<PAGE>
As filed with the Securities and Exchange Commission on January 20, 1995
Registration No. 33-65966
========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
___________________
A. Exact Name of Trust:
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
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).
____
/ X / immediately upon filing on January 20, 1995 pursuant to paragraph
(b);
_ _
/ / on (date) pursuant to paragraph (b);
__ _
/_ _/ 60 days after filing pursuant to paragraph (a);
__ _
/_ _/ on (date) pursuant to paragraph (a) of Rule 485.
__________________
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of securities. On August
26, 1994, the Registrant filed the Rule 24f-2 Notice for the
Registrant's most recent fiscal year.
<PAGE>
CUSIP: 383741600R
Government Securities Equity Trust Series 6
[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 Templeton Growth Fund,
Inc. (the "Fund"), an open-end, diversified, registered, management
investment company. The objective of the Fund is long-term capital
growth through a flexible policy of investing in stocks and debt
obligations of companies and governments of any nation. 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 This Prospectus For Future Reference.
Prospectus dated January 20, 1995
<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 6 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 ("Fund Shares") of the Templeton Growth Fund, Inc. (the "Fund"),
an open-end diversified, 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 fifteen 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 through a flexible
policy of investing in stocks and debt obligations of companies and
governments of any nation. The Fund may purchase and write covered put
and call options on securities indices that are traded on United States
and foreign exchanges; may invest up to 5% of its total assets in put or
call options on securities held in the Fund; may purchase and sell stock
index futures contracts up to an aggregate amount not exceeding 20% of
its total assets but may not at any time commit more than 5% of its
total assets to initial margin deposits on futures contracts; may invest
in preferred stocks and certain debt securities, rated or unrated, such
as convertible bonds and bonds selling at a discount. 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, $15.00 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 $15.00 since the capital protection is limited to
the aggregate maturity value per Unit of Treasury Obligations. As of the
date of the "Summary of Essential Information", the Public Offering
Price, including the sales charge, was approximately $11.19 per Unit and
consequently Unit Holders purchasing Units on such date could anticipate
realizing proceeds at maturity of the Treasury Obligations greater than
their initial investment of approximately $11.19 per Unit. 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 subsequent to the Date of Deposit. 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, which it
seeks to achieve through a flexible policy of investing in stocks and
debt obligations of companies and governments of any nation. The Fund
may invest in junk bonds and may utilize futures and options (see page
B-5) Any income realized will be incidental.
Although the Fund generally invests in common stock it may also
invest in preferred stocks and certain debt securities, rated or
unrated, such as convertible bonds and bonds selling at a discount.
Whenever, in the judgment of Templeton, Galbraith & Hansberger Ltd. (the
"Investment Manager"), market or economic conditions warrant, the Fund
may, for temporary defensive purposes, invest without limit in U.S.
Government securities, bank time deposits in the currency of any major
nation and commercial paper which, at the date of the investment, must
be rated A-1 by Standard & Poor's Corporation ("S&P") or Prime-1 by
Moody's Investors Service, Inc. ("Moody's") or, if not rated, issued by
a company which, at the date of investment, has an outstanding debt
issue rated AAA or AA by S&P or Aaa or Aa by Moody's, and purchase from
banks or broker-dealers Canadian or U.S. Government Securities with a
simultaneous agreement by the seller to repurchase them within no more
than seven days at the original purchase price plus accrued interest.
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 $15.00 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, 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 charge is reduced on a
graduated scale for sales involving at least 2,000 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.
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 Risk 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 securities in which the
Fund invests. (see Fund Risk Factors on pages B-8 and B-9). 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.
California Investors Only-Sales to individuals in California are
restricted to persons who have (i) annual income of at least $30,000 and
a net worth of at least $30,000, exclusive of home, home furnishings and
automobiles or (ii) net worth of at least $75,000, exclusive of home, home
furnishings and automobiles.
Portfolio Summary
$119,250,000 face amount of Treasury Obligations maturing on November
15, 2008 and 2,711,745 Fund Shares were held in the Trust. The Treasury
Obligations and the Fund Shares represented 48% and 52%, respectively, of
the total of the aggregate bid side evaluation of Treasury Obligations in
the Trust and the aggregate value of Fund Shares.
