<PAGE>
As filed with the Securities and Exchange Commission on July 28, 1997
Registration No. 33-57992
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
POST-EFFECTIVE AMENDMENT NO. 4 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
___________________
A. Exact Name of Trust:
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
B. Name of depositor:
PRUDENTIAL SECURITIES INCORPORATED
C. Complete address of depositor's principal executive office:
One Seaport Plaza
199 Water Street
New York, New York 10292
D. Name and complete address of agent for service:
Copy to:
LEE B. SPENCER, JR., ESQ. KENNETH W. ORCE, ESQ.
PRUDENTIAL SECURITIES INCORPORATED CAHILL GORDON & REINDEL
One Seaport Plaza 80 Pine Street
199 Water Street New York, New York 10005
New York, New York 10292
It is proposed that this filing will become effective (check appropriate
box).
___
/__/ immediately upon filing on (date) pursuant to paragraph (b);
___
/x_ / on July 31, 1997 pursuant to paragraph (b);
___
/__/ 60 days after filing pursuant to paragraph (a);
___
/__/ on (date) pursuant to paragraph (a) of Rule 485.
<PAGE>
CUSIP: 383741501R
Government Securities Equity Trust Series 5
(LOGO)
- --------------------------------------------------------------------------------
The objectives of the Trust are to attempt to obtain safety of capital through
investment in stripped United States Treasury issued notes or bonds paying no
current interest and to attempt to provide for capital appreciation through
investment in shares of the DelCap Fund A Class of the DelCap Fund series (the
'Fund'), one of the two series of Delaware Group Equity Funds IV, Inc., an
open-end, series, registered, management investment company. The objective of
the Fund is long-term capital growth which the Fund attempts to achieve by
investing in common stocks and securities convertible into common stocks of
companies that have a demonstrated history of growth and have the potential to
support continued growth. Units of the Trust may be suited for purchase by
Individual Retirement Accounts, Keogh Plans and other tax-deferred retirement
plans.
- --------------------------------------------------------------------------------
Sponsor:
Prudential Securities (LOGO)
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Please Read and Retain Prospectus dated
This Prospectus for Future Reference July 31, 1997
<PAGE>
- --------------------------------------------------------------------------------
This Prospectus does not contain all the information with respect to the
investment company set forth in its registration statement and exhibits relating
thereto which have been filed with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933 and the Investment Company Act
of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
The Trust
Government Securities Equity Trust Series 5 consists of one underlying unit
investment trust (the 'Trust' or 'GSET' as the context requires), composed of
stripped United States Treasury issued notes or bonds bearing no current
interest (the 'Treasury Obligations') and shares of the DelCap Fund A Class (the
'Fund Shares') of the DelCap Fund series (the 'Fund'), one of the two series of
Delaware Group Equity Funds IV, Inc. an open-end, series, registered management
investment company, or contracts and funds for the purchase thereof (the
Treasury Obligations and the Fund Shares, collectively, the 'Securities'). The
Trust contains Treasury Obligations maturing approximately fourteen years from
the Date of Deposit and Fund Shares.
The objectives of the Trust are to attempt to obtain safety of capital
through investment in stripped United States Treasury issued notes or bonds
paying no current interest and to attempt to provide for capital appreciation
through investment in shares of the Fund. The objective of the Fund is long-term
capital growth which the Fund attempts to achieve by investing in common stocks
and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth. The Fund may write covered call options on securities held in the Fund
may invest up to 2% of its total assets in put options on securities held in the
Fund may engage in transactions in options on stock indices for non-speculative
purposes, and may invest in foreign securities. There is, of course, no
assurance that the Trust's objectives will be achieved.
The Trust is structured to contain a sufficient amount of Treasury
Obligations to insure that an investor will receive, at the maturity of such
Trust, $20.00 per unit. However, an investor holding his Units to Trust maturity
may suffer a loss to the extent the investor's purchase cost of a Unit exceeds
$20.00 since the capital protection is limited to the aggregate maturity value
per Unit of Treasury Obligations. An investor who sells his Units prior to Trust
maturity may suffer a loss to the extent that the price he receives upon the
sale of his Units is less than the purchase price of his Units. The price paid
for a Unit may differ from that set forth herein due to changes in the value of
the Securities in the portfolio. There is no assurance that a purchaser of Units
on the date of the Prospectus or subsequent to such date will receive, upon
termination, the purchase price per Unit. The Fund has not been structured to
generate dividends and therefore dividend distributions by the Trust are likely
to be insignificant. The maximization of dividend income is not an objective of
the Trust. The Trust is 'concentrated' in Fund Shares, so investors should be
aware that the potential for capital appreciation is directly related to the
investment performance of the Fund itself.
Subsequent to the Date of Deposit the Sponsor may, from time to time,
deposit additional Treasury Obligations and Fund Shares in the Trust while
maintaining the proportionate relationship between the maturity amount of the
Treasury Obligations and the number of Fund Shares immediately prior to such
deposit. Any additional Treasury Obligations added to the Trust will be United
States Treasury notes or bonds substantially identical to those then held in the
Trust.
The Fund
The objective of the Fund is long-term capital growth. The strategy will be
to invest primarily in common stocks that, in the judgment of Delaware
Management Company, Inc. ('Delaware Management'), the Fund's Investment Manager,
are of superior quality and those securities convertible into such common
stocks.
Securities purchased will be of companies whose earnings Delaware Management
believes will grow more rapidly than the average of those listed in the Standard
& Poor's ('S&P') 500 Stock Index. Delaware Management's emphasis will be on the
securities of companies that, in its judgment, have the characteristics that
will enable them to grow faster than the economy as measured by the Index.
This judgment will be based on the financial strength of the company, the
expertise of its management, the growth potential of the company within its
industry and the growth potential of the industry itself.
Delaware Management will focus primarily on those securities of companies it
believes have established themselves within their industry while maintaining
growth potential. If Delaware Management believes that market conditions
A-i
<PAGE>
warrant, the Fund may employ option strategies. Also, on a temporary, defensive
basis, Delaware Management may invest in fixed income obligations.
Although the Fund will constantly strive to attain the objective of
long-term capital growth, there can be no assurance it will be attained. The
objective of the Fund may not be changed without shareholder approval. There is,
of course, no guarantee that the Fund's investment objective will be achieved.
Investment Risks
Investors should be aware of the risks which an investment in Units of the
Trust may entail. During the life of the Trust, the value of the portfolio
Securities and hence the Units may fluctuate and therefore the Public Offering
Price and Redemption Price per Unit may be more or less than the price paid by
the investor. The value of the Treasury Obligations will fluctuate inversely
with changes in interest rates and the value of Fund Shares will vary as the
value of the underlying portfolio securities of the Fund increases or decreases.
The Treasury Obligations are subject to substantially greater price fluctuations
during periods of changing interest rates than securities of comparable quality
which make periodic interest payments. See 'The Trust--Stripped U.S. Treasury
Obligations.' Although the Trust is structured to return to an initial Unit
Holder his purchase cost of a Unit through the distribution of the Treasury
Obligations' maturity value on the mandatory termination date of the Trust, an
investor will have included the accrual of original issue discount on such
Treasury Obligations in income for federal income tax purposes and will have
paid federal income tax on such accrual. An investor holding his Units to Trust
maturity may suffer a loss to the extent the investor's purchase cost of a Unit
exceeds $20.00 since the capital protection is limited to the aggregate maturity
value per Unit of Treasury Obligations. Similarly, an investor who sells his
Units prior to Trust maturity may suffer a loss to the extent that the price he
receives upon the sale of his Units is less than the purchase price of his
Units.
Distributions
Distributions, if any, of dividends and 12b-1 fee amounts received by the
Trust from the Sponsor in respect of Fund Shares (net of Trust expenses),
distributions of any net capital gains received in respect of Fund Shares and
proceeds of the sale of Fund Shares not used to redeem Units will be made
quarterly on or shortly after the Quarterly Distribution Date to Unit Holders of
record on the Quarterly Record Date immediately preceding such Quarterly
Distribution Date. No distribution will be made if the amount available for
distribution is less than $2.50 per 100 Units (see 'Rights of Unit
Holders--Distributions'). Alternatively, Unit Holders may have their
distributions reinvested (see 'Reinvestment of Trust Distributions'). Accrual of
original issue discount on the Treasury Obligations will not be distributed on a
current basis, although Unit Holders will be subject to income tax at ordinary
income rates as if a current distribution of such amounts had been made (see
'Tax Status of the Trust' herein). Upon termination of the Trust, the Trustee
will distribute, upon surrender of Units for cancellation, to each Unit Holder,
his pro rata share of such Trust's net assets including the proceeds of Fund
Shares sold unless a Unit Holder elects to receive Fund Shares pursuant to an
'in kind' distribution of the number of Fund Shares attributable to his Units,
in the manner set forth under 'Amendment and Termination of the
Indenture--Termination' herein. Upon termination, a Unit Holder may invest the
proceeds from the Treasury Obligations in Fund Shares at such shares' net asset
value.
Public Offering Price
The Public Offering Price of the Units during the initial offering period is
equal to the aggregate offering side evaluation of the underlying Treasury
Obligations and the net asset value of the Fund Shares (excluding any sales
charge), divided by the number of Units outstanding plus a sales charge equal to
5.25% of the Public Offering Price (5.541% of the net amount invested) per Unit.
Any cash held by the Trust will be added to the Public Offering Price. After the
initial public offering period, the Public Offering Price of the Units is
computed by adding to the aggregate bid side evaluation of the Treasury
Obligations the aggregate net asset value of Fund Shares in the Trust, dividing
such sum by the number of Units outstanding and then adding a sales charge of
5.25% of the Public Offering Price (5.541% of the net amount invested). Any
money in the Income and Principal Accounts other than money required to redeem
tendered Units will be added to the Public Offering Price. The sales charges is
reduced on a graduated scale for sales involving at least 1,667 Units (see
'Public Offering of Units--Volume Discount'). The minimum purchase is 100 Units
except the minimum purchase is 25 Units in the case of Individual Retirement
Accounts, Keogh Plans and other tax-deferred retirement plans.
A-ii
<PAGE>
Secondary Market
The Sponsor, although not obligated to do so, presently intends to maintain
a secondary market to repurchase the Units based on the aggregate bid side
evaluation of the Treasury Obligations and the net asset value of the Fund
Shares (excluding any sales charge on Fund Shares). If such market is not
maintained, a Unit Holder will be able to dispose of his Units through
redemption at prices based on the aggregate bid side evaluation of the Treasury
Obligations and the net asset value of the Fund Shares (see 'Rights of Unit
Holders--Redemption' herein). Market conditions may cause such prices to be
greater or less than the amount paid for Units and may result in a loss to a
Unit Holder upon the disposition of a Unit.
Special Considerations
An investment in Units of the Trust should be made with an understanding of
the risks entailed in an investment in
(i) the stripped United States Treasury issued notes or bonds bearing no current
interest and (ii) a mutual fund which invests in the type of equity securities
in which the Fund invests. The Trust's objectives are to attempt to obtain
safety of capital through investment in the stripped United States Treasury
issued notes or bonds paying no current interest and to attempt to provide for
capital appreciation through an investment in Fund Shares. The Trust is
'concentrated' in Fund Shares so investors should be aware that the potential
for capital appreciation is directly related to the investment performance of
the Fund itself. Additionally, changes in the price of the Treasury Obligations
and changes in the net asset value of the Fund Shares will affect the price of
the Trust's Units.
Portfolio Summary
$28,500,000 face amount of Treasury Obligations maturing on August 15, 2007
and 441,579 Fund Shares were held in the Trust on June 30, 1997. The Treasury
Obligations and the Fund Shares represented 54.6% and 45.4%, respectively, of
the total of the aggregate bid side evaluation of Treasury Obligations in the
Trust and the aggregate value of Fund Shares.
A-iii
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
As of June 30, 1997
<TABLE>
<S> <C>
AGGREGATE MATURITY VALUE OF TREASURY OBLIGATIONS........................................... $28,500,000.00
AGGREGATE NUMBER OF FUND SHARES............................................................ 441,579
NUMBER OF UNITS............................................................................ 1,425,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED BY EACH UNIT........................ 1/1,425,000th
PUBLIC OFFERING PRICE
Aggregate bid side evaluation of Treasury Obligations in the Trust.................... $14,594,280.00
Aggregate value of Fund Shares(D)(D).................................................. 12,147,838.29
Aggregate cash value.................................................................. 13,710.10
--------------
Total................................................................................. $26,755,828.39
--------------
--------------
Divided by 1,425,000 Units............................................................ 18.776
Plus sales charge of 5.25% of Public Offering Price (5.541% of net amount
invested)*............................................................................ 1.04
--------------
Public Offering Price per Unit(D)(D)(D)............................................... $ 19.816
--------------
--------------
REDEMPTION AND SPONSOR'S REPURCHASE PRICE PER UNIT (based on bid side evaluation of
underlying Treasury Obligations and net asset value of the Fund Shares, $1.04 less than
Public Offering Price per Unit)(D)(D).................................................... $ 18.776
QUARTERLY RECORD DATES: January 1, April 1, July 1, October 1.
QUARTERLY DISTRIBUTION DATES: January 15, April 15, July 15, October 15.
TRUSTEE'S ANNUAL FEE** (including estimated expenses and Evaluator's fee): $1.83 per 100
Units outstanding.
EVALUATOR'S FEE FOR EACH EVALUATION OF TREASURY OBLIGATIONS: $5.00
EVALUATION TIME: 4:00 P.M. New York time (i.e. the close of regular trading on the New York
Stock Exchange.)
MANDATORY TERMINATION DATE: August 15, 2007.
MINIMUM VALUE OF TRUST: The Trust may be terminated if the value of Trust assets at any
time is less than $33,200,000.
DATE OF DEPOSIT: April 8, 1993(D).
</TABLE>
- ------------
(D) The Date of Deposit is the date on which the Trust Indenture and Agreement
was signed and the initial deposit of Securities with the Trustee was made.
(D)(D) Calculated by multiplying aggregate number of Fund Shares by the current
net asset value per share (excluding any sales load on the Fund Shares).
(D)(D)(D) This Public Offering Price is computed as of June 30, 1997 and may
vary from the Public Offering Price on the date of this Prospectus or any
subsequent date.
* Certain transactions are entitled to a reduced sales charge. (See 'Public
Offering of Units--Volume Discount'.) ** Based on Trust size of 1,499,999 or
fewer Units
- ------------
For an explanation of the management fees paid by the Fund see page B-9.
