that the Evaluator shall be under no liability to the Trustee, the
Sponsor or the Holders for errors in judgment. This provision, however, shall
not protect the Evaluator in cases of wilful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties. The Trustee, the
Sponsor and the Holders may rely on any evaluation furnished by the Evaluator
and shall have no responsibility for the accuracy thereof.
THE SPONSOR
If the Sponsor fails to perform its duties or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then the
Trustee may (a) appoint a successor Sponsor at rates of compensation deemed by
the Trustee to be reasonable and as may not exceed amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and liquidate
the Trusts or (c) continue to act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the Trusts or to the Holders for
taking any action or for refraining from the taking any action in good faith or
for errors in judgment and shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Security. This
provision, however, shall not protect the Sponsor in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. The Sponsor may transfer all or substantially all of its
assets to a corporation or partnership which carries on its business and duly
assumes all of its obligations under the Indenture and in that event shall be
relieved of all futher liability under the Indenture.
15
<PAGE>
MISCELLANEOUS
TRUSTEE
The Trustee of the Fund is The Bank of New York, a New York banking
corporation with its Unit Investment Trust Department address at P.O. Box 974,
Wall Street Station, New York, New York 10268-0974 (which is subject to
supervision by the New York Superintendent of Banks, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal Reserve System).
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 Sponsor.
AUDITORS
The financial statements, including the Portfolios of the Trusts, included
herein have been audited by Deloitte & Touche LLP, independent accountants, as
stated in their opinion appearing herein and have been so included in reliance
upon that opinion given on the authority of that firm as experts in accounting
and auditing.
SPONSOR
The Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business, and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. The Sponsor and Merrill
Lynch Asset Management, Inc., a Delaware corporation and subsidiary of Merrill
Lynch & Co., Inc., the parent of the Sponsor, are engaged in the investment
advisory business. The Sponsor has acted as sponsor of a number of series of
unit investment trusts. The Sponsor has acted as principal underwriter and
managing underwriter of other investment companies. The Sponsor, in addition to
participating as a member of various selling groups or as an agent of other
investment companies, executes orders on behalf of investment companies for the
purchase and sale of securities of these companies and sells securities to these
companies in its capacity as a broker or dealer in securities.
CODE OF ETHICS
The Sponsor has adopted a code of ethics requiring preclearance and
reporting of personal securities transactions by its personnel who have access
to information on Defined Asset Funds portfolio transactions. The code is
intended to prevent any act, practice or course of conduct which would operate
as a fraud or deceit on any Fund and to provide guidance to these persons
regarding standards of conduct consistent with the Sponsor's responsibilities to
the Funds.
16
<PAGE>
Defined
Asset FundsSM
SPONSOR: GOVERNMENT SECURITIES
Merrill Lynch, INCOME FUND
Pierce, Fenner & Smith Incorporated U.S. Government Zero Coupon Bond Series
Defined Asset Funds 8
P.O. Box 9051 A Unit Investment Trust
Princeton, NJ 08543-9051 This Prospectus does not contain all of
(609) 282-8500 the information with respect to the
EVALUATOR: investment company set forth in its
Interactive Data Services registration statement and exhibits
14 Wall Street relating thereto which have been filed
New York, NY 10005 with the Securities and Exchange
TRUSTEE: Commission, Washington, D.C. under the
The Bank of New York Securities Act of 1933 and the
Unit Investment Trust Department Investment Company Act of 1940, and to
P.O. Box 974 which reference is hereby made. Copies
Wall Street Division of filed material can be obtained from
New York, NY 10268-0974 the Public Reference Section of the
1-800-221-7771 Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed
rates. The Commission also maintains a
Web site that contains information
statements and other information
regarding registrants such as Defined
Asset Funds that file electronically
with the Commission at
http://www.sec.gov.
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No person is authorized to give any
information or to make any
representations with respect to this
investment company not contained in its
registration statement and exhibits
related thereto; and any information or
representation not contained herein must
not be relied upon as having been
authorized.
------------------------
This Prospectus does not constitute an
offer to sell or the solicitation of an
offer to buy nor shall there be any sale
of these securities in any State in
which such offer, solicitation or sale
would be unlawful prior to registration
or qualification under the securities
laws of any such State.
11352--1/98
17