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
As of December 29, 1994 (1)
<TABLE>
<S> <C>
AGGREGATE MATURITY VALUE OF TREASURY OBLIGATIONS........ $119,250,000.00
AGGREGATE NUMBER OF FUND SHARES......................... 2,711,745
NUMBER OF UNITS......................................... 7,950,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST
REPRESENTED BY EACH UNIT.............................. 1/7,950,000
PUBLIC OFFERING PRICE
Aggregate bid side evaluation of Treasury
Obligations in the Trust.............................. $40,356,585.00
Aggregate value of Fund Shares(2)............... $43,903,151.55
Aggregate cash value............................... $ 47,388.14
Total........................................... $84,307,124.69
Divided by 7,950,000 Units.............................. 10.605
Plus sales charge of 5.25% of Public Offering Price
(5.541% of net amount invested)(4)................. .588
Public Offering Price per Unit(3)............... 11.193
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, $.588 less than Public Offering
Price per Unit)(2)...................................... $ 10.605
QUARTERLY RECORD DATES: February 1, May 1, August 1, November 1.
QUARTERLY DISTRIBUTION DATES:
February 15, May 15, August 15, November 15.
TRUSTEE'S ANNUAL FEE(5) (including estimated expenses and Evaluator's
fee) $1.67 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: November 15, 2008.
MINIMUM VALUE OF TRUST: The Trust may be terminated if the value of Trust
assets at any time is less than 40% of the aggregate maturity values of
Treasury Obligations calculated after the most recent deposit of Treasury
Obligations.
DATE OF DEPOSIT: October 20, 1993 (1)
</TABLE>
- -------------
(1) 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.
(2) Calculated by multiplying aggregate number of Fund Shares by the
current net asset value per share (excluding any sales load on the Fund
Shares).
(3) This Public Offering Price is computed as of December 29, 1994
and may vary from the Public Offering Pace on the date of this Prospectus
or any subsequent date.
(4) Certain transactions are entitled to a reduced sales charge.
(See "Public Offering of Units-Volume Discount".)
(5) Based on Trust size of 1,000,000 or fewer Units.
For an explanation of the management fees paid by the Fund see page
B-7.<PAGE>
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
THE UNIT HOLDERS, SPONSOR AND TRUSTEE
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
We have audited the statement of financial condition and schedule of
portfolio securities of the Government Securities Equity Trust Series 6 as
of September 30, 1994, and the related statements of operations and changes
in net assets for the period from October 20, 1993 (date of deposit) to
September 30, 1994. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.
Our procedures included confirmation of the securities owned as of
September 30, 1994 as shown in the statement of financial condition and
schedule of portfolio securities by correspondence with United States Trust
Company of New York, 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Government
Securities Equity Trust Series 6 as of September 30, 1994 and the results
of
its operations and the changes in its net assets for the period from
October 20, 1993 (date of deposit) to September 30, 1994 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
December 29, 1994
New York, New York
</AUDIT-REPORT>
A-1
<PAGE>
STATEMENT OF FINANCIAL CONDITION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1994
<TABLE>
TRUST PROPERTY
<S> <C>
Investments in Securities at market value
(amortized cost $97,403,439 including accreted
interest of $3,060,753) (Note (a) and Schedule
of Portfolio Securities Notes (4) and (5)) $90,034,809
Other receivable 21,503
Cash 64,795
Total 90,121,107
LIABILITY AND NET ASSETS
Less Liability:
Accrued Trust fees and expenses 9,707
Net Assets:
Balance applicable to 8,060,000 Units of fractional
undivided interest issued and outstanding (Note (c)):
Capital, less net unrealized market depreciation
of $7,368,630 $90,034,809
Undistributed principal and net investment
income (Note (b)) 76,591
Net assets $90,111,400
Net asset value per Unit
($90,111,400 divided by 8,060,000 Units) $ 11.1801
See notes to financial statements
</TABLE>
A-2
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
<CAPTION>
For the period from
October 20, 1993
(date of deposit)
to September 30, 1994
<S> <C>
Investment income:
Interest $ 3,060,753
Dividends (Note (a)(5)) 260,592
Other income 114,783
3,436,128
Less Expenses:
Trust fees and expenses 58,177
Total expenses 58,177
Investment income - net 3,377,951
Net loss on investments:
Long-term capital gain distributions received 440,701