A-iv
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
THE UNIT HOLDERS, SPONSOR AND TRUSTEE
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
We have audited the statement of financial condition and schedule of
portfolio securities of the Government Securities Equity Trust Series 5 as
of March 31, 1997, and the related statements of operations and changes in
net assets for each of the three years in the period then ended. These
financial statements are the responsibility of the Trustee (see Footnote
(a)(1)). Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of the securities owned as of March 31,
1997 as shown in the statement of financial condition and schedule of
portfolio securities by correspondence with The Chase Manhattan Bank, the
Trustee. An audit also includes assessing the accounting principles used
and the 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 the Government
Securities Equity Trust Series 5 as of March 31, 1997, and the results of
its operations and the changes in its net assets for each of the three years
in the period then ended in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
July 7, 1997
New York, New York
</AUDIT-REPORT>
A-1
<PAGE>
STATEMENT OF FINANCIAL CONDITION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
March 31, 1997
<TABLE>
TRUST PROPERTY
<S> <C>
Investments in Securities at market value (amortized cost
$25,306,379 including accreted interest of $3,485,969)
(Note (a) and Schedule of Portfolio Securities Notes (4) and
(5)) $25,625,739
Other receivable 2,348
Cash 15,174
Total 25,643,261
LIABILITY AND NET ASSETS
Less Liability:
Accrued Trust fees and expenses 3,819
Net Assets:
Balance applicable to 1,500,000 Units of fractional
undivided interest issued and outstanding (Note (c)):
Capital, plus unrealized market appreciation
of $319,360 $25,625,739
Undistributed principal and net investment income
(Note (b)) 13,703
Net assets $25,639,442
Net asset value per Unit ($25,639,442 divided by 1,500,000 Units) $ 17.0930
See notes to financial statements
</TABLE>
A-2
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
<CAPTION>
For the years ended March 31,
1997 1996 1995
<S> <C> <C> <C>
Investment income (Note (a)(2):
Interest $1,086,895 $1,329,923 $1,610,268
Dividends 191,351 514,556 -
Other income 41,386 53,058 66,727
Total income 1,319,632 1,897,537 1,676,995
Less Expenses:
Trust fees and expenses 25,021 30,127 34,551
Total expenses 25,021 30,127 34,551
Investment income - net 1,294,611 1,867,410 1,642,444
Net (loss) gain on investments:
Realized gain (loss) on securities sold or
redeemed 643,340 1,216,806 (170,024)
Capital gain distributions received 1,616,412 1,734,243 1,573,648
Net unrealized market (depreciation)
appreciation (3,084,523) 3,463,704 (1,123,223)
Net (loss) gain on investments (824,771) 6,414,753 280,401
Net increase in net assets resulting from
operations $ 469,840 $8,282,163 $1,922,845
See notes to financial statements
</TABLE>
A-3
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
<CAPTION>
For the years ended March 31,
1997 1996 1995
<S> <C> <C> <C>Operations:
Investment income - net $ 1,294,611 $ 1,867,410 $1,642,444
Realized gain (loss) on securities sold
or redeemed 643,340 1,216,806 (170,024)
Capital gain distributions received 1,616,412 1,734,243 1,573,648
Net unrealized market (depreciation)
appreciation (3,084,523) 3,463,704 (1,123,223)
Net increase in net assets
resulting from operations 469,840 8,282,163 1,922,845
Less Distributions to Unit Holders:
Principal (1,607,109) (1,721,795) (1,571,760)
Investment income - net (207,919) (531,565) (35,799)
Total distributions (1,815,028) (2,253,360) (1,607,559)
Less Capital Share Transactions:
Redemption of 375,000 Units, 800,000
Units and 450,000 Units, respectively (6,853,011) (13,944,487) (6,746,045)
Income distribution on redemption (6,738) (5,513) (4,455)
Total capital share transactions (6,859,749) (13,950,000) (6,750,500)
Net decrease in net assets (8,204,937) (7,921,197) (6,435,214)
Net assets:
Beginning of year 33,844,379 41,765,576 48,200,790
End of year (including undistributed
principal and net investment income of
$13,703, $11,009 and $18,058, respec-
tively) $25,639,442 $33,844,379 $41,765,576
See notes to financial statements
</TABLE>
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
March 31, 1997
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of the significant
accounting policies of the Trust:
(1) Basis of Presentation
The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of
the Trust and is responsible for establishing and maintaining a
system of internal controls directly related to, and designed to
provide reasonable assurance as to the integrity and reliability
of, financial reporting of the Trust. The Trustee is also
responsible for all estimates and accruals reflected in the Trust's
financial statements. The Evaluator determines the price for each
underlying Security included in the Trust's Schedule of Portfolio
Securities on the basis set forth in Part B of this Prospectus,
"Public Offering of Units - Public Offering Price". Under the
Securities Act of 1933 ("the Act"), as amended, the Sponsor is
deemed to be an issuer of the Trust Units. As such, the Sponsor
has the responsibility of an issuer under the Act with respect to
financial statements of each Trust included in the Registration
Statement under the Act and amendments thereto.
(2) Investments
Investments are stated at market value as determined by the
Evaluator based on the bid side evaluations on the Zero Coupon
Treasury Obligations, and by calculations based on the net asset
value per share of the Fund, on the last day of trading during the
period. The value on the date of initial deposit (April 7, 1993)
represents the cost of investments to the Trust based on the
offering side evaluations and the net asset value per share, of the
Treasury Obligations and Fund Shares, respectively, as of the close
of business on the date of initial deposit. The cost of
investments purchased subsequent to the date of initial deposit is
based on the offering side evaluations and the net asset value per
share, respectively, at the date of purchase. The difference
between the initial cost and face amount of the Treasury
Obligations at the date of purchase is being amortized over the
period to its maturity date using the interest method.
(3) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such
taxes.
A-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
March 31, 1997
(4) Expenses
The Trust pays annual Trustee's fee, estimated expenses, Evaluator's
fees and may incur additional charges as explained under "Expenses
and Charges - Fees" and "- Other Charges" in Part B of this
Prospectus.
(b) DISTRIBUTIONS
Distributions from the income and principal accounts, if any, received
by the Trust are made to Unit Holders on a quarterly basis and
distributions of any net capital gains received in respect of Fund
Shares will be made at least annually to Unit Holders of record. Income
from the amortization of original issue discount on the Zero Coupon
Treasury Obligations will not be distributed on a current basis. Upon
termination of the Trust, the Trustee will distribute, upon surrender of
Units for cancellation, to each Unit Holder his pro rata share of the
Trust's assets, less expenses, in the manner set forth under "Amendment
and Termination of the Trust - Termination" herein.
(c) COST TO INVESTORS
<TABLE>
A reconciliation of the cost of Units to investors to the net amount
applicable to investors as of March 31, 1997 follows:
<S> <C>
Cost to investors $63,539,215
Less: Gross underwriting commissions (sales charge) 3,169,415
Net cost to investors 60,369,800
Cost of securities sold or redeemed (41,109,100)
Unrealized market appreciation 319,360
Accumulated interest accretion 6,045,679
Net amount applicable to investors $25,625,739
</TABLE>
A-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
March 31, 1997
(d) OTHER INFORMATION
<TABLE>
Selected data for a Unit of the Trust during each year:
<CAPTION>
For the years ended March 31,
1997 1996 1995
<S> <C> <C> <C>
Principal distributions during
year $ .9890 $ .8399 $ .5664
Net investment income distribu-
tions during year $ .1280 $ .2593 $ .0129
Net asset value at end of year $17.0930 $18.0503 $15.6133
Trust Units outstanding at end
of year 1,500,000 1,875,000 2,675,000
</TABLE>
A-7
<PAGE>
<TABLE>
SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
March 31, 1997
<CAPTION>
Port-
folio Name of Issuer/Title of Maturity Amount or Market
No. Portfolio Security <F1> Number of Shares Value<F4><F5>
<C> <S> <C> <C>
1. Stripped United States Treasury
Obligations Maturing 8/15/07 <F2> $30,000,000 $14,493,300
2. Shares of the DelCap Fund A class
of the Concept I Series of
Delaware Group DelCap Fund, Inc.
($23.95 per Fund Share) <F3> 464,820 11,132,439
$25,625,739
See notes to Schedule of Portfolio Securities
A-8
</TABLE>
<PAGE>
NOTES TO SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 5
March 31, 1997
<F1> None of the Securities is redeemable by operation of optional call
provisions.
<F2> The Zero Coupon Treasury Obligations have been purchased at a
discount from their par value because there is no stated interest
income thereon (such Securities are often referred to as zero
coupon Securities). Over the life of the Treasury Obligations such
discount accrues and upon maturity thereof the holders will receive
100% of the Treasury Obligation maturity amount thereof.
<F3> The Fund's investment manager is Delaware Management Company, Inc.
<F4> The market value of the Treasury Obligations as of March 31, 1997
was determined by the Evaluator on the basis of bid side
evaluations for the Securities at such date. The market value of
the Fund Shares was calculated by multiplying the aggregate number
of shares by the current net asset value per share as of the same
date.
<F5> At March 31, 1997, the unrealized market appreciation of Securities
was comprised of the following:
Gross unrealized market appreciation $641,396
Gross unrealized market depreciation (322,036)
Unrealized market appreciation $319,360
The amortized cost of the Securities for Federal income tax purposes
was $25,306,379 at March 31, 1997.
A-9
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 5
------------------------
THE TRUST
The Government Securities Equity Trust Series 5 (the 'Trust' or 'GSET' as
the context requires) was created under the laws of the State of New York,
pursuant to a Trust Indenture and Agreement and a related Reference Trust
Agreement dated the Date of Deposit (collectively, the 'Indenture')* among
Prudential Securities Incorporated (the 'Sponsor'), United States Trust Company
of New York ('predecessor trustee') and Kenny S&P Evaluation Services, a
division of J.J. Kenny Co., Inc. (the 'Evaluator'). The Chase Manhattan Bank is
the Trustee (the 'Trustee') of the Trust. The Sponsor, Prudential Securities
Incorporated, is a wholly-owned, indirect subsidiary of The Prudential Insurance
Company of America.
The objectives of the Trust are to attempt to obtain safety of capital
through investment in stripped United States Treasury issued notes or bonds
paying no current interest (the 'Treasury Obligations') and to attempt to
provide for capital appreciation through investment in shares of the DelCap Fund
A Class (the 'Fund Shares') of the DelCap Fund series (the 'Fund'), one of the
two series of Delaware Group Equity Funds IV, Inc., an open-end, series,
registered management investment company. The Fund's investment objective is
long-term capital growth which the Fund attempts to achieve by investing in
common stocks and securities convertible into common stocks of companies that
have a demonstrated history of growth and have the potential to support
continued growth (the Treasury Obligations and Fund Shares hereinafter,
collectively, referred to as 'Securities'). There is of course no guarantee that
the Trust's objectives will be achieved.
Trust Formation
On the Date of Deposit, the Sponsor deposited with the Trustee the
underlying Securities or confirmations of contracts for the purchase of such
Securities at prices equal to the evaluation of the Treasury Obligations on the
offering side of the market on the Date of Deposit as determined by the
Evaluator and the net asset value of the Fund Shares (see 'Schedule of Portfolio
Securities'). The Trust was created simultaneously with the deposit of the
Securities with the Trustee and the execution of the Indenture. The Trustee then
immediately delivered to the Sponsor certificates of beneficial interest (the
'Certificates') representing the units (the 'Units') comprising the entire
ownership of the Trust. Through this Prospectus, the Sponsor is offering the
Units for sale to the public. The holders of Units (the 'Unit Holder' or 'Unit
Holders' as the context requires) will have the right to have their Units
redeemed at a price based on the aggregate bid side evaluation of the Treasury
Obligations as determined by the Evaluator and the net asset value of the Fund
Shares (the 'Redemption Price'), if the Units cannot be sold in the secondary
market which the Sponsor, although not obligated to, presently intends to
maintain. The Trust has a mandatory termination date set forth under 'Summary of
Essential Information,' but may be terminated prior thereto upon the occurrence
of certain events (see 'Amendment and Termination of the
Indenture--Termination'), including a reduction in the value of the Trust below
the value set forth under 'Summary of Essential Information.'
With the deposit of the Securities in the Trust on the Date of Deposit, the
Sponsor established a percentage relationship between the maturity amounts of
Treasury Obligations and the number of Fund Shares in the Portfolio. Subsequent
to the initial deposit of Securities on the Date of Deposit, the Sponsor may,
but is not obligated to, deposit additional Securities (including contracts
together with an irrevocable letter of credit for the purchase thereof) in the
Trust, to receive in exchange therefor additional Units and to offer such Units
to the public by means of this Prospectus. A subsequent deposit by the Sponsor
of Treasury Obligations and Fund Shares will maintain the proportionate
relationship between the maturity amount of Treasury Obligations and the number
of Fund Shares immediately prior to such deposit; the deposited Treasury
Obligations will be substantially identical to those held in the Trust
immediately prior to the subsequent deposit. Each Unit owned by each Unit Holder
will represent the same proportionate interest in the Trust. As additional Units
are issued by the Trust as a result of the deposit of additional Securities by
the Sponsor, the aggregate value of the Securities in the Trust will be
increased and the fractional undivided interest in the Trust represented by each
Unit will be decreased.
- ------------
* Reference is hereby made to said Indenture and any statements contained
herein are qualified in their entirety by the provisions of said Indenture.
B-1
<PAGE>
<PAGE>
On a recent date, each Unit represented the fractional undivided interest in
the Securities and net income of the Trust set forth under 'Summary of Essential
Information.' The Trust Portfolio has been structured so that a Unit Holder will
receive, at the Mandatory Termination Date of the Trust, an amount per Unit at
least equal to $20.00 even if the value of the Fund Shares were to decline to
zero, although the Unit Holder would forego any earnings on amounts invested. Of
course, whether or not a Unit Holder makes a profit or suffers a loss depends on
whether his purchase price was less than or exceeded $20.00 per Unit. A Unit
Holder selling his Units prior to the Mandatory Termination Date may suffer a
loss to the extent the sale price of his Units is less than the purchase price.
Because certain of the Securities from time to time may be sold under
circumstances described herein and because additional Securities may be
deposited into the Trust from time to time, the Trust is not expected to retain
its present size and composition. If any Units are redeemed by the Trustee, the
number of Securities in the Trust will be reduced by an amount allocable to
redeemed Units and the fractional undivided interest in such Trust represented
by each unredeemed Unit will be increased. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unit Holder (which may include the
Sponsor) or until the termination of the Trust pursuant to the Indenture.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units, if Units are available
to fill orders on the day that that price is set. If Units are not available or
are insufficient to fill the order (e.g., if demand for Units exceeds the Units
available for sale and the Sponsor is not yet able to create additional Units),
the investor's order will be rejected by the Sponsor. The number of Units
available may be insufficient to meet demand because of the Sponsor's inability
to or decision not to purchase and deposit Treasury Obligations of the required
type and/or Fund Shares in amounts sufficient to maintain the proportionate
relationship between maturity values of Treasury Obligations and numbers of Fund
Shares of the Fund required to create additional Units. The Sponsor may, if
unable to accept orders on any given day, offer to execute the order as soon as
sufficient Units can be created. An investor will be deemed to place a new order
for that number of Units each day until that order is accepted. The investor's
order will then be executed, when Units are available, at the Public Offering
Price next calculated after such continuing order is accepted. The investor
will, of course, be able to revoke his purchase offer at any time prior to
acceptance by the Sponsor.
Securities Selection
In selecting Treasury Obligations for deposit in the Trust, the following
factors, among others, were considered by the Sponsor: (i) the prices and yields
of such securities and (ii) the maturities of such securities. In selecting the
Fund Shares for deposit in the Trust, the following factors, among others, were
considered by the Sponsor: (i) the historical performance of the Fund and (ii)
the nature of the underlying Fund portfolio.
The Trust consists of such of the Securities listed under 'Schedule of
Portfolio Securities,' herein as may continue to be held from time to time in
the Trust, newly deposited Securities meeting requirements for creation of
additional Units and undistributed cash receipts from the Fund and proceeds
realized from the disposition of Securities.
Stripped U.S. Treasury Obligations
The Treasury Obligations in the Portfolio consist of United States Treasury
Obligations which have been stripped by the United States Treasury of their
unmatured interest coupons or such stripped coupons or receipts or certificates
evidencing such obligations or coupons. The obligor with respect to the Treasury
Obligations is the United States Government. Such Treasury Obligations may
include certificates that represent rights to receive the payments that comprise
a U.S. Government bond.
U.S. Treasury bonds evidence the right to receive a fixed payment at a
future date from the U.S. Government, and are backed by the full faith and
credit of the U.S. Government. The Treasury Obligations can be purchased at a
deep discount because the buyer receives only the right to receive one fixed
payment at a specific date in the future and does not receive any periodic
interest payments. The effect of owning deep discount obligations which do not
make current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during the life
of the discount obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income on such
obligations at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest at higher rates
in the future. For this reason, the
B-2
<PAGE>
<PAGE>
Treasury Obligations are subject to substantially greater price fluctuations
during periods of changing market interest rates than are securities of
comparable quality which pay interest on a current basis. Investors should be
aware that income in respect of the accrual of original issue discount on the
Treasury Obligations, although not distributed on a current basis, will be
subject to income tax on a current basis at ordinary income tax rates (see 'Tax
Status of the Trust').
The following disclosure concerning the Fund and its affiliates has been
provided by Delaware Distributors, L.P. While the Sponsor has not independently
verified this information, it has no reason to believe that such information is
not correct in all material respects. No representation is made herein as to the
accuracy or adequacy of such information.
Delaware Group Equity Funds IV, Inc.--DelCap Fund series
The Portfolio also contains shares of the DelCap Fund A Class (the 'Fund
Shares') of the DelCap Fund series (the 'Fund'). On June 30, 1997, the net
assets of the Fund were $901,958,788.00. The Fund has retained an Investment
Manager, Delaware Management Company, Inc. ('Delaware Management') which is an
indirect wholly-owned subsidiary of Delaware Management Holdings, Inc. Effective
April 3, 1995, Delaware Management Holdings, Inc. merged with and into a
wholly-owned subsidiary of Lincoln National Corporation of Fort Wayne, Indiana.
The Fund's investment objective is long-term capital growth which the Fund
attempts to achieve by investing in common stocks and securities convertible
into common stocks of companies that have a demonstrated history of growth and
have the potential to support continued growth. The Fund will attempt to meet
its objectives by exceeding the return of common stocks as measured by the S&P
500 Stock Index. While management believes its objective may best be attained by
investing in common stocks, the Fund may also invest in other securities
including, but not limited to, convertible securities, warrants, preferred
stocks, bonds and foreign securities. The strategies employed are dependent upon
the judgment of Delaware Management.
In investing for capital appreciation, the Fund may hold securities for any
period of time. Should the market warrant a temporary, defensive approach, the
Fund may also invest in fixed income obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities as well as corporate bonds of
investment quality rated Baa or above by Moody's Investors Service or BBB or
above by S&P. The Fund may write covered call options on individual issues as
well as write call options on stock indices. The Fund may also purchase put
options on individual issues and on stock indices. Delaware Management will
employ these techniques in an attempt to protect appreciation attained, to
offset capital losses and to take advantage of the liquidity available in the
option markets. The ability to hedge effectively using options on stock indices
will depend, in part, on the correlation between the composition of the index
and the Fund's portfolio as well as the price movement of individual securities.
Delaware Management may also write covered call options to achieve income to
offset the cost of purchasing put options. While there is no limit on the amount
of the Fund's assets which may be invested in covered call options, the Fund
will not invest more than 2% of its net assets in put options. The Fund will
only use Exchange-traded options. The Fund may also enter into closing
transactions to offset put or call options prior to their exercise or
expiration. For a further discussion of the Fund's investment program see
'Investment Strategies and Restrictions' below.
The Fund may be suitable for the patient investor interested in long-term
capital appreciation. The investor should be willing to accept the risks
associated with investments in domestic and international securities. The Fund
is designed primarily for capital appreciation. Providing current income is not
an objective of the Fund. Any income produced is expected to be minimal. An
investor should not consider a purchase of Fund Shares as equivalent to a
complete investment program.
The Chase Manhattan Bank is the custodian of the Fund's assets. The Delaware
Service Company, Inc. serves as the Fund's shareholder servicing, dividend
disbursing and transfer agent. The Fund's prospectus is available upon request.
General Information Regarding the Fund
The Fund has qualified and intends to continue to qualify for treatment as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. As long as the Fund qualifies for this treatment, it is not
subject to Federal income taxes on amounts distributed to shareholders. The
Fund, for purposes of determining taxable income, distribution requirements and
other requirements of Subchapter M, is treated as a separate corporation. The
Fund intends to distribute substantially all of the Funds' net capital gains and
net investment income before the end of each calendar year. Any dividend or
distribution by the Fund has the effect of reducing the net asset value per
share on the ex-dividend date by the amount of the dividend or distribution (see
'Net Asset Value of the Fund Shares').
B-3
<PAGE>
<PAGE>
Shown below for the periods indicated are financial highlights relating to
Fund Shares:
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net
Asset
Value,
Beginning
of
Period... $ 28.870 $ 25.570 $ 26.080 $ 20.730 $ 21.470 $ 15.810 $ 19.060 $ 13.920 $ 14.930 $ 16.540
Income
(Loss)
From
Investment
Operations
Net
Investment
Income
(Loss)1... (0.208) (0.166) (0.218) (0.125) (0.059) 0.064 0.419 0.201 0.042 0.449
Net
Gains
(Losses)
on
Securities
(both
realized
and
unrealized)... 5.618 5.296 0.528 5.475 (0.651) 6.496 (3.219) 5.059 (0.357) 5.361
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
Total
From
Investment
Operations... 5.410 5.130 0.310 5.350 (0.710) 6.560 (2.800) 5.260 (0.315) 5.810
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
Less
Distributions
Dividends
from
Net
Investment
Income.. none none none none (0.030) (0.410) (0.160) (0.120) (0.430) none
Distributions
from
Capital
Gains... (3.540) (1.830) (0.820) none none (0.490) (0.290) none (0.265) (7.420)
Returns
of
Capital... none none none none none none none none none none
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
Total
Distributions.. (3.540) (1.830) (0.820) none (0.030) (0.900) (0.450) (0.120) (0.695) (7.420)
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
Net
Asset
Value,
End of
Period... $ 30.740 $ 28.870 $ 25.570 $ 26.080 $ 20.730 $ 21.470 $ 15.810 $ 19.060 $ 13.920 $ 14.930
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
-------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
Total
Return2... 21.09% 22.04% 1.17% 25.81% (3.32)% 43.25% (14.99)% 38.15% (2.26)% 63.07%
Ratios/Supplemental
Data
Net
Assets,
End of
Period
(000's
omitted)... $923,248 $888,571 $890,787 $1,057,358 $993,125 $512,356 $155,392 $138,589 $114,122 $131,916
Ratio of
Expenses
to
Average
Daily
Net
Assets... 1.35% 1.37% 1.35% 1.30% 1.39% 1.43% 1.41% 1.44% 1.55% 1.39%3
Ratio of
Net
Investment
Income
(Loss)
to
Average
Daily
Net
Assets... (0.74)% (0.67)% (0.68)% (0.43)% (0.26)% 0.63% 2.61% 1.28% 0.31% 7.11%4
Portfolio
Turnover
Rate... 72% 51% 34% 51% 24% 33% 45% 42% 77% 127%
Average
Commission
Rate
Paid... $ 0.0600 N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
- ---------------
1 The per share information for the years ended 9/30/96 and 9/30/95 were
based on the average shares outstanding method.
2 Does not reflect maximum sales charge that is or was in effect nor the 1%
Limited CDSC that would apply in the event of certain redemptions within
12 months of purchase. Total return for 1987 reflects the expense
limitations referenced in Notes 3 and 4.
3 Ratio of expenses to average daily net assets prior to expense limitation
was 1.73% for 1987.
4 Ratio of net investment income (loss) to average daily net assets prior to
expense limitation was 6.77% for 1987.
B-4
<PAGE>
Investment Strategies and Restrictions
Strategies
In pursuit of its objective and policies, the Fund may employ one or more of
the following investment strategies.
The application of the Fund's investment policy will be dependent upon the
judgment of Delaware Management. In accordance with the judgment of Delaware
Management, the proportions of the Fund's assets invested in particular
industries will vary from time to time. The securities in which the Fund invests
may or may not be listed on a national stock exchange, but if they are not so
listed will generally have an established over-the-counter market. While
management believes that the investment objective can be achieved by investing
in common stocks, the portfolio may be invested in other securities including,
but not limited to, convertible securities, preferred stocks, bonds, warrants
and foreign securities. In periods during which Delaware Management feels that
market conditions warrant a more defensive portfolio positioning, the Fund may
also invest temporarily in various types of fixed income obligations.
In addition, from time to time, the Fund may also engage in the following
investment techniques:
Repurchase Agreements. While the Fund is permitted to do so, it normally
does not invest in repurchase agreements, except to invest cash balances.
A repurchase agreement is a short-term investment by which the purchaser
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, thereby determining the yield during
the purchaser's holding period. Should an issuer of a repurchase agreement fail
to repurchase the underlying security, the loss to the Fund, if any, would be
the difference between the repurchase price and the market value of the
security. The Fund will limit its investments in repurchase agreements to those
which Delaware Management, under the guidelines of the Board of Directors,
determines to present minimal credit risks and which are of high quality. In
addition, the Fund must have collateral of at least 100% of the repurchase
price, including the portion representing the Fund's yield under such agreements
which is monitored on a daily basis.
The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the Investment Company Act of
1940 to allow the Delaware Group funds jointly to invest cash balances. The Fund
may invest cash balances in a joint repurchase agreement in accordance with the
terms of such exemption and subject generally to the conditions described above.
Options. The Fund may write call options and purchase put options on a
covered basis only, and will not engage in option writing strategies for
speculative purposes.
A. Covered Call Writing--The Fund may write covered call options from time
to time on such portion of its portfolio, without limit, as Delaware Management
determines is appropriate in seeking to obtain the Fund's investment objective.
A call option gives the purchaser of such option the right to buy, and the
writer, in this case the Fund, has the obligation to sell the underlying
security at the exercise price during the option period. The advantage to the
Fund of writing covered calls is that the Fund receives a premium which is
additional income. However, if the security rises in value, the Fund may not
fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to both options on actual portfolio securities owned by the
Fund and options on stock indices, the Fund may enter into closing purchase
transactions. A closing purchase transaction is one in which the Fund, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Fund to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Fund may realize a net
gain or loss from a closing purchase transaction depending upon whether the net
amount of the original premium received on the call option is more or less than
the cost of effecting the closing purchase transaction. Any loss incurred in a
closing purchase transaction may be partially or entirely offset by the premium
received from a sale of a
B-5
<PAGE>
<PAGE>
different call option on the same underlying security. Such a loss may also be
wholly or partially offset by unrealized appreciation in the market value of the
underlying security. Conversely, a gain resulting from a closing purchase
transaction could be offset in whole or in part by a decline in the market value
of the underlying security.
If a call option expires unexercised, the Fund will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security, and the
proceeds of the sale of the security plus the amount of the premium on the
option, less the commission paid.
The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.
The Fund will write call options only on a covered basis, which means that
the Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected, the
Fund would be required to continue to hold a security which it might otherwise
wish to sell, or deliver a security it would want to hold. Options written by
the Fund will normally have expiration dates between one and nine months from
the date written. The exercise price of a call option may be below, equal to or
above the current market value of the underlying security at the time the option
is written.
B. Purchasing Put Options--The Fund may invest up to 2% of its total assets
in the purchase of put options. The Fund will, at all times during which it
holds a put option, own the security covered by such option.
The Fund intends to purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ('protective puts'). The ability to
purchase put options will allow the Fund to protect unrealized gain in an
appreciated security in its portfolio without actually selling the security. If
the security does not drop in value, the Fund will lose the value of the premium
paid. The Fund may sell a put option which it has previously purchased prior to
the sale of the securities underlying such option. Such sales will result in a
net gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put option which
is sold.
The Fund may sell a put option purchased on individual portfolio securities
or stock indices. Additionally, the Fund may enter into closing sale
transactions. A closing sale transaction is one in which the Fund, when it is
the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
Options on Stock Indices
A stock index assigns relative values to the common stocks included in the
index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have different
delivery requirements. Stock options provide the right to take or make delivery
of the underlying stock at a specified price. A stock index option gives the
holder the right to receive a cash 'exercise settlement amount' equal to (i) the
amount by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of exercise, multiplied by (ii) a fixed 'index multiplier.'
Receipt of this cash amount will depend upon the closing level of the stock
index upon which the option is based being greater than (in the case of a call)
or less than (in the case of a put) the exercise price of the option. The amount
of cash received will be equal to such difference between the closing price of
the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to the Fund on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, the Fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the stock so
included. Some stock index options are based on a broad market index such as the
Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such
B-6
<PAGE>
<PAGE>
as the AMEX Oil and Gas Index or the Computer and Business Equipment Index.
Options on stock indices are currently traded on the following Exchanges among
others: The Chicago Board Options Exchange, New York Stock Exchange and American
Stock Exchange.
The Fund's ability to hedge effectively all or a portion of its securities
through transactions in options on stock indices depends on the degree to which
price movements in the underlying index correlate with price movements in the
Fund's portfolio securities. Since the Fund's portfolio will not duplicate the
components of an index, the correlation will not be exact. Consequently, the
Fund bears the risk that the prices of the securities being hedged will not move
in the same amount as the hedging instrument. It is also possible that there may
be a negative correlation between the index or other securities underlying the
hedging instrument and the hedged securities which would result in a loss on
both such securities and the hedging instrument.
Positions in stock index options may be closed out only on an Exchange which
provides a secondary market. There can be no assurance that a liquid secondary
market will exist for any particular stock index option. Thus, it may not be
possible to close such an option. The inability to close options positions could
have an adverse impact on the Fund's ability to effectively hedge its
securities. The Fund will enter into an option position only if there appears to
be a liquid secondary market for such options.
The Fund will not engage in transactions in options on stock indices for
speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.
Foreign Securities
The Fund may invest in securities of foreign companies. However, the Fund
will not invest more than 25% of the value of its total assets, at the time of
purchase, in foreign securities (other than securities of Canadian issuers
registered under the Securities Exchange Act of 1934 or American Depository
Receipts, on which there are no such limits).
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Fund. Payment of
such interest equalization tax, if imposed, would reduce the Fund's rate of
return on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to the Fund by United States
corporations.
Investors should recognize that investing in foreign corporations involves
certain considerations, including those set forth below, which are not typically
associated with investing in United States corporations. Foreign corporations
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to United States
corporations. There may also be less supervision and regulation of foreign stock
exchanges, brokers and listed corporations than exist in the United States. The
Fund may be affected either unfavorably or favorably by fluctuations in the
relative rates of exchange as between the currencies of different nations and
exchange control regulations. Furthermore, there may be the possibility of
expropriation or confiscatory taxation, political, economic or social
instability or diplomatic developments which could affect assets of the Fund
held in foreign countries.
Rule 144A Securities
The Fund may invest in restricted securities, including securities eligible
for resale without registration pursuant to Rule 144A ('Rule 144A Securities')
under the Securities Act of 1933. Rule 144A permits many privately placed and
legally restricted securities to be freely traded among certain institutional
buyers such as the Fund. The Fund may invest no more than 10% of the value of
its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
Delaware Management the day-to-day function of determining whether or not
individual Rule 144A Securities are liquid for purposes of the Fund's 10%
limitation on investments in illiquid assets. The Board has instructed Delaware
Management to consider the following factors in determining the liquidity of a
Rule 144A Security: (i) the frequency of trades and trading volume for the
security; (ii) whether at least three dealers are willing to purchase or sell
the security and the number of potential purchasers; (iii) whether at least two
dealers are making a market in the security; (iv) the nature of the security and
the nature of the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of transfer).