Realized loss on securities sold or redeemed (208,295)
Net unrealized market depreciation (7,368,630)
Net loss on investments (7,136,224)
Net decrease in net assets resulting from operations $(3,758,273)
See notes to financial statements
</TABLE>
A-3
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
<CAPTION>
For the period from
October 20, 1993
(date of deposit)
to September 30, 1994
<S> <C>
Operations:
Investment income - net $ 3,377,951
Capital gain distributions received 440,701
Realized loss on securities sold or redeemed (208,295)
Net unrealized market depreciation (7,368,630)
Net decrease in net assets resulting
from operations (3,758,273)
Less Distributions to Unit Holders:
Principal (434,720)
Investment income - net (234,840)
Total distributions (669,560)
Capital share transactions:
Creation of 8,270,000 additional Units 96,881,533
Redemption of 310,000 Units (3,520,322)
Income distribution on redemption (1,677)
Net capital share transactions 93,359,534
Net increase in net assets 88,931,701
Net assets:
Beginning of period 1,179,699
End of period (including undistributed principal and
net investment income of $76,591) $90,111,400
See notes to financial statements
</TABLE>
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1994
(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 the 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 of 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 (October 20,
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
As a Unit Investment Trust, the Trust is organized as a Grantor
Trust and is not an association taxable as a corporation for
Federal income tax purposes; accordingly, no provision is required
for such taxes.
(4) Expenses
The Trust pays an annual Trustee's fee, estimated expenses,
Evaluator's fees, and an annual Sponsor's portfolio supervision
fee, and may incur additional charges as explained under "Expenses
and Charges" in Part B of this Prospectus.
A-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1994
(5) Investment Income
Included in dividends is a short-term capital gain distribution
received of $77,771.
(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 September 30, 1994 follows:
<S> <C>
Original cost to investors $103,209,447
Less: Gross underwriting commissions (sales charge) (5,148,215)
Net cost to investors 98,061,232
Cost of securities sold or redeemed (3,718,546)
Net unrealized market depreciation (7,368,630)
Accumulated interest accretion 3,060,753
Net amount applicable to investors $ 90,034,809
(d) OTHER INFORMATION
</TABLE>
<TABLE>
Selected data for a Unit of the Trust during the period:
<CAPTION>
For the period from
October 20, 1993
(date of deposit)
to September 30, 1994
<S> <C>
Capital gain distributions received during
period $ .0580
Principal distributions during period $ .0572
Net investment income distributions during
period $ .0309
Net asset value at end of period $ 11.1801
Trust Units outstanding at end of period 8,060,000
</TABLE>
A-6
<PAGE>
<TABLE>
SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1994
<CAPTION>
Name of Issuer/Title of Portfolio Face Amount/ Market
Security <F1> Number of Shares Value<F4><F5>
<C> <S> <C> <C>
1. Stripped United States Treasury
Obligations Maturing on
November 15, 2008 <F2> $120,900,000 $39,118,404
2. Shares of the Templeton Growth
Fund, Inc. ($18.52 per
Fund Share) <F3> 2,749,266 50,916,405
$90,034,809
A-7
<PAGE>
NOTES TO SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1994
<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 Templeton, Galbraith &
Hansberger, Ltd.
<F4> The market value of the Treasury Obligations as of September 30,
1994 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 September 30, 1994, the net unrealized market depreciation of
Securities was comprised of the following:
Gross unrealized market appreciation $ 4,108,888
Gross unrealized market depreciation (11,477,518)
Net unrealized market depreciation $(7,368,630)
The amortized cost of the Securities for Federal income tax
purposes was $97,403,439 at September 30, 1994.
A-8
PAGE
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 6
THE TRUST
The Government Securities Equity Trust Series 6 (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 (the "Trustee") and Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc. (the "Evaluator"). 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 ("Fund
Shares") of Templeton Growth Fund, Inc. (the "Fund") an open-end,
diversified, registered, management investment company. The Fund's
investment objective is long-term capital growth through a flexible policy
of investing in stocks and debt obligations of companies and governments
of any nation (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.