B-7
<PAGE>
<PAGE>
If Delaware Management determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 10% limit on
investments in such securities, Delaware Management will determine what action
to take to ensure that the Fund continues to adhere to such limitation.
Portfolio Loan Transactions
The Fund may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
It is the understanding of Delaware Management that the staff of the
Securities and Exchange Commission permits portfolio lending by registered
investment companies if certain conditions are met. These conditions are as
follows:
1) each transaction must have 100% collateral in the form of cash, short-term
U.S. Government securities, or irrevocable letters of credit payable by banks
acceptable to the Fund from the borrower; 2) this collateral must be valued
daily and should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund; 3) the Fund must be
able to terminate the loan after notice, at any time; 4) the Fund must receive
reasonable interest on any loan, and any dividends, interest or other
distributions on the lent securities, and any increase in the market value of
such securities; 5) the Fund may pay reasonable custodian fees in connection
with the loan; 6) the voting rights on the lent securities may pass to the
borrower; however, if the Board of Directors knows that a material event will
occur affecting an investment loan, they must either terminate the loan in order
to vote the proxy or enter into an alternative arrangement with the borrower to
enable the directors to vote the proxy.
The majority risk to which the Fund would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, the Fund will only enter into loan arrangements
after a review of all pertinent facts by Delaware Management, under the
supervision of the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored by Delaware Management on an ongoing basis.
Investment Restrictions. The Fund is subject to the following investment
restrictions which may be changed only with the approval, by vote, of a majority
of the holders of the outstanding voting securities of the Fund, as defined by
the Investment Company Act of 1940, as amended (the '1940 Act'). The Fund may
not:
1. Invest more than 5% of the market or other fair value of its assets
in the securities of any one issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities).
2. Invest in securities of other investment companies, except as part
of a merger, consolidation or other acquisition.
3. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with the Fund's investment
objective and policies, are considered loans and except that the Fund may
loan up to 25% of its assets to qualified broker/dealers or institutional
investors for their use relating to short sales or other security
transactions.
4. Purchase or sell real estate, but this shall not prevent the Fund
from investing in securities secured by real estate or interests therein.
5. Purchase more than 10% of the outstanding voting and nonvoting
securities of any issuer, or invest in companies for the purpose of
exercising control or management.
6. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, the Fund may be
deemed to be an 'underwriter' as that term is defined in the Securities Act
of 1933.
7. Make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of
issuers all of which conduct their principal business activities in the same
industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
8. Write or purchase puts, calls or combinations thereof, except that
the Fund may write covered call options with respect to any or all parts of
its portfolio securities and purchase put options if the Fund owns the
security covered by the put option at the time of purchase and that premiums
paid on all put options outstanding do not
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exceed 2% of its total assets. The Fund may sell put options previously
purchased and enter into closing transactions with respect to covered call
and put options. In addition, the Fund may write call options and purchase
put options on stock indices and enter into closing transactions with
respect to such options.
9. Purchase securities on margin, make short sales of securities or
maintain a net short position.
10. Invest more than 5% of the value of its total assets in securities
of companies less than three years old. Such three-year period shall include
the operation of any predecessor company or companies.
11. Invest in warrants valued at lower of cost or market exceeding 5% of
the Fund's net assets. Included in that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York Stock Exchange
or American Stock Exchange.
12. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of the
Delaware Group Equity Funds IV, Inc. or of its investment manager if or so
long as the directors and officers of the Delaware Group Equity Funds IV,
Inc. and of its investment manager together own beneficially more than 5% of
any class of securities of such issuer.
13. Invest in interests in oil, gas or other mineral exploration or
development programs.
14. Invest more than 10% of the Fund's total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
15. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to
facilitate redemptions. The Fund has no intention of increasing its net
income through borrowing. Any borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In the event that such asset
coverage shall at any time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays) or such longer period as
the Securities and Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. The Fund will not
pledge more than 10% of its net assets. The Fund will not issue senior
securities as defined in the Investment Company Act of 1940, except for
notes to banks. Investment securities will not normally be purchased while
the Fund has an outstanding borrowing.
In addition, although not a fundamental investment restriction, the Fund
currently does not invest its assets in real estate limited partnerships.
Net Asset Value of the Fund Shares
The net asset value per share of Fund Shares is determined as of the close
of regular trading on the New York Stock Exchange (ordinarily 4:00 P.M. New York
time) on each 'business day,' defined as any day the New York Stock Exchange is
open for business, by subtracting the Fund's liabilities from its assets, and
then dividing the result by the total number of Fund Shares outstanding.
The determination of a Fund Shares' net asset value per share is made in
accordance with generally accepted accounting principles. Among other items, the
Fund's liabilities include accrued expenses and dividends payable, and its total
assets include portfolio securities valued at their market valued as well as
income accrued but not yet received. Securities for which market prices are
readily available are priced at market rates. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith and by a method approved by the officers of Delaware Group Equity
Funds IV, Inc. and in accordance with methods which are specifically authorized
by the Board of Directors of Delaware Group Equity Funds IV, Inc. Foreign
securities expressed in foreign currency values will be converted into U.S.
dollar values at the mean between the currencies' bid and offer quotations.
Short-term obligations with maturities of less than 60 days are valued at
amortized cost as reflecting fair value.
The Fund's Investment Manager
Pursuant to an investment management agreement dated April 3, 1995, Delaware
Management serves as the Fund's Investment Manager.
Delaware Management manages the Fund's portfolio and makes investment
decisions which are implemented by the Fund's Trading Department. Delaware
Management also pays the salaries of all the directors, officers and employees
of
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Delaware Group Equity Funds IV, Inc. who are affiliated with Delaware
Management. For these services, Delaware Management is paid an annual fee of
3/4 of 1% of the average daily net assets of the Fund, less all directors' fees
paid to the unaffiliated directors by the Fund. The Fund's fee is higher than
that paid by many other funds. The fee may be higher or lower than that paid by
funds with comparable investment objectives. Investment management fees paid by
the Fund for the fiscal year ended September 30, 1996 were 0.75% of average
daily net assets.
The Fund's Plan of Distribution
Delaware Distributors, L.P. ('Delaware Distributors') is the national
distributor for the Fund under a Distribution Agreement. The Fund has adopted a
distribution plan under Rule 12b-1 of the Investment Company Act of 1940 (the
'1940 Act') (the 'Plan') which permits the Fund to pay Delaware Distributors a
monthly fee for its services and expenses in distributing and promoting sales of
Fund Shares. These expenses include preparing and distributing advertisements,
sales literature, and prospectuses and reports used for sales purposes,
compensating sales and marketing personnel, holding special promotions for
specified periods of time, and paying distribution and maintenance fees to
brokers, dealers and other entities which sell Fund Shares, including 12b-1 fees
payable to the Sponsor. From time to time at the discretion of Delaware
Distributors, all registered broker/dealers whose aggregate sales of the Fund
Shares (as well as other classes of shares of the Fund) exceed certain limits as
set by Delaware Distributors, may receive from Delaware Distributors an
additional payment of up to .25% of the dollar amount of such sales. Delaware
Distributors may also provide additional promotional incentives or payments to
dealers that sell shares of the Delaware Group of funds, including Fund Shares.
In some instances, these incentives or payments may be offered only to certain
dealers who maintain, have sold or may sell certain amounts of shares.
Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group fund shares, including Fund
Shares, Delaware Distributors may, from time to time, pay to participate in
dealer-sponsored seminars and conferences, reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences and advertising
and may, from time to time, pay or allow additional promotional incentives to
dealers, which shall include non-cash concessions, such as certain luxury
merchandise or a trip to or attendance at a business or investment seminar at a
luxury resort, as part of preapproved sales contests. Payment of non-cash
compensation to dealers is currently under review by the National Association of
Securities Dealers, Inc. ('NASD') and the Securities and Exchange Commission. It
is likely that the NASD's Rules of Fair Practice will be amended such that the
ability of Delaware Distributors to pay non-cash compensation as described above
will be restricted in some fashion. Delaware Distributors intends to comply with
the NASD's Rules of Fair Practice as they may be amended.
In addition, the Fund may make payments directly to others, such as banks,
who aid in the distribution of Fund Shares or provide services to the Fund,
pursuant to service agreements with the Fund. The aggregate fees paid by the
Fund to Delaware Distributors and others under the Plan may not exceed .30% of
the average daily net assets attributable to Fund Shares in any year. The Fund
will not incur any distribution expenses beyond this limit, which may not be
increased without shareholder approval. Delaware Distributors may, however,
incur additional expenses and make additional payments to dealers from its own
resources to promote the distribution of Fund Shares (see 'Profit of Sponsor').
Pursuant to the exemptive order issued by the Securities and Exchange Commission
the Sponsor has agreed to pay to the Trust the 12b-1 fees it receives from
Delaware Distributors with respect to the Fund Shares held by the Trust. Fund
Shares held directly by an investor (other than the Trust) including Fund Shares
purchased pursuant to 'Reinvestment of Trust Distributions' will, however, be
subject to 12b-1 fees (see 'Reinvestment of Trust Distributions').
Risk of Investment in Units
Fund Shares will be deposited in the Trust pursuant to an exemptive order
issued by the Securities and Exchange Commission. Under the terms of the
exemptive order, the Sponsor has agreed to take certain steps to ensure that the
Trust's investment in Fund Shares is equitable to all parties and particularly
that the interests of the Unit Holders are protected. Accordingly, any sales
charges which would otherwise be applicable will be waived on Fund Shares sold
to the Trust, since the Sponsor is receiving the sales charge on all Units sold.
In addition, the Indenture requires the Trustee to vote all Fund Shares held in
the Trust in the same manner and ratio on all proposals as the vote of owners of
Fund Shares not held by the Trust.
The Fund's Shares may appreciate or depreciate in value (or pay dividends)
depending on the full range of economic and market influences affecting the
securities in which the Fund is invested and the success of the Fund's
management in
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anticipating or taking advantage of such opportunities as may occur. In
addition, in the event of the inability of Delaware Management to act and/or
claims or actions against the Fund by regulatory agencies or other persons or
entities, the value of the Fund Shares may decline thereby causing a decline in
the value of Units. Termination of the Fund prior to the Termination Date of the
Trust may result in the termination of the Trust sooner than anticipated. Prior
to a purchase of Units, investors should determine that the aforementioned risks
are consistent with their investment objectives.
The net asset value of the Fund's Shares, like the value of the Treasury
Obligations, will fluctuate over the life of the Trust and may be more or less
than the price paid therefor by the Trust. An investment in Units of the Trust
should be made with an understanding of the risks inherent in ownership of
equity securities since the portfolio of the Fund is invested in common stocks
and securities convertible into common stocks of companies that have a
demonstrated history of growth and which Delaware Management believes have the
potential to support continued growth. However, the Sponsor believes that, upon
termination of the Trust on the mandatory termination date, even if the Fund
Shares are worthless, the Treasury Obligations will provide sufficient cash at
maturity to equal $20.00 per Unit. Part of such cash will, however, represent
the accrual of taxable original issue discount on the Treasury Obligations.
A UNIT HOLDER PURCHASING A UNIT ON THE DATE OF THIS PROSPECTUS OR THEREAFTER
MAY RECEIVE TOTAL DISTRIBUTIONS, INCLUDING DISTRIBUTIONS MADE UPON TERMINATION
OF THE TRUST, THAT ARE LESS THAN THE AMOUNT PAID FOR A UNIT.
Sales of Securities in the Portfolio under certain permitted circumstances
may result in an accelerated termination of the Trust. It is also possible that,
in the absence of a secondary market for the Units or otherwise, redemptions of
Units may occur in sufficient numbers to reduce the portfolio to a size
resulting in such termination. In addition, the Trust may be terminated if the
net aggregate value of the Trust is less than 40% of the aggregate maturity
values of the Treasury Obligations calculated immediately after the most recent
deposit of Treasury Obligations in the Trust (see 'Amendment and Termination of
the Indenture--Termination'). Early termination of the Trust may have important
consequences to the Unit Holder; e.g., to the extent that Units were purchased
with a view to an investment of longer duration, the overall investment program
of the investor may require readjustment; or the overall return on investment
may be less than anticipated, and may result in a loss to a Unit Holder.
In the event of the early termination of the Trust, the Trustee will cause
the Fund Shares to be sold and the proceeds thereof distributed to the Unit
Holders in proportion to their respective interests therein, unless a Unit
Holder elects to receive Fund Shares 'in kind.' (See 'Amendment and Termination
of the Indenture--Termination.') Proceeds from the sale of the Treasury
Obligations will be paid in cash.
The Trustee will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of market variations
to improve a Unit Holder's investment but may dispose of Securities only under
limited circumstances. (See 'Sponsor--Responsibility').
To the best of the Sponsor's knowledge there was no litigation pending as of
the Date of Deposit in respect of any Security which might reasonably be
expected to have a material adverse effect on the Trust. At any time after the
Date of Deposit, litigation may be instituted on a variety of grounds with
respect to the Securities. The Sponsor is unable to predict whether any such
litigation may be instituted, or if instituted, whether such litigation might
have a material adverse effect on the Trust.
The Units
On a recent date, each Unit represented a fractional undivided interest in
the Securities and the net income of the Trust set forth under 'Summary of
Essential Information.' Thereafter, if any Units are redeemed by the Trustee,
the amount of Securities in the Trust will be reduced by amounts allocable to
redeemed Units, and the fractional undivided interest represented by each Unit
in the balance will be increased, although the actual interest in the Trust
represented by each Unit will remain unchanged. Units will remain outstanding
until redeemed upon tender to the Trustee by any Unit Holder (which may include
the Sponsor) or until the termination of the Trust itself (see 'Rights of Unit
Holders--Redemption' and 'Amendment and Termination of the
Indenture--Termination,' herein).
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TAX STATUS OF THE TRUST
In the opinion of Messrs. Cahill Gordon & Reindel, counsel for the Sponsor,
under existing law:
The Trust is not an association taxable as a corporation for United
States federal income tax purposes and income of the Trust will be treated
as income of the Unit Holders in the manner set forth below. Each Unit
Holder will be considered the owner of a pro rata portion of each asset of
the Trust under the grantor trust rules of Sections 671-678 of the Internal
Revenue Code of 1986, as amended (the 'Code').
Each Unit Holder will be required to include in his gross income, as
determined for federal income tax purposes, original issue discount with
respect to his pro rata portion of the Treasury Obligations held by the
Trust at the same time and in the same manner as though the Unit Holder were
the direct owner of such pro rata portion. Each Unit Holder will be
considered to have received the distributions paid on his pro rata portion
of the Fund Shares held in the Trust (including such portion of such
distributions used to pay fees and expenses of the Trust) when such
distributions are received or deemed to be received by the Trust. An
individual Unit Holder who itemizes deductions will be entitled to an
itemized deduction for his pro rata share of fees and expenses paid by the
Trust as though such fees and expenses were paid directly by the Unit
Holder, but only to the extent that this amount together with the Unit
Holder's other miscellaneous deductions exceeds 2% of his adjusted gross
income. A corporate Unit Holder will not be subject to this 2% floor.
Each Unit Holder will have a taxable event when a Security is disposed
of (whether by sale, exchange, redemption, or payment at maturity) or when
the Unit Holder redeems or sells his Units. The total tax cost of each Unit
to a Unit Holder must be allocated among the assets held in the Trust in
proportion to the relative fair market values thereof on the date the Unit
Holder purchases his Units.