On the Date of Deposit, 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 $15.00 even if the value
of the Fund Shares were to decline to zero. 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 $15.00 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
* Reference is hereby made to said Indenture and any statements contained
herein are qualified in their entirety by the provisions of said Indenture.
<PAGE>
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.
Notwithstanding the availability of the above-mentioned irrevocable
letter(s) of credit, it is expected that the Sponsor will pay for the
Securities as the contracts for their purchase become due. A substantial
portion of such contracts have not become due by the date of this
Prospectus. To the extent Units are sold prior to the settlement of such
contracts, the Sponsor will receive the purchase price of such Units prior
to the time at which it pays for Securities pursuant to such contracts and
have the use of such funds during this period.
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 such 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. The Sponsor will
execute orders to purchase in the order it determines that they are
received, i.e., orders received first will be filled first except that
indications of interest prior to the effectiveness of the registration of
the offering of trust Units which become orders upon effectiveness will be
accepted according to the order in which the indications of interest were
received.
On the Date of Deposit the Trust consisted of the Securities listed
under "Schedule of Portfolio Securities," herein or contracts to acquire
such Securities together with a letter of credit to provide the amount
necessary to complete the purchase of such Securities. Neither the Sponsor
nor any affiliate of the Sponsor will be liable in any way for any default,
failure or defect in any Securities.
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 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 Franklin/Templeton Distributors, Inc. 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.
Templeton Growth Fund, Inc.
The portfolio of the Trust also contains shares (the "Fund Shares")
of the Templeton Growth Fund, Inc. (the "Fund"). On August 31, 1994, the
net assets of the Fund were $5,611,560,380. The Fund has retained an
investment manager, Templeton, Galbraith & Hansberger Ltd. (the
"Investment Manager").
The Fund's investment objective is long-term capital growth through
a flexible policy of investing in stocks and debt obligations of
companies and governments of any nation. Any income realized will be
incidental.
Although the Fund generally invests in common stock, it may also
invest in preferred stocks and certain debt securities, rated or
unrated, such as convertible bonds and bonds selling at a discount.
Whenever, in the judgment of the Investment Manager, market or economic
conditions warrant, the Fund may, for temporary defensive purposes,
invest without limit in U.S. Government securities, bank time deposits
in the currency of any major nation and commercial paper, and purchase
from banks or broker-dealers Canadian or U.S. Government securities with
a simultaneous agreement by the seller to repurchase them within no more
than seven days at the original purchase price plus accrued interest.
The Fund may invest no more than 5% of its total assets in
securities issued by any one company or government, exclusive of U.S.
Government securities. Although the Fund may invest up to 25% of its
assets in a single industry, it has no present intention of doing so.
The Fund may not invest more than 5% of its assets in warrants
(exclusive of warrants acquired in units or attached to securities) nor
more than 10% of its assets in securities with a limited trading market.
The investment objective and policies described above, as well as most
of the investment restrictions which the fund is subject to, cannot be
changed without the approval of holders of Fund Shares (the "Share-
holders"). The Fund invests for long-term growth of capital and does not
intend to place emphasis upon short-term trading profits. Accordingly,
the Fund expects to have a portfolio turnover rate of less than 50%.
The Fund may also purchase and sell stock index futures contracts
up to an aggregate amount not exceeding 20% of its total assets. In
addition, in order to increase its return or to hedge all or a portion
of its portfolio investments, the Fund may purchase and sell put and
call options on securities indices. These investment techniques are
described below and under the heading "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, N.A. is the custodian of the Fund's
assets. Franklin Templeton Investor Services, Inc. serves as the Fund's
dividend disbursing and transfer agent. Templeton Global Investors, Inc.
performs certain administrative functions for the Fund. The Fund's
prospectus is available upon request.