The tax basis of a Unit Holder with respect to his interest in a Treasury
Obligation will be increased by the amount of original issue discount thereon
properly included in the Unit Holder's gross income as determined for Federal
income tax purposes.
The amount of gain recognized by a Unit Holder on a disposition of Fund
Shares or Treasury Obligations by the Trust will be equal to the difference
between such Unit Holder's pro rata portion of the gross proceeds realized by
the Trust on the disposition and the Unit Holder's tax basis in his pro rata
portion of the Fund Shares or Treasury Obligations disposed of, determined as
described in the preceding paragraphs. Any such gain recognized on a sale or
exchange and any such loss will be capital gain or loss, except that gain or
loss recognized by a financial institution with respect to a Treasury Obligation
or by a dealer with respect to Fund Shares or Treasury Obligations will be
ordinary income or loss. Any capital gain or loss arising from the disposition
of a Unit Holder's pro rata interest in a Security will be long-term capital
gain or loss if the Unit Holder has held his Units and the Trust has held the
Security for more than one year. A capital loss due to sale or redemption of a
Unit Holder's interest with respect to Fund Shares held in the Trust will be
treated as a long-term capital loss to the extent of any long-term capital gains
derived by the Unit Holder from such interest if the Unit Holder has held such
interest for six months or less. The holding period for this purpose will be
determined by applying the rules of Sections 246(c)(3) and (4) of the Code.
Under the Code, net capital gain (i.e., the excess of net long-term capital gain
over net short-term capital loss) of individuals, estates and trusts is subject
to a maximum nominal tax rate of 28%. Such net capital gain may, however, result
in a disallowance of itemized deductions and/or affect a personal exemption
phase-out.
If the Unit Holder sells or redeems a Unit for cash he is deemed thereby to
have disposed of his entire pro rata interest in all Trust assets represented by
the Unit and will have taxable gain or loss measured by the difference between
his per Unit tax basis for such assets, as described above, and the amount
realized.
Each Unit Holder's interest in each Treasury Obligation is treated as an
interest in an original issue discount obligation. The original issue discount
on each Treasury Obligation will be taxed as ordinary income for federal income
tax purposes and will be equal to the excess of the maturity value of the Unit
Holder's interest in the Treasury Obligation over its cost to the Unit Holder. A
Unit Holder will be required to include in gross income for each taxable year a
portion of this original issue discount and will be subject to income tax
thereon even though the income is not distributed. Original issue discount is
treated for federal income tax purposes as income earned under a constant
interest formula which takes into account the semi-annual compounding of accrued
interest, resulting in an increasing amount of original issue discount accruing
in each year.
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A Unit Holder who is neither a citizen nor a resident of the United States
and is not a United States domestic corporation (a 'foreign Unit Holder') will
not generally be subject to United States federal income taxes, including
withholding taxes, on his pro rata share of the original issue discount on the
Treasury Obligations held in the Trust, any gain from the sale or other
disposition of his, her or its pro rata interest in a Treasury Obligation or
Fund Share held in the Trust, any undistributed gain retained by the Fund and
designated by the Fund to be taken into account by its shareholders or any
capital gain dividend received by the Trust from the Fund, which original issue
discount is not effectively connected with the conduct by the foreign Unit
Holder of a trade or business within the United States and which gain is either
(I) not from sources within the United States or (II) not so effectively
connected, provided that:
(a) with respect to original issue discount (i) the Treasury Obligations
are in registered form and were issued after July 18, 1984, and (ii) the
foreign Unit Holder is not a controlled foreign corporation related (within
the meaning of Section 864(d)(4) of the Code) to Prudential Insurance
Company of America;
(b) with respect to any U.S.-source capital gain, the foreign Unit
Holder (if an individual) is not present in the United States for 183 days
or more during his or her taxable year in which the gain was realized and so
certifies; and
(c) the foreign Unit Holder provides the required certifications
regarding (i) his, her or its status, (ii) in the case of U.S.-source
income, the fact that the original issue discount or gain is not effectively
connected with the conduct by the foreign Unit Holder of a trade or business
within the United States, and (iii) if determined to be required, the
controlled foreign corporation matter mentioned in clause (a)(ii) above.
Fund distributions paid to foreign Unit Holders either directly or through the
Trust and not constituting income effectively connected with the conduct of a
trade or business within the United States by the distributee will be subject to
United States federal withholding taxes at a 30% rate or a lesser rate
established by treaty unless the Fund distribution is a capital gain dividend.
Foreign Unit Holders should consult their own tax counsel with respect to United
States tax consequences of ownership of Units.
Each Unit Holder (other than a foreign Unit Holder who has properly provided
the certifications described in the preceding paragraph) will be requested to
provide the Unit Holder's taxpayer identification number to the Trustee and to
certify that the Unit Holder has not been notified that payments to the Unit
Holder are subject to back-up withholding. If the taxpayer identification number
and an appropriate certification are not provided when requested, a 31% back-up
withholding will apply.
The Fund has elected to qualify for and intends to remain qualified for the
special tax treatment afforded regulated investment companies under the Code and
to meet applicable requirements with respect to its gross income,
diversification of holdings and distributions so that the Fund (but not the
Trust Unit Holders) will be relieved of Federal income tax on the amounts
distributed by the Fund to the Trust. Such distributions may include taxable net
investment income, net capital gain and the unreinvested proceeds of sales of
securities held by the Fund. It is also possible for the Fund to retain net
capital gains for investment, in which event the Fund will be subject to Federal
income tax on the retained amount; but may, as a regulated investment company,
designate the retained amount as undistributed capital gains in a notice to
those persons who were its shareholders (including the Trust and thus its Unit
Holders) at the close of the Fund's taxable year.
If the Fund were to so retain any net capital gains for investment, its
shareholders (including Trust Unit Holders) (a) would be required to include in
gross income for tax purposes, as long-term capital gains, their proportionate
shares of the undistributed net capital gain of the Fund, and (b) would be
deemed to have paid their proportionate shares of the tax paid by the Fund on
the undistributed net capital gain so that the amount of tax deemed paid by each
such shareholder would be credited against the shareholder's United States
federal income tax liability and a refund could be claimed to the extent that
credits exceeded such liability. For United States federal income tax purposes,
the basis of shares of the Fund owned by a shareholder of the Fund (including a
Trust Unit Holder) would be increased by an amount equal to 65% of the amount of
undistributed capital gains required to be so included in computing such Fund
shareholder's long-term capital gains.
Capital gain distributions, if any, made by the Fund, as a regulated
investment company, are taxable as long-term capital gain, regardless of how
long the Fund shareholder (including a Trust Unit Holder) has held the Fund's
shares, and are not eligible for the dividends received deduction available to
corporations. Other dividend distributions by the Fund may, depending upon
circumstances, be eligible for such dividends received deduction, in whole or in
part.
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Generally, dividends paid by the Fund, as a regulated investment company,
are treated as received by the Trust, and thus its Unit Holders, in the taxable
year in which the distribution is made by the Fund; however, any dividend
declared by the Fund in October, November or December of any calendar year,
payable to shareholders of record on a specified date in such a month and
actually paid during January of the following year, will be treated as received
on December 31 of the preceding year.
Non-taxable Fund distributions reduce the Unit Holder's tax cost basis with
respect to his interest in Fund Shares held by the Trust and are treated as a
gain from the sale of such interest if and to the extent that such distributions
exceed the tax cost basis of the Unit Holder with respect to his interest in
Fund Shares held by the Trust.
The Code places a floor of 2% of adjusted gross income on miscellaneous
itemized deductions, including investment expenses, of individuals (and estates
and trusts other than grantor trusts, to the extent provided in regulations).
The Code also directs the Secretary of the Treasury to issue regulations
prohibiting indirect deductions through a mutual fund or other pass-through
entity of amounts not allowable as a deduction under this rule if paid or
incurred directly by such an investor but such regulations are not to apply to
indirect deductions through a 'publicly offered regulated investment company,'
which the Fund is believed to be. The 2% floor rule will, however, apply in any
event to investment expenses of the Trust, as opposed to the Fund, and affected
Unit Holders should aggregate such expenses with their other miscellaneous
deductions in applying the 2% rule.
The Fund has filed its 1996 information returns as a 'publicly offered
regulated investment company.' The Trust cannot predict whether or not the Fund
will qualify as a 'publicly offered regulated investment company' for 1997 or
any later year. The term 'publicly offered regulated investment company' is
defined as meaning a regulated investment company the shares of which are
'continuously offered' or regularly traded on an established securities market
or 'held by or for no fewer than 500 persons at all times during the taxable
year.'
In addition, under the Code, the allowable amount of certain itemized
deductions claimed by individual taxpayers, including investment expenses, is
subject to an overall limitation applicable to individual taxpayers with
adjusted gross income in excess of a $117,950 threshold amount ($58,975 for a
married taxpayer filing separately). The $117,950 (or $58,975) threshold amount
will be indexed for inflation after 1996. The overall limitation reduces the
otherwise allowable amount of the affected itemized deductions by the lesser of
(i) 3% of the adjusted gross income in excess of the threshold amount or (ii)
80% of the amount of the otherwise allowable affected itemized deductions. The
other limitations contained in the Code on the deduction of itemized expenses,
including the 2% floor described above, are applied prior to this overall
limitation.
The Code also imposes a 4% excise tax on untaxed undistributed income of
regulated investment companies. If the Fund distributes in each calendar year an
amount equal to the sum of at least 98% of its ordinary income for such calendar
year and 98% of its capital gain net income for the 12 month period ended on
October 31 of each calendar year (or on December 31 if the Fund qualifies to so
elect and does so) and distributes an amount equal to the 2% balances not later
than the close of the succeeding calendar year, the Fund will not be subject to
this 4% excise tax. For purposes of this excise tax, any net long-term capital
gain in excess of net short-term capital loss retained by the Fund for any
fiscal year ending on or before the close of the calendar year but designated as
undistributed capital gains taxable to shareholders as described above is
treated as if distributed to the Fund's shareholders.
Further information with respect to the federal income tax consequences of
investment in Fund Shares may be found in the most recently available prospectus
with respect to the Fund Shares, a copy of which will be provided upon request
to the Trustee or Sponsor.
Interest paid by a Unit Holder other than a corporation on indebtedness
properly allocable to Units will be deductible as investment interest to the
extent permitted by Section 163(d) of the Code.
As of the end of each calendar year, the Trustee will furnish to each Unit
Holder an annual statement containing information relating to the dividends
(including capital gain dividends) received or deemed received, rebated 12b-1
fees received from the Sponsor, discount accrued on the Securities, the gross
proceeds received by the Trust from the disposition of any Security (resulting
from redemption or payment at maturity of any Security or the sale by the Trust
of any Security), and the fees and expenses paid by the Trust.
The foregoing discussion relates only to United States federal income taxes.
Unit Holders may be subject to state, local or foreign taxation.
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Investors should consult their tax counsel for advice with respect to their
own particular tax situations.
RETIREMENT PLANS
Units in the Trust may be suitable for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other qualified retirement plans.
Investors considering participation in any such plan should review the laws
specifically related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan.
PUBLIC OFFERING OF UNITS
Public Offering Price
The Public Offering Price of the Units during the initial offering period is
computed by adding to the aggregate offering side evaluation of the Treasury
Obligations the aggregate net asset value of Fund Shares in the Trust, dividing
such sum by the number of Units outstanding and then adding a sales charge of
5.25% of the Public Offering Price (5.541% of the net amount invested). Money in
the Income and Principal Accounts other than money required to redeem previously
tendered Units will be added to the Public Offering Price.
After the initial public offering period, the Public Offering Price of the
Units will be computed by adding to the aggregate bid side evaluation of the
Treasury Obligations the aggregate net asset value of Fund Shares in the Trust,
dividing such sum by the number of Units outstanding then adding a sales charge
of 5.25% of the Public Offering Price (5.541% of the net amount invested). Money
in the Income and Principal Accounts other than money required to redeem
previously tendered Units will be added to the Public Offering Price.
The Public Offering Price on the date of this Prospectus or on any
subsequent date will vary from the Public Offering Price as of the date set
forth in the 'Summary of Essential Information' in accordance with fluctuations
in the value of the Treasury Obligations and net asset value of the Fund Shares
in the Trust.
The Public Offering Price shall be determined for the Trust by the Evaluator
in the following manner: the aggregate value of the Units shall be determined
during the initial offering period, on the basis of the offering prices of the
Treasury Obligations (determined by the Evaluator) and the net asset value of
the Fund Shares as determined by Delaware Group DelCap Fund, Inc., and following
the initial offering period on the basis of the bid prices for the Treasury
Obligations (determined by the Evaluator) and the net asset value of the Fund
Shares as determined by Delaware Group DelCap Fund, Inc.
Public Distribution
During the initial public offering period (i) for Units issued on the Date
of Deposit and (ii) for additional Units issued after such date in respect of
additional deposits of Securities, Units will be distributed to the public by
the Sponsor and through dealers at the Public Offering Price, calculated on each
business day. The initial offering period is 30 days unless all Units are sold
prior thereto, whereupon the initial public offering period will terminate. The
initial public offering period may be extended by the Sponsor so long as
additional deposits are being made or Units remain unsold. Upon termination of
the initial offering period in each case unsold Units or Units acquired by the
Sponsor in the secondary market referred to below may be offered to the public
by this Prospectus at the then current Public Offering Price calculated daily.
The Sponsor intends to qualify Units in states selected by the Sponsor for
sale by the Sponsor and through dealers who are members of the National
Association of Securities Dealers, Inc. Sales to dealers will be made at prices
which include a concession per Unit as shown in the table below, but subject to
change from time to time at the discretion of the Sponsor. (Such price does not
include volume purchase discounts, which are available only to non-dealer
purchasers). The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
B-15
<PAGE>
<TABLE>
<CAPTION>
Percent of
Sales Charge
Number of Units Per Unit
- --------------------------------------------------------------------------------------------- ------------
<S> <C>
Less than 1,667 Units........................................................................ 68%
1,667-6,666 Units............................................................................ 68%
6,667-16,666 Units........................................................................... 68%
16,667-33,333 Units.......................................................................... 68%
33,334-66,666 Units.......................................................................... 68%
66,667 Units or more......................................................................... 68%
</TABLE>
Secondary Market
While not obligated to do so, it is the Sponsor's present intention to
maintain a secondary market for Units and to continuously offer to repurchase
Units from Unit Holders at the applicable Sponsor's Repurchase Price (see
'Summary of Essential Information'). The Sponsor's Repurchase Price is computed
by adding to the aggregate of the bid side evaluation of the Treasury
Obligations the net asset value of Fund Shares in the Trust, and cash on hand in
the Trust and dividends receivable on Fund Shares (other than cash deposited by
the Sponsor for the purchase of Securities) deducting therefrom amounts required
to redeem previously tendered Units and amounts required for distribution to
Unit Holders of record as of a date prior to the evaluation, accrued expenses of
the Trustee, Evaluator, and counsel, taxes and governmental charges, if any, and
any Reserve Account and then dividing the resulting sum by the number of Units
outstanding, as of the date of such computation. There is no sales charge
incurred when a Unit Holder sells Units back to the Sponsor. Any Units
repurchased by the Sponsor at the Sponsor's Repurchase Price may be reoffered to
the public by the Sponsor at the then current Public Offering Price. Any profit
or loss resulting from the resale of such Units will be for the account of the
Sponsor.