General Information Regarding the Fund
The Fund intends normally to pay a dividend at least once annually
representing substantially all of its net investment income (which
includes, among other items, dividends and interest) and to distribute at
least annually any realized capital gains. By so doing and meeting certain
diversification of assets and other requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), the Fund intends to qualify annually
as a regulated investment company under the Code. The status of the Fund
as a regulated investment company does not involve government supervision
of management or of its investment practices or policies. As a regulated
investment company, the Fund generally will be relieved of liability for
United States Federal income tax on that portion of its net investment
income and net realized capital gains which it distributes to its
Shareholders. Amounts not distributed on a timely basis in accordance with
a calendar year distribution requirement also are subject to a
nondeductible 4% excise tax. To prevent application of the excise tax, the
Fund intends to make distributions in accordance with the calendar year
distribution requirement. 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").
<PAGE>
SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout the periods indicated)
Shown below for the periods indicated are per share
income and capital changes for a share outstanding throughout the periods
indicated ("per share information") of the Fund.
</TABLE>
<TABLE>
Year Ended August 31,
<S> <C> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989 1988
Investment income
(net of foreign
tax withheld) $ .48 $ .54 $ .56 $ .67 $ .67 $.54
Operating
expenses
(excluding
taxes on
income) .16 .13 .11 .10 .09 .09
Income taxes -- -- -- -- -- --
Total
expenses .16 .13 .11 .10 .09 .09
Net
investment
income .32 .41 .45 .57 .58 .45
Dividends from net
investment
income (.36) (.44) (.54) (.62) (.48) (.44)
Net realized and
unrealized
gain (loss) 2.97 .92 1.68 (.87) 3.12 (2.41)
Distributions from
net realized
capital gains (1.27) (1.22) (.68) (.47) (.25) (1.08)
Net increase
(decrease) in net
asset value 1.66 (.33) .91 (1.39) 2.97 (3.48)
Net asset value
at beginning
of period 15.81 16.14 15.23 16.62 13.65 17.13
Net asset value at
end of period $17.47 $15.81 $16.14 $15.23 $16.62 $13.65
Ratio to average
net assets:
Operating expense
(excluding
taxes on income) 1.03% 0.88% 0.75% 0.67% 0.66% 0.69%
Total expenses
(including
taxes on income) 1.03% 0.88% 0.75% 0.67% 0.66% 0.69%
Net investment
income 2.10% 2.62% 3.09% 3.70% 4.20% 3.50%
Portfolio turnover
rate 28.89% 24.46% 30.28% 18.47% 11.55% 11.44%
Number of shares
outstanding at
end of period
(000's) 230,953 206,707 179,455 162,005 141,682 115,192
<CAPTION>
Pro Forma*
Eight Eight
Months Months
Ended Ended
August December Year Ended Year Ended
31, 31, April 30, April 30,
1987 1986 1986 1985
<C> <S> <S> <S> <S>
Investment income (net
of foreign tax withheld) $ .35 $ .31 $ .42 $ .50
Operating expenses
(excluding
taxes on income) .06 .05 .07 .07
Income taxes -- .12 .16 .20
Total expenses .06 .17 .23 .27
Net investment income .29 .14 .19 .23
Dividends from net
investment income -- (.40) (.24) (.19)
Net realized and unrealized
gain (loss) 3.97 .28 3.72 .83
Distributions from net
realized capital gains -- (.48) (.48) (.29)
Net increase (decrease)
in net asset value 4.26 (.46) 3.19 .58
Net asset value at
beginning of period 12.87 13.33 10.14 9.56
Net asset value at
end of period $17.13 $12.87 $13.33 $10.14
Ratio to average
net assets:
Operating expense
(excluding
taxes on income) 0.66%** 0.83%** 0.73% 0.77%
Total expenses (including
taxes on income) 0.66%** 2.40%** 2.50% 2.97%
Net investment income 2.99%** 1.76%** 2.11% 2.66%
Portfolio turnover rate 17.55% 9.50% 23.00% 20.41%
Number of shares
outstanding at end of
period (000's) 95,376 86,022 75,742 58,724
</TABLE>
____________________
* The Fund commenced operations on December 31, 1986 as successor
in interest to 58% of Templeton Growth Fund, Ltd. (the "Canadian Fund")
which reorganized into two funds on that date. In accordance with the
terms of the reorganization, the Canadian shareholders, representing 42%
of the shares outstanding, remained shareholders of the Canadian Fund and
the non-Canadian shareholders, representing 58% of the shares outstanding,
became shareholders of the Fund. The per share table is presented as if
the reorganization took place as of the inception of the Canadian Fund, 58%
of the net assets and shares outstanding were allocated to the Fund and the
Fund continued to operate in Canada subject to canadian federal and
provincial taxes until December 31, 1986. No other pro forma adjustments
have been made for any changes in operating costs had the reorganization
taken place at that date. Since the table is on the basis of
a single share outstanding throughout the period, the results illustrated,
except for the number of shares outstanding at the end of each year, are
the same as those shown for the Canadian Fund.
** Annualized.
<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 the Investment
Manager. In accordance with the judgment of the Investment Manager, the
proportions of the Fund's assets invested in particular industries and
countries will vary from time to time.
In addition, from time to time, the Fund may also engage in the
following investment techniques:
Repurchase Agreements. When the Fund acquires a security from a U.S.
bank or a registered broker-dealer, it may simultaneously enter into a
repurchase agreement, wherein the seller agrees to repurchase the security
at a specified time and price. The repurchase price is in excess of the
purchase price by an amount which reflects an agreed-upon rate of return,
which is not tied to the coupon rate of the underlying security. Under the
1940 Act, repurchase agreements are considered to be loans collateralized
by the underlying security and therefore will be fully collateralized.
However, if the seller should default on its obligation to repurchase the
underlying security, the Fund may experience delay or difficulty in
exercising its rights to realize upon the security and might incur a loss
if the value of the security declines, as well as costs in liquidating the
security.
Options on Indices. The Fund may purchase and write (i.e.,sell) put
and call options on securities indices that are traded on United States and
foreign exchanges or in the over-the-counter markets. An option on a
securities index permits the purchaser of the option, in return for the
premium paid, the right to receive from the seller cash equal to the
difference between the closing price of the index and the exercise price
of the option. The Fund may write a put or a call option only if the option
is "covered." This means that so long as the Fund is obligated as the
writer of an option, it will maintain with its custodian cash or cash
equivalents equal to the contract value (in the case of call options) or
exercise price (in the case of put options). The Fund will not purchase put
or call options if the aggregate premium paid for such options would exceed
5% of its total assets.
Stock Index Futures Contracts. For hedging purposes only, the Fund may
purchase and sell stock index futures contracts up to an aggregate amount
not exceeding 20% of its total assets. A stock index futures contract is
an agreement under which two parties agree to take or make delivery of an
amount of cash based on the difference between the value of a stock index
at the beginning and at the end of the contract period. When the Fund
enters into a stock index futures contract, it must make an initial
deposit, known as "initial margin," as a partial guarantee of its
performance under the contract. As the value of the stock index fluctuates,
either party to the contract is required to make additional margin
deposits, known as "variation margin" to cover any additional obligation
it may have under the contract. In addition, when the Fund enters into a
futures contract, it will segregate assets or "cover" its position in
accordance with the 1940 Act. The Fund may not at any time commit more than
5% of its total assets to initial margin deposits on futures contracts.
Loans of Portfolio Securities. The Fund may lend to banks and broker-
dealers portfolio securities with an aggregate market value of up to one-
third of its total assets to generate income. Such loans must be secured
by collateral (consisting of any combination of cash, U.S. Government
securities or irrevocable letters of credit) in an amount at least equal
(on a daily marked-to-market basis) to the current market value of the
securities loaned. The Fund may terminate the loans at any time and obtain
the return of the securities loaned within five business days. The Fund
will continue to receive any interest or dividends paid on the loaned
securities and will continue to retain any voting rights with respect to
the securities.
Investment Restrictions. The Fund has imposed upon itself certain
Investment Restrictions, which together with the investment objective and
policies are fundamental policies except as otherwise indicated. No changes
in the Fund's investment objective and policies or Investment Restrictions
(except those which are not fundamental policies) can be made without
approval of the Shareholders. For this purpose, the provisions of the 1940
Act require the affirmative vote of the lesser of either (A) 67% or more
of the Shares present at a Shareholders' meeting at which more than 50% of
the outstanding Shares are present or represented by proxy or (B) more than
50% of the outstanding Shares of the Fund.