If the supply of Units exceeds demand (or for any other business reason),
the Sponsor may, at any time, occasionally, from time to time, or permanently,
discontinue the repurchase of Units of this Series at the Sponsor's Repurchase
Price, without notice. In such event, although under no obligation to do so, the
Sponsor may, as a service to Unit Holders, offer to repurchase Units at the
'Redemption Price,' a price based on the current bid prices for the Treasury
Obligations and the net asset value of the Fund Shares. Alternatively, Unit
Holders may redeem their Units through the Trustee.
Profit of Sponsor
The Sponsor receives a sales charge on the Units as indicated herein in the
chart below under 'Volume Discount.' Delaware Distributors will reimburse the
Sponsor for expenses incurred by the Sponsor in connection with the creation of
the Trust and the offering of units of the Trust in an amount not to exceed
$200,000. On the sale of Units to dealers, the Sponsor will retain the
difference between the dealer concession and the sale charge (see 'Public
Distribution,' herein).
The Sponsor may have also realized a profit (or sustained a loss) on the
deposit of the Treasury Obligations in the Trust representing the difference
between the cost of the Treasury Obligations to the Sponsor and the cost of the
Treasury Obligations to the Trust. The Sponsor will deposit all Fund Shares into
the Trust at net asset value. During the initial offering period, to the extent
additional Units continue to be issued and offered for sale to the public, the
Sponsor may realize additional profit (or sustain a loss) due to daily
fluctuations in the offering prices of the Treasury Obligations and in the net
asset value of the Fund Shares in the Trust and thus in the Public Offering
Price of Units received by the Sponsor. Cash, if any, received by the Sponsor
from the Unit Holders prior to the settlement date for purchase of Units or
prior to the payment for Securities upon their delivery may be used in the
Sponsor's business to the extent permitted by applicable regulations and may be
of benefit to the Sponsor.
The Sponsor may also realize profits (or sustain losses) while maintaining a
secondary market in the Units, in the amount of any difference between the
prices at which the Sponsor buys Units and the prices at which the Sponsor
resells such Units or the prices at which the Sponsor redeems such Units, as the
case may be.
Volume Discount
Although under no obligation to do so, the Sponsor intends to permit volume
purchasers of Units to purchase Units at a reduced sales charge. The Sponsor may
at any time upon prior notice to Unit Holders change the amount by which the
sales charge is reduced, or may discontinue the discount altogether.
B-16
<PAGE>
<PAGE>
The sales charges for the Trust in the primary and secondary market will be
reduced pursuant to the following graduated scale for sales to any person of at
least 1,667 units.
<TABLE>
<CAPTION>
Sales Charge
Primary and Secondary
Market
------------------------
Percent Percent
of Public of Net
Offering Amount
Number of Units Price Invested
- ------------------------------------------------------------------------------- --------- --------
<S> <C> <C>
Less than 1,667 Units.......................................................... 5.25% 5.541%
1,667-6,666 Units.............................................................. 5.00% 5.263%
6,667-16,666 Units............................................................. 4.50% 4.712%
16,667-33,333 Units............................................................ 4.00% 4.167%
33,334-66,666 Units............................................................ 3.00% 3.092%
66,667 Units or more........................................................... 2.00% 2.041%
</TABLE>
The reduced sales charges as shown on the chart above will apply to such
purchases of Units in any fourteen-day period which qualify for the volume
discount by the same person, including a partnership or corporation, other than
a dealer, in the amounts stated herein, and for this purpose, purchases of Units
of the Trust will be aggregated with concurrent purchases of Units of any other
trust that may be offered by the Sponsor.
Units held in the name of the purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed for the purposes hereof to be
registered in the name of the purchaser. The reduced sales charges are also
applicable to a trustee or other fiduciary, including a partnership or
corporation, purchasing Units for a single trust estate or single fiduciary
account.
Employee Discount
The Sponsor intends, at the discretion of the Sponsor, to permit employees
of Prudential Securities Incorporated and Delaware Management and their
respective subsidiaries and affiliates to purchase Units of the Trust at a price
based on the offering side evaluation of the Treasury Obligations and the net
asset value of Fund Shares in the Trust plus a reduced sales charge of $5.00 per
100 Units, subject to a limit of 5% of the Units.
EXCHANGE OPTION
Unit Holders may elect to exchange any or all of their Units of this Series
of the Government Securities Equity Trust for units of one or more of any other
series in the Prudential Securities Incorporated family of unit investment
trusts (except Series of Government Securities Equity Trust) or for any units of
any additional trusts that may from time to time be made available for such
exchange by the Sponsor (collectively referred to as the 'Exchange Trusts').
Such units may be acquired at prices based on reduced sales charges per unit.
The purpose of such reduced sales charge is to permit the Sponsor to pass on to
the Unit Holder who wishes to exchange Units the cost savings resulting from
such exchange of Units. The cost savings result from reductions in the time and
expense related to advice, financial planning and operational expense required
for the Exchange Option.
Exchange Trusts may have different investment objectives; a Unit Holder
should read the prospectus for the applicable Exchange Trust carefully to
determine its investment objective prior to exercise of this option.
This option will be available provided the Sponsor maintains a secondary
market in both the Units of this Series and units of the applicable Exchange
Trust and provided that units of the applicable Exchange Trust are available for
sale and are lawfully qualified for sale in the jurisdiction in which the Unit
Holder is a resident. While it is the Sponsor's present intention to maintain a
secondary market for the units of all such trusts, there is no obligation on its
part to do so. Therefore, there is no assurance that a market for units will in
fact exist on any given date on which a Unit Holder wishes to sell or exchange
his Units; thus there is no assurance that the Exchange Option will be available
to any Unit Holder. The Sponsor reserves the right to modify, suspend or
terminate this option at any time without further notice to Unit Holders. In the
event the Exchange Option is not available to a Unit Holder at the time he
wishes to exercise it, the Unit Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction from
the Unit Holder.
B-17
<PAGE>
<PAGE>
To exercise the Exchange Option, a Unit Holder should notify the Sponsor of
his desire to exchange his Units for one or more units of the Exchange Trusts.
If units of the applicable outstanding series of the Exchange Trust are at that
time available for sale, the Unit Holder may select the series or group of
series for which he desires his Units to be exchanged. The Unit Holder will be
provided with a current prospectus or prospectuses relating to each series in
which he indicates interest.
Units of the Exchange Trust trading in the secondary market maintained by
the Sponsor, if so maintained, will be sold to the Unit Holder at a price equal
to the evaluation price per unit of the securities in that portfolio and the
applicable sales charge of $15 per unit of the Exchange Trust. The reduced sales
charge for units of any Exchange Trust acquired during the initial offering
period for such units will result in a price for such units equal to the
offering side evaluation per unit of the securities in the Exchange Trust's
portfolio plus accrued interest plus a reduced sales charge of $25 per Exchange
Trust unit. The reduced sales charge for a unit holder of an Exchange Trust
exchanging into this Series of Government Securities Equity Trust will be $.23
per Unit for Units purchased in the secondary market and $.37 per Unit for Units
purchased during the initial offering period. Exchange transactions will be
effected only in whole units; thus, any proceeds not used to acquire whole units
will be paid to the exchanging Unit Holder unless the Unit Holder adds the
amount of cash necessary to purchase one additional whole Exchange Trust unit.
Owners of units of any registered unit investment trust, other than
Prudential Securities Incorporated sponsored trusts, which were initially
offered at a minimum applicable sales charge of 3.0% of the public offering
price exclusive of any applicable sales charge discounts, may elect to apply the
cash proceeds of sale or redemption of those units directly to acquire units of
any Exchange Trust trading in the secondary market at the reduced sales charge
of $20 per Unit, subject to the terms and conditions applicable to the Exchange
Option. To exercise this option, the owner should notify his retail broker. He
will be given a prospectus of each series in which he indicates interest, units
of which are available. The Sponsor reserves the right to modify, suspend or
terminate the option at any time without further notice, including the right to
increase the reduced sales charge applicable to this option (but not in excess
of $5 more per unit than the corresponding fee then charged for a unit of an
Exchange Trust which is being exchanged).
For example, assume that a Unit Holder, who has three units of a Trust with
a 4.25% sales charge and a current price of $1,100 per unit, sells his units and
exchanges the proceeds for units of a series of an Exchange Trust with a current
price of $950 per unit and an ordinary sales charge of 4.25%. The proceeds from
the Unit Holder's units will aggregate $3,300. Since only whole units of an
Exchange Trust may be purchased under the Exchange Option, the Holder would be
able to acquire four units in the Exchange Trust for a total cost of $3,860
($3,800 for units and $60 for the $15 per unit sales charge) by adding an extra
$560 in cash. Were the Unit Holder to acquire the same number of units at the
same time in the regular secondary market maintained by the Sponsor, the price
would be $3,968.68 [$3,800 for the units and $168.68 for the 4.25% sales charge
(4.439% of the net amount invested)].
Federal Income Tax Consequences
An exchange of Units pursuant to the Exchange Option will constitute a
'taxable event' under the Code, i.e., a Unit Holder will recognize gain or loss
at the time of the exchange except that upon an exchange of Units of this series
of the Government Securities Equity Trust for units of any other series of
Exchange Trusts which are grantor trusts for U.S. federal income tax purposes,
the Internal Revenue Service may seek to disallow any loss incurred upon such
exchange to the extent that the underlying securities in each trust are
substantially identical and the purchase of units of an Exchange Trust that
takes place less than thirty-one days after the sale of the Units. Unit Holders
are advised to consult their own tax advisors as to the tax consequences of
exchanging Units in their particular case. In particular, Unit Holders who
exchange Units of this series of the Government Securities Equity Trust for
units of any other series of Exchange Trusts within 91 days of acquisition of
the Units should consult their tax advisors as to the possible application of
Section 852(f) of the Code to the exchange.
REINVESTMENT OF TRUST DISTRIBUTIONS
Distributions by the Trust, if any, of dividend income received by the Trust
and 12b-1 fee amounts paid by the Sponsor, distributions of any net capital
gains received in respect of Fund Shares and proceeds of the sale of Fund Shares
not used to redeem Units will be made quarterly on or shortly after the
Quarterly Distribution Date to Unit Holders of record on the Quarterly Record
Date immediately preceding such Quarterly Distribution Date. A Unit Holder will
receive such amounts in cash unless such Unit Holder directs The Chase Manhattan
Bank, acting as distribution agent, to invest such amounts on behalf of the
participating Unit Holder in Fund Shares at such shares' net asset value which
B-18
<PAGE>
<PAGE>
shares will be subject to 12b-1 expenses. Investment in Fund Shares is
conditioned upon their lawful qualification for sale in the jurisdiction in
which the Unit Holder resides. There can be no assurance, however, that such
qualification will be obtained.
The appropriate prospectus will be sent to the Unit Holder. A Unit Holder's
election to participate in a reinvestment program will apply to all Units of the
Trust owned by such Unit Holder. The Unit Holder should read the prospectus for
the reinvestment program carefully before deciding to participate.
EXPENSES AND CHARGES
Initial Expenses
All expenses and charges incurred prior to or in the establishment of the
Trust were incurred by the Sponsor, Delaware Distributors and Delaware
Management.
Fees
The Trustee will receive for its services under the Indenture an annual fee
in the amount set forth in the 'Summary of Essential Information.'
For each evaluation of the Treasury Obligations in the Trust, the Evaluator
shall receive a fee as set forth in the 'Summary of Essential Information.'
The Trustee's fees and the Evaluator's fees are payable quarterly on or
before each Distribution Date from the Income Account, to the extent funds are
available therein and thereafter from the Principal Account. Any of such fees
may be increased without approval of the Unit Holders in proportion to increases
under the classification 'All Services Less Rent' in the Consumer Price Index
published by the United States Department of Labor. The Trustee also receives
benefits to the extent that it holds funds on deposit in various non-interest
bearing accounts created under the Agreement.
Other Charges
The following additional charges are or may be incurred by the Trust as more
fully described in the Indenture: (a) fees of the Trustee for extraordinary
services, (b) 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 by the Trustee to protect the Trust and
the rights and interests of the Unit Holders, (e) indemnification of the Trustee
for any loss, liability or expenses incurred by it in the administration of the
Trust without gross negligence, bad faith, willful misfeasance or willful
misconduct on its part or reckless disregard of its obligations and duties, (f)
indemnification of the Sponsor for any losses, liabilities and expenses incurred
in acting as Sponsor or Depositor under the Indenture without gross negligence,
bad faith, willful misfeasance or willful misconduct or reckless disregard of
its obligations and duties, (g) expenditures incurred in contacting Unit Holders
upon termination of the Trust and (h) to the extent then lawful, expenses
(including legal, auditing and printing expenses) of maintaining registration or
qualification of the Units and/or the Trust under federal or state securities
laws subsequent to initial registration so long as the Sponsor is maintaining a
market for the Units. The accounts of the Trust will be audited not less
frequently than annually by independent public accountants selected by the
Sponsor. The cost of such audit will be an expense of the Trust.
The fees and expenses set forth herein are payable out of the Trust and when
paid by or owing to the Trustee are secured by a lien on the Trust. If the cash
dividend, capital gains distributions and 12b-1 fee payments made by the Sponsor
to the Trust are insufficient to provide for amounts payable by the Trust, the
Trustee has the power to sell Fund Shares (not Treasury Obligations) to pay such
amounts. To the extent Fund Shares are sold, the size of the Trust will be
reduced and the proportions of the types of Securities will change. Such sales
might be required at a time when Fund Shares would not otherwise be sold and
might result in lower prices than might otherwise be realized. Moreover, due to
the minimum amount in which Fund Shares may be required to be sold, the proceeds
of such sales may exceed the amount necessary for the payment of such fees and
expenses. If the cash dividends, capital gains distributions and 12b-1 fee
payments made by the Sponsor to the Trust and proceeds of Fund Shares sold after
deducting the ordinary expenses are insufficient to pay the extraordinary
expenses of the Trust the Trustee has the power to sell Treasury Obligations to
pay such extraordinary expenses.
B-19
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B-20
<PAGE>
<PAGE>
Government Securities Equity Trust
REINVESTMENT APPLICATION
I/We hereby authorize and direct The Chase Manhattan Bank to apply all
distributions that I/we have elected to be reinvested as a registered
unitholder(s) of a Government Securities Equity Trust Series towards the
purchase of additional shares of the DelCap Fund A Class of the Concept I Series
of the Delaware Group DelCap Fund, Inc.
I/We hold Government Securities Equity Trust Series 5
(This Series can only reinvest into the DelCap Fund A Class of the
Concept I Series of the Delaware Group DelCap Fund, Inc.)
The authorization shall continue in effect until written notice of
revocation is given by the certificate holder or his personal representatives.
Name(s) in Which Unit Trust is Registered
Social Security or Tax Identification Number
Signature DATE
Signature of Joint Tenant (if any) DATE
My/Our Brokerage Firm Is:
My/Our Account Number Is:
Forward application to: The Chase Manhattan Bank
P.O. Box 888--Cooper Station
New York, NY 10276
<PAGE>
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<PAGE>
<PAGE>
RIGHTS OF UNIT HOLDERS
Certificates
Ownership of Units is evidenced by registered certificates executed by the
Trustee and the Sponsor. Certificates are transferable or interchangeable upon
presentation at the corporate trust office of the Trustee, properly endorsed or
accompanied by an instrument of transfer satisfactory to the Trustee and
executed by the Unit Holder or his authorized attorney, together with the
payment of $2.00, if required by the Trustee (not currently required), or such
other amount as may be determined by the Trustee and approved by the Sponsor,
and any other tax or governmental charge imposed upon the transfer of
Certificates. The Trustee will replace any mutilated, lost, stolen or destroyed
Certificate upon proper identification, satisfactory indemnity and payment of
charges incurred. Any mutilated Certificate must be presented to the Trustee
before any substitute Certificate will be issued.