In accordance with these Restrictions, the Fund will not:
1. Invest in real estate or mortgages on real estate (although
the Fund may invest in marketable securities secured by real estate
or interests therein or issued by companies or investment trusts which
invest in real estate or interests therein); invest in interests
(other than debentures or equity stock interests) in oil, gas or other
mineral exploration or development programs; purchase or sell
commodity contracts except stock index futures contracts; invest in
other open-end investment companies or, as an operating policy
approved by the Board of Directors, invest in closed-end investment
companies.
2. Purchase or retain securities of any company in which
Directors or Officers of the Fund or of its Investment Manager,
individually owning more than 1/2 of 1% of the securities of such
company, in the aggregate own more than 5% of the securities of such
company.
3. Purchase more than 10% of any class of securities of any
one company, including more than 10% of its outstanding voting
securities, or invest in any company for the purpose of exercising
control or management.
4. Act as an underwriter; issue senior securities; purchase on
margin or sell short; write, buy or sell puts, calls, straddles or
spreads (but the Fund may make margin payments in connection with, and
purchase and sell, stock index futures contracts and options on
securities indices).
5. Loan money, apart from the purchase of a portion of an
issue
of publicly distributed bonds, debentures, notes and other evidences
of indebtedness, although the Fund may buy Canadian and United States
Government obligations with a simultaneous agreement by the seller to
repurchase them within no more than seven days at the original
purchase pace plus accrued interest.
6. Borrow money for any purpose other than redeeming its
Shares
or purchasing its Shares for cancellation, and then only as a
temporary measure to an amount not exceeding 5% of the value of its
total assets, or pledge, mortgage, or hypothecate its assets to secure
such temporary borrowings, and then only to such extent not exceeding
10% of the value of its total assets as the Board of Directors of the
Fund may by resolution approve. (For the purposes of this Restriction,
collateral arrangements with respect to margin for stock index futures
contracts are not deemed to be a pledge of assets.)
7. Invest more than 5% of the value of the Fund's total assets
in securities of issuers which have been in continuous operation less
than three years.
8. Invest more than 5% of the Fund's total assets in warrants,
whether or not listed on the New York or American Stock Exchange,
including no more than 2% of its total assets which may be invested
in warrants that are not listed on those exchanges, Warrants acquired
by the Fund in units or attached to securities are not included in
this Restriction. This Restriction does not apply to options on
securities indices.
9. Invest more than 15% of the Fund's total assets in
securities
of foreign issuers that are not listed on a recognized United States
or foreign securities exchange, including no more than 10% of its
total assets (including warrants) which may be invested in securities
with a limited trading market. The Fund's position in the latter type
of securities may be of such size as to affect adversely their
liquidity and marketability and the Fund may not be able to dispose
of its holdings in these securities at the current market price.
10. Invest more than 25% of the Fund's total assets in a
single
industry.
11. Invest in "letter stocks" or securities on which there are
sales restrictions under a purchase agreement.
12. Participate on a joint or a joint and several basis in any
trading account in securities.
Whenever any investment policy or Investment Restriction states a
maximum percentage of the Fund's assets which may be invested in any
security or other property, it is intended that such maximum percentage
limitation be determined immediately after and as a result of the Fund's
acquisition of such security or property. The value of the Fund's assets
is calculated as described below under the heading "Net Asset Value of the
Fund Shares." Nothing in the investment policies or Investment Restrictions
(except Restrictions 9 and 10) shall be deemed to prohibit the Fund from
purchasing securities pursuant to subscription rights distributed to the
Fund by any issuer of securities held at the time in its portfolio (as long
as such purchase is not contrary to the Fund's status as a diversified
investment company under the 1940 Act).