Certain Limitations
The death or incapacity of any Unit Holder will not operate to terminate the
Trust nor entitle the legal representatives or heirs of such Unit Holder to
claim an accounting or to take any other action or proceeding in any court for a
partition or winding up of the Trust.
No Unit Holder shall have the right to vote except with respect to removal
of the Trustee or amendment and termination of the Trust as prescribed in the
Indenture (see 'Administration of the Trust--Amendment' and 'Administration of
the Trust--Termination' herein). Unit Holders shall have no right to control the
operation or administration of the Trust in any manner.
Distributions
The terms of the Treasury Obligations do not provide for periodic payment to
the holders thereof of the annual accrual of discount. To the extent that
dividends and/or 12b-1 fee payments from the Sponsor become payable with respect
to the Fund Shares held in the Trust, the Trustee will collect such amounts as
they become payable and credit such amounts to a separate Income Account created
pursuant to the Indenture. All other moneys received by the Trustee with respect
to the Fund Shares shall be credited to the Principal Account. Quarterly
distributions to each Unit Holder of record as of the immediately preceding
Quarterly Record Date will be made on the next following Quarterly Distribution
Date and shall consist of an amount substantially equal to such Unit Holder's
pro rata share of the distributable cash balances in the Income Account and the
Principal Account, if any, computed as of the close of business on such
Quarterly Record Date. No quarterly distribution will be made if the amount
available for distribution is less than $2.50 per 100 Units except that, no less
than once a year, on a Quarterly Distribution Date, the Trustee shall distribute
the entire cash balances in the Principal and Income Accounts. All funds
collected or received will be held by the Trustee in trust without interest to
Unit Holders as part of the Trust until required to be disbursed in accordance
with the provisions of the Indenture. Such funds will be segregated by separate
recordation on the trust ledger of the Trustee so long as such practice
preserves a valid preference of Unit Holders under the bankruptcy laws of the
United States, or if such preference is not preserved, the Trustee shall handle
such funds in such other manner as shall constitute the segregation and holding
thereof in trust within the meaning of the Investment Company Act of 1940, as
the same may be from time to time amended. To the extent permitted by the
Indenture and applicable banking regulations, such funds are available for use
by the Trustee pursuant to normal banking procedures.
The Trustee is authorized by the Indenture to withdraw from the Principal
Account to the extent funds are not sufficient in the Income Account such
amounts as it deems necessary to establish a reserve for any taxes or other
governmental charges that may be payable out of the Trust, which amounts will be
credited to a separate Reserve Account. If the Trustee determines that the
amount in the Reserve Account is greater than the amount necessary for payment
of any taxes or other governmental charges, it will promptly recredit the excess
to the Account from which it was withdrawn. In addition, the Trustee may
withdraw from the Income Account, to the extent available, that portion of the
Redemption Price which represents income. The balance paid on any redemption,
including income, if any, shall be withdrawn from the Principal Account of the
Trust to the extent that funds are available. If such available balance is
insufficient, the Trustee is empowered to sell Securities in order to provide
moneys for redemption of Units tendered. (See 'Rights of Unit
Holders--Redemption'.)
B-21
<PAGE>
<PAGE>
Reports and Records
With each distribution, the Trustee will furnish to the Unit Holders a
statement of the amount of dividends and other receipts, if any, distributed,
expressed in each case as a dollar amount per Unit.
Within a reasonable time after the end of each calendar year, the Trustee
will furnish to each person who was a Unit Holder of record at any time during
the calendar year a statement setting forth: (1) as to the Income Account:
dividends and other cash amounts received, deductions for payment of applicable
taxes and for fees and expenses of the Trust, redemptions of Units, and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (2) as to
the Principal Account: the dates of disposition and identity of any Securities
and the net proceeds received therefrom, deductions for payments of applicable
taxes and for fees and expenses of the Trust and redemptions of Units, and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (3) a list
of the Securities held and the number of Units outstanding on the last business
day of such calendar year; (4) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; (5) amounts actually
distributed during such calendar year from the Income Account and from the
Principal Account, separately stated, expressed both as total dollar amounts and
as dollar amounts representing the pro rata share of each Unit outstanding on
the last business day of such calendar year; and (6) an annual report of
original issue discount accrual.
The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of Unit
Holders, a current list of Securities in the portfolio and a copy of the
Indenture.
Redemption
Tender of Units
Units may be tendered to the Trustee for redemption at its corporate trust
office at 4 New York Plaza, New York, New York 10004, upon delivery of a request
for redemption and the Certificates for the Units requested to be redeemed and
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of the Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will be cancelled.
Certificates for Units to be redeemed must be properly endorsed or
accompanied by a written instrument of transfer, although redemptions without
the necessity of Certificate presentation will be effected for record Unit
Holders for whom Certificates have not been issued. Unit Holders must sign
exactly as their name appears on the face of the Certificate with the signature
guaranteed by an officer of a national bank or trust company or by a member firm
of either the New York, Midwest or Pacific Stock Exchanges or other financial
institution acceptable to the Trustee, if any. In certain instances the Trustee
may require additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority.
Within seven calendar days following such tender, or if the seventh calendar
day is not a business day, on the first business day prior thereto, the Unit
Holder will be entitled to receive in cash an amount for each Unit tendered
equal to the Redemption Price per Unit computed as of the Evaluation Time set
forth in the 'Summary of Essential Information' on the date of tender (see
'Redemption--Computation of Redemption Price per Unit'). The 'date of tender' is
deemed to be the date on which Units are received by the Trustee, except that as
regards Units received after the Evaluation time, the date of tender is the next
day on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
There is no sales charge incurred when a Unit Holder tenders his Units to
the Trustee for redemption. All amounts paid on redemption representing Income
will be withdrawn from the Income Account to the extent moneys are available;
all other amounts will be paid from the Principal Account. The Trustee is
required by the Indenture to sell Fund Shares and Treasury Obligations, to the
extent possible in the same ratio as the ratio of Fund Shares and Treasury
Obligations then held in the Trust, in order to provide moneys for redemption of
Units tendered. To the extent Securities are sold, the size of the Trust will be
reduced. Such sales could result in a loss to the Trust. The redemption of a
Unit for cash will constitute a taxable event for the Unit Holder under the Code
(see 'Tax Status of the Trust').
B-22
<PAGE>
<PAGE>
Purchase by the Sponsor of Units Tendered for Redemption
The Indenture requires that the Trustee notify the Sponsor of any tender of
Units for redemption. So long as the Sponsor is maintaining a bid in the
secondary market, the Sponsor, prior to the close of business on the second
succeeding business day, may purchase any Units tendered to the Trustee for
redemption at the price so bid by making payment therefor to the Unit Holder in
an amount not less than the Redemption Price and not later than the day on which
the Units would otherwise have been redeemed by the Trustee, i.e., the Unit
Holder will receive the Redemption Price from the Sponsor within 7 days of the
date of tender (see 'Public Offering of Units--Secondary Market'). Units held by
the Sponsor may be tendered to the Trustee for redemption as any other Units.
The price of any Units resold by the Sponsor will be the Public Offering Price
determined in the manner provided in this Prospectus (see 'Public Offering of
Units--Public Offering Price'). Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a reduction in the offering or redemption price subsequent to its
acquisition of such Units (see 'Public Offering of Units--Profit of Sponsor').
Computation of Redemption Price per Unit
The Redemption Price per Unit is determined as of the Evaluation Time on the
day any such determination is made. The Redemption Price is each Unit's pro rata
share, determined by the Trustee of the sum of:
(1) the aggregate bid side evaluation of the Treasury Obligations in the
Trust, as determined by the Evaluator and the net asset value of the Fund
Shares in the Trust determined as of the Evaluation Time set forth in the
'Summary of Essential Information'; and
(2) cash on hand in the Trust and dividends receivable on Fund Shares
(other than cash deposited by the Sponsor for the purchase of Securities);
less amounts representing (a) accrued taxes and governmental charges payable out
of the Trust, (b) the accrued expenses of the Trust, and (c) cash held with
respect to previously tendered Units or for distribution to Unit Holders of
record as of a date prior to the evaluation, and (d) any Reserve Account
('Redemption Price').
The right of redemption may be suspended and payment of the Redemption Price
per Unit postponed for more than seven calendar days following a tender of Units
for redemption for any period during which the New York Stock Exchange is
closed, other than for weekend and holiday closing, or trading on that Exchange
is restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or evaluation of
the Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Neither the Trustee nor
the Sponsor is liable to any person or in any way responsible for any loss or
damage that may result from any such suspension or postponement. The amount
realized by a Unit Holder upon any redemption of Units may be less than the
price paid by him for such Units.
SPONSOR
Prudential Securities Incorporated 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.
Prudential Securities Incorporated, a wholly-owned subsidiary of Prudential
Securities Group Inc. and an indirect wholly-owned subsidiary of The Prudential
Insurance Company of America, is engaged in the investment advisory business.
Prudential Securities Incorporated has acted as principal underwriter and
managing underwriter of other investment companies. In addition to participating
as a member of various selling groups or as an agent of other investment
companies, Prudential Securities Incorporated executes orders on behalf of
investment companies for the purchase and sale of securities of such companies
and sells securities to such companies in its capacity as a broker or dealer in
securities.
Prudential Securities Incorporated is distributor for series of Prudential
Government Securities Trust, The BlackRock Government Income Trust, Command
Government Fund, Command Money Fund, Command Tax-Free Fund, Global Utility Fund,
Inc., Nicholas-Applegate Fund, Inc., Prudential Allocation Fund, Prudential
California Municipal Fund, Prudential Distressed Securities Fund, Inc.,
Prudential Diversified Bond Fund, Inc., Prudential Dryden Fund, Prudential
Emerging Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity
Income Fund, Prudential Europe Growth Fund, Inc., Prudential Global Genesis
Fund, Inc., The Prudential Global Government Plus Fund, Inc., Prudential Global
Limited Maturity Fund, Inc., Prudential Global Natural Resources Fund, Inc., The
Global Total Return Fund, Inc., Prudential Government Income Fund, Prudential
High Yield Fund, Inc., Prudential Institutional Liquidity Portfolio, Inc.,
B-23
<PAGE>
<PAGE>
Prudential Intermediate Global Income Fund, Inc., Prudential Jennison Series
Fund, Inc., Prudential MoneyMart Assets, Inc., Prudential Mortgage Income Fund,
Inc., Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond Fund,
Prudential Municipal Series Fund, Prudential National Municipals Fund, Inc.,
Prudential Pacific Growth Fund, Inc., Prudential Small Companies Fund, Inc.,
Prudential Special Money Market Fund, Inc., Prudential Structured Maturity Fund,
Inc., Prudential Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc., and
Prudential World Fund, Inc.
On October 21, 1993, Prudential Securities Incorporated entered into an
omnibus settlement with the Securities and Exchange Commission ('SEC'), state
securities regulators (with the exception of the Texas Securities Commissioner
who joined the settlement on January 18, 1994) and the National Association of
Securities Dealers, Inc. ('NASD') to resolve allegations that from 1980 through
1990 Prudential Securities Incorporated sold certain limited partnership
interests in violation of securities laws to persons for whom such securities
were not suitable and misrepresented the safety, potential returns and liquidity
of these investments. Without admitting or denying the allegations asserted
against it, Prudential Securities Incorporated consented to the entry of an SEC
Administrative Order which stated that the conduct of Prudential Securities
Incorporated violated the federal securities laws, directed Prudential
Securities Incorporated to cease and desist from violating the federal
securities laws, pay civil penalties, and adopt certain remedial measures to
address the violations.
Pursuant to the terms of the SEC settlement, Prudential Securities
Incorporated agreed to the imposition of a $10,000,000 civil penalty,
established a settlement fund in the amount of $330,000,000 and procedures to
resolve legitimate claims for compensatory damages by purchasers of the
partnership interests. Prudential Securities Incorporated has agreed to provide
additional funds, if necessary, for the purpose of the settlement fund. The
settlement with the state securities regulators included an agreement to pay a
penalty of $500,000 per jurisdiction. Prudential Securities Incorporated
consented to a censure and to the payment of a $5,000,000 fine in settling the
NASD action.
In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that Prudential
Securities Incorporated committed fraud in connection with the sale of certain
limited partnership interests in violation of federal securities laws. An
agreement was simultaneously filed to defer prosecution of these charges for a
period of three years from the signing of the agreement, provided that
Prudential Securities Incorporated complies with the terms of the agreement. If,
upon completion of the three year period, Prudential Securities Incorporated has
complied with the terms of the agreement, no prosecution will be instituted by
the United States for the offenses charged in the complaint. If on the other
hand, during the course of the three year period, Prudential Securities
Incorporated violates the terms of the agreement, the U.S. Attorney can then
elect to pursue these charges. Under the terms of the agreement, Prudential
Securities Incorporated agreed, among other things, to pay an additional
$330,000,000 into the fund established by the SEC to pay restitution to
investors who purchased certain Prudential Securities Incorporated limited
partnership interests.
Limitations on Liability
The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Indenture, but will be under no liability to Unit
Holders for taking any action or refraining from any action in good faith or for
errors in judgment or responsible in any way for any default, failure or defect
in any Security or for depreciation or loss incurred by reason of the sale of
any Securities, except in cases of willful misfeasance, bad faith, gross
negligence or reckless disregard for its obligations and duties (see
'Sponsor--Responsibility').
Responsibility
The Trust is not a managed registered investment company. Securities will
not be sold by the Trustee to take advantage of ordinary market fluctuations.
Although the Sponsor and Trustee do not presently intend to dispose of
Securities, the Indenture permits the Sponsor to direct the Trustee to dispose
of any Security in the Trust for the purpose of redeeming Units tendered for
redemption and to dispose of Fund Shares to pay Trust expenses.
The proceeds resulting from the disposition of any Security in the Trust
will be distributed as set forth under 'Rights of Unit Holders--Distributions'
to the extent such proceeds are not utilized for the purpose of redeeming Units
or paying Trust expenses.
B-24
<PAGE>
<PAGE>
Resignation
If at any time the Sponsor shall resign under the Indenture or shall fail or
be incapable of performing its duties thereunder or shall become bankrupt or its
affairs are taken over by public authorities, the Indenture directs the Trustee
to either (1) appoint a successor Sponsor or Sponsors at rates of compensation
deemed reasonable by the Trustee not exceeding amounts prescribed by the
Securities and Exchange Commission, (2) act as Sponsor itself without
terminating the Trust or (3) terminate the Trust. The Trustee will promptly
notify Unit Holders of any such action. The Sponsor has agreed that any
successor Sponsor chosen must be reasonably acceptable to Delaware Management,
Delaware Distributors and Delaware Group DelCap Fund, Inc.
TRUSTEE
The Trustee is The Chase Manhattan Bank, a New York Bank with its principal
executive office at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, New York, New York 10004. The
Trustee is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System. In connection with the storage and handling of
certain Securities deposited in the Trust, the Trustee may use the services of
The Depository Trust Company. These services may include safekeeping of the
Securities and coupon-clipping, computer book-entry transfer and institutional
delivery services. The Depository Trust Company is a limited purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System and a clearing agency registered under the Securities
Exchange Act of 1934.
Limitations on Liability
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the disposition of any moneys, Securities or
Certificates or in respect of any evaluation or for any action taken in good
faith reliance on prima facie properly executed documents except in cases of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties. In addition, the Indenture provides that the Trustee
shall not be personally liable for any taxes or other governmental charges
imposed upon or in respect of the Trust which the Trustee may be required to pay
under current or future laws of the United States or any other taxing authority
having jurisdiction.
Responsibility
The Trustee shall not be liable for any default, failure or defect in any
Security or for any depreciation or loss by reason of any such sale of Fund
Shares or by reason of the failure of the Sponsor to give directions to the
Trustee.
Additionally, the Trustee may sell Securities designated by the Sponsor, or
if not so directed, in its own discretion, for the purpose of redeeming Units
tendered for redemption. Fund Shares will be sold first unless the Sponsor is
able to sell Treasury Obligations and Fund Shares in the proportionate
relationship between the maturity values of the Treasury Obligations and the
number of Fund Shares.
Amounts received by the Trust upon the sale of any Security under the
conditions set forth above will be deposited in the Principal Account when
received and to the extent not used for the redemption of Units will be
distributable by the Trustee to Unit Holders of record on the Quarterly Record
Date next prior to a Quarterly Distribution Date.
For information relating to the responsibilities of the Trustee under the
Indenture, reference is also made to the material set forth under 'Rights of
Unit Holders' and 'Sponsor--Resignation.'
Resignation
By executing an instrument in writing and filing the same with the Sponsor,
the Trustee and any successor may resign. In such an event the Sponsor is
obligated to appoint a successor trustee as soon as possible. If the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
as provided in the Indenture. The Sponsor may also remove the Trustee for any
other reason that the Sponsor determines to be in the best interest of the Unit
Holders. Such resignation or removal shall become effective upon the acceptance
of appointment by the successor trustee. If upon resignation of a trustee no
successor has been appointed and has accepted the appointment within thirty days
after notification, the retiring trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of a
trustee becomes effective only when the successor trustee accepts its
appointment as such or when a court of competent
B-25
<PAGE>
<PAGE>
jurisdiction appoints a successor trustee. A successor trustee has the same
rights and duties as the original trustee except to the extent, if any, that the
Indenture is modified as permitted by its terms.
EVALUATOR
The Evaluator is Kenny S&P Evaluation Services, a division of J.J. Kenny
Co., Inc., with main offices located at 65 Broadway, New York, New York 10006.
Limitations on Liability
The Trustee, Sponsor and Unit Holders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof.
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, Sponsor or Unit
Holders for errors in judgment. The Evaluator shall, however, be liable for its
own willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties under the Indenture.
Responsibility
The Indenture requires the Evaluator to evaluate the Treasury Obligations on
the basis of their bid prices on the last business day of June and December in
each year, on the day on which any Unit is tendered for redemption and on any
other day such evaluation is desired by the Trustee or is requested by the
Sponsor. For information relating to the responsibility of the Evaluator to
evaluate the Treasury Obligations, see 'Public Offering of Units--Public
Offering Price.'
Resignation
The Evaluator may resign or may be removed by the Sponsor, and the Sponsor
is to use its best efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment by the
successor Evaluator. If upon resignation of the Evaluator no successor accepts
appointment within thirty days after notice of resignation, the Evaluator may
apply to a court of competent jurisdiction for the appointment of a successor.
AMENDMENT AND TERMINATION OF THE INDENTURE
Amendment
The Indenture may be amended by the Trustee and the Sponsor without the
consent of Unit 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, and (c) to make such other provisions as
shall not adversely affect the interest of the Unit Holders; provided that the
Indenture may also be amended by the Sponsor and the Trustee with the consent of
Unit Holders evidencing 51% of the Units at the time outstanding for the
purposes of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any manner the rights
of Unit Holders. In no event shall the Indenture be amended, so as to increase
the number of Units issuable thereunder except as the result of the additional
deposits of Securities, to permit the deposit of Securities after the Date of
Deposit except in accordance with the terms and conditions of the Indenture as
initially adopted, to permit any other acquisition of securities or other
property by the Trustee either in addition to or in substitution for any of the
Securities on hand in the Trust or to permit the Trustee to vary the investment
of the Unit Holders or to empower the Trustee to engage in business or to engage
in investment activities not specifically authorized in the Indenture as
originally adopted; or so as to adversely affect the characterization of the
Trust as a grantor trust for Federal income tax purposes. In the event of any
amendment, the Trustee is obligated to promptly notify all Unit Holders of the
substance of such amendment.
Termination
The Trust may be terminated at any time by the consent of the holders of 51%
of the Units or by the Trustee upon the
direction of the Sponsor when the aggregate net value of all Trust assets as
shown by an evaluation made as described under 'Evaluator--Responsibility' is
less than 40% of the aggregate maturity values of the Treasury Obligations
deposited in the Trust on the Date of Deposit and subsequent thereto calculated
after the most recent deposit of Treasury Obligations in the Trust or if there
has been a material change in the Fund's objectives or if Replacement Treasury
Obligations are not acquired. However, in no event may the Trust continue beyond
the Mandatory Termination Date set
B-26
<PAGE>
<PAGE>
forth under 'Summary of Essential Information.' In the event of termination,
written notice thereof will be sent by the Trustee to all Unit Holders.
Within a reasonable period after termination, the Trustee will sell any
Securities remaining in the Trust (other than Fund Shares for which an in kind
distribution has been requested), and, after paying all expenses and charges
incurred by the Trust, will distribute to each Unit Holder, upon surrender for
cancellation of his Certificate for Units, his pro rata share of: (i) the amount
realized upon disposition of the Fund Shares unless the Unit Holder notifies the
Trustee in writing of his preference for distribution 'in kind,' (ii) the amount
realized upon the disposition or maturity of the Treasury Obligations and (iii)
any other assets of the Trust. A Unit Holder may invest the proceeds of the
Treasury Obligations in Fund Shares at such shares' net asset value, which shall
be subject to 12b-1 expenses. The sale of the Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time and, therefore, the amount realized by
a Unit Holder on termination may be less than the principal amount of Treasury
Obligations represented by the Units held by such Unit Holder.
Tax Impact of In Kind Distribution Upon Termination
Under the position taken by the Internal Revenue Service in Revenue Ruling
90-7, a distribution by the Trustee to a Unit Holder (or to his agent) of his
pro rata share of the Fund Shares in kind upon termination of the Trust will not
be a taxable event to the Unit Holder. Such Unit Holder's basis for Fund Shares
so distributed (other than any Fund Shares purchased with his pro rata share of
the proceeds of Treasury Obligations) will be equal to his basis for the same
Fund Shares (previously represented by his Units) prior to such distribution and
his holding period for such Fund Shares will be the shorter of the period during
which he held his Units and the period for which the Securities were held in the
Trust. A Unit Holder will have a taxable gain or loss, which will be a capital
gain or loss except in the case of a dealer or a financial institution, when the
Unit Holder disposes of such Securities in a taxable transfer.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Messrs.
Cahill Gordon & Reindel, a partnership including a professional corporation, 80
Pine Street, New York, New York 10005, as special counsel for the Sponsor.
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Portfolio Securities of
the Government Securities Equity Trust included in this Prospectus have been
examined by Deloitte & Touche LLP, certified public accountants, as stated in
their report appearing herein, and are included in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
B-27
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
No person is authorized to give any information or to make any
representations with respect to this investment company not contained in this
Prospectus; 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 a solicitation of an offer to buy, securities in any state to
any person to whom it is not lawful to make such offer in such state.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES EQUITY TRUST
Series 5
Table of Contents
Page
-----
<S> <C>
Summary of Essential Information........................ A-iv
Independent Auditors' Report............................ A-1
Statement of Financial Condition........................ A-2
Schedule of Portfolio Securities........................ A-8
The Trust............................................... B-1
Trust Formation..................................... B-1
Securities Selection................................ B-2
Stripped U.S. Treasury Obligations.................. B-2
Delaware Group Equity Funds IV, Inc.--DelCap Fund
series.............................................. B-3
General Information Regarding the Fund.............. B-3
Investment Strategies and Restrictions.............. B-5
Options on Stock Indices............................ B-6
Foreign Securities.................................. B-7
Rule 144A Securities................................ B-7
Portfolio Loan Transactions......................... B-8
Net Asset Value of the Fund Shares.................. B-9
The Fund's Investment Manager....................... B-9
The Fund's Plan of Distribution..................... B-10
Risk of Investment in Units......................... B-10
The Units........................................... B-11
Tax Status of the Trust................................. B-12
Retirement Plans........................................ B-15
Public Offering of Units................................ B-15
Public Offering Price............................... B-15
Public Distribution................................. B-15
Secondary Market.................................... B-16
Profit of Sponsor................................... B-16
Volume Discount..................................... B-16
Employee Discount................................... B-17
Exchange Option......................................... B-17
Federal Income Tax Consequences..................... B-18
Reinvestment of Trust Distributions..................... B-18
Expenses and Charges.................................... B-19
Initial Expenses.................................... B-19
Fees................................................ B-19
Other Charges....................................... B-19
Rights of Unit Holders.................................. B-21
Certificates........................................ B-21
Certain Limitations................................. B-21
Distributions....................................... B-21
Reports and Records................................. B-21
Redemption.......................................... B-22
Sponsor................................................. B-22
Limitations on Liability............................ B-23
Responsibility...................................... B-24
Resignation......................................... B-25
Trustee................................................. B-25
Limitations on Liability............................ B-25
Responsibility...................................... B-25
Resignation......................................... B-25
Evaluator............................................... B-26
Limitations on Liability............................ B-26
Responsibility...................................... B-26
Resignation......................................... B-26
Amendment and Termination of the Indenture.............. B-26
Amendment........................................... B-26
Termination......................................... B-26
Tax Impact of In Kind Distribution Upon
Termination......................................... B-27
Legal Opinions.......................................... B-27
Independent Auditors.................................... B-27
</TABLE>
Sponsor
(LOGO)
Prudential Securities Incorporated
One Seaport Plaza
199 Water Street
New York, New York 10292
Trustee
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Evaluator
Kenny S & P Evaluation Services
65 Broadway
New York, New York 10006
Fund Shares
Delaware Group Equity
Funds IV, Inc.--DelCap Fund series
1818 Market Street
Philadelphia, PA 19103
<PAGE>
This Post-Effective Amendment to the Registration Statement on
Form S-6 comprises the following papers and documents:
The facing sheet on Form S-6.
The Prospectus.
Signatures.
Consent of independent public accountants and consent of
evaluator; all other consents were previously filed.
The following Exhibits:
***Ex-3.(i) - Certificate of Incorporation of
Prudential Securities Incorporated
dated March 29, 1993.
*******Ex-3.(ii) - Revised By-Laws of Prudential
Securities Incorporated as amended
through June 21, 1996.
**Ex-4.a - Trust Indenture and Agreement dated
May 16, 1989.
*Ex-23 - Consent of Kenny S&P Evaluation
Services, a division of J.J. Kenny
Co., Inc. (as evaluator).
****Ex-24 - Powers of Attorney executed by a
majority of the Board of Directors
of Prudential Securities
Incorporated.
*Ex-27 - Financial Data Schedule.
Ex-99 - Information as to Officers and
Directors of Prudential Securities
Incorporated is incorporated by
reference to Schedules A and D of
Form BD filed by Prudential
Securities Incorporated pursuant to
Rules l5b1-1 and l5b3-1 under the
Securities Exchange Act of 1934
(1934 Act File No. 8-16267).
*****Ex-99.2 - Affiliations of Sponsor with other
investment companies.
*****Ex-99.3 - Broker's Blanket Policies, Standard
Form No. 14 in the aggregate amount
of $62,500,000.
******Ex-99.4 - Investment Advisory Agreement.
_________________________
* Filed herewith.
II-1
<PAGE>
** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
Government Securities Equity Trust Series 1, Registration
No. 33-25710.
*** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
Government Securities Equity Trust Series 5, Registration
No. 33-57992.
**** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
National Municipal Trust, Series 172, Registration No. 33-5468
and National Equity Trust, Top Ten Portfolio Series 3,
Registration No. 333-15919.
***** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
Prudential Unit Trusts, Insured Tax-Exempt Series 1,
Registration No. 2-89263.
****** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
National Municipal Trust, Insured Series 43, Registration No.
33-29314.
******* Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
National Municipal Trust, Series 186, Registration
No. 33-54697.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Government Securities Equity Trust Series 5 certifies that it
meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Registration Statement or amendment thereto to be signed
on its behalf by the undersigned thereunto duly authorized, in the City of
New York, and State of New York on the 25th day of July, 1997.
Government Securities Equity Trust Series 5
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By the following persons,* who
constitute a majority of the
Board of Directors of Prudential
Securities Incorporated
Robert C. Golden
Alan D. Hogan
A. Laurence Norton, Jr.
Leland B. Paton
Martin Pfinsgraff
Vincent T. Pica II
Hardwick Simmons
Lee B. Spencer, Jr.
By __/s/ Kenneth Swankie_____________
(Kenneth Swankie,
Senior Vice President,
Manager-Unit Investment
Trust Department, as
authorized signatory for
Prudential Securities
Incorporated and Attorney-
in-Fact for the persons
listed above)
_____________________
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF COUNSEL
The consent of counsel to the use of its name in the Prospectus
included in this Registration Statement is contained in its opinion filed
as Exhibit 5 to this Registration Statement.
II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report, dated July 7, 1997, accompanying the
financial statements of the Government Securities Equity Trust Series 5
included herein and to the reference to our Firm as experts under the
heading "Auditors" in the Prospectus which is a part of this registration
statement.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
July 25, 1997
New York, New York
II-5
<PAGE>
Exhibit 23
Letterhead of Kenny S&P Evaluation Services
(a division of J.J. Kenny Co., Inc.)
July 28, 1997
Prudential Securities Incorporated
1 New York Plaza
New York, NY 10292
Re: Government Securities Equity Trust
Post-Effective Amendment No. 4
Government Securities Equity Trust Series 5
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-57992 for the above-
captioned trust. We hereby acknowledge that Kenny S&P
Evaluation Services, a division of J.J. Kenny Co., Inc. is
currently acting as the evaluator for the trust. We hereby
consent to the use in the Registration Statement of the
references to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust
portfolio are the ratings currently indicated in our KENNYBASE
database as of the date of the evaluation report.
You are hereby authorized to file a copy of this
letter with the Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
Frank A. Ciccotto
Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR GOVERNMENT SECURITIES EQUITY TRUST
SERIES 5 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000897071
<NAME> GOVERNMENT SECURITIES EQUITY TRUST
SERIES 5
<SERIES>
<NAME> GOVERNMENT SECURITIES EQUITY TRUST
SERIES 5
<NUMBER> 1
<MULTIPLIER> 1
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-1-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 25,306,379
<INVESTMENTS-AT-VALUE> 25,625,739
<RECEIVABLES> 2,348
<ASSETS-OTHER> 15,174
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,643,261
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,819
<TOTAL-LIABILITIES> 3,819
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,308,593
<SHARES-COMMON-STOCK> 1,500,000
<SHARES-COMMON-PRIOR> 1,875,000
<ACCUMULATED-NII-CURRENT> 11,489
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 319,360
<NET-ASSETS> 25,639,442
<DIVIDEND-INCOME> 191,351
<INTEREST-INCOME> 0
<OTHER-INCOME> 1,128,281
<EXPENSES-NET> 25,021
<NET-INVESTMENT-INCOME> 1,294,611
<REALIZED-GAINS-CURRENT> 2,259,752
<APPREC-INCREASE-CURRENT> (3,084,523)
<NET-CHANGE-FROM-OPS> 469,840
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 207,919
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 1,607,109
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 375,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (8,204,937)
<ACCUMULATED-NII-PRIOR> 18,428
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