Net Asset Value of the Fund Shares
The net asset value of the Fund Shares is computed as of the close of
trading on each day the New Stock Exchange is open for trading, by dividing
the value of the Fund's securities plus any cash and other assets
(including accrued interest and dividends receivable) less all liabilities
(including accrued expenses) by the number of Fund Shares outstanding,
adjusted to the nearest whole cent. A security listed or traded on a
recognized stock exchange or NASDAQ is valued at its last sale price on the
principal exchange on which the security is traded. The value of a foreign
security is determined in its national currency as of the close of trading
on the foreign exchange on which it is traded, or as of 4:00 p.m., New York
time, if that is earlier, and that value is then converted into its U.S.
dollar equivalent at the foreign exchange rate in effect at noon, New York
time, on the day the value of the foreign security is determined. If no
sale is reported at that time, the mean between the current bid and asked
price is used. Occasionally, events which affect the values of such
securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange, and will
therefore not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at fair value as
determined by the management and approved in good faith by the Board of
Directors of the Fund. All other securities for which over-the-counter
market quotations are readily available are valued at the mean between the
current bid and asked price. Securities for which market quotations are not
readily available and other assets are valued at fair value as determined
by the management and approved in good faith by the Board of Directors of
the Fund.
The Fund's Investment Manager
The Fund is managed by its Board of Directors and all powers are
exercised by or under authority of the Board.
The Investment Manager of the Fund is Templeton, Galbraith &
Hansberger Ltd., Nassau, Bahamas. The Investment Manager is an indirect
wholly owned subsidiary of Franklin Resources, Inc. ("Franklin"). Through
its subsidiaries, Franklin is engaged in various aspects of the financial
services industry.
The Investment Manager furnishes the Fund with investment research,
advice and supervision. The Investment Manager does not furnish any
overhead items or facilities for the Fund, although such expenses are paid
by some investment advisers of other investment companies. As compensation
for its services, the Fund pays the Investment Manager a fee, equal on an
annual basis to 0.75% of the average daily net assets of the Fund up to
$200 million, reduced to 0.675% of such net assets in excess of $200
million and further reduced to 0.60% of such net assets in excess of $1,300
million.
Templeton Global Investors, Inc. (the "Business Manager") provides
certain administrative facilities and services for the Fund, including
payment of salaries of officers, preparation and maintenance of books and
records, preparation of tax returns and financial reports, monitoring
compliance with regulatory requirements and monitoring tax deferred
retirement plans. For its services, the Business Manager receives a fee
equivalent to 0.15% of the average daily net assets of the Fund during the
year, reduced to 0. 135% of such net assets in excess of $200 million, to
0. 10% of such assets in excess of $700 million, and to 0.075% of such
assets in excess of $1,200 million.
The Fund's Plan of Distribution
The Fund, pursuant to Rule 12b-1 under the 1940 Act, has adopted a
Distribution Plan (the "Plan"). Under the Plan, the Fund may reimburse the
principal underwriter monthly (subject to a limit of 0.25% per annum of the
Fund's average daily net assets) for Franklin Templeton Distributors,
Inc.'s ("Templeton Distributor") costs and expenses in connection with any
activity which is primarily intended to result in the sale of Fund Shares.
Payments to Templeton Distributor, could be for various types of
activities, including (1) payments to broker-dealers who provide certain
services of value to the Fund's Shareholders (sometimes referred to as a
"trail fee"); (2) reimbursement of expenses relating to selling and
servicing efforts or of organizing and conducting sales seminars; (3)
payments to employees or agents of the principal underwriter who engage in
or support distribution of Shares; (4) payments of the costs of preparing,
printing and distributing prospectuses and reports to prospective investors
and of printing and advertising expenses; (5) payment of dealer commissions
and wholesaler compensation in connection with sales of Fund Shares
exceeding $1 million (on which the Fund imposes no initial sales charge)
and interest or carrying charges in connection therewith; and (6) such
other similar services as the Fund's Board of Directors determines to be
reasonably calculated to result in the sale of Shares. Under the Plan, the
costs and expenses not reimbursed in any one given month (including costs
and expenses not reimbursed because they exceed the limit of 0.25% per
annum of the Fund's average daily net assets) may be reimbursed in
subsequent months or years. As of August 31, 1994 the Fund had no 12b-1 fee
carryforward. Pursuant to an exemptive order application issued by the
Securities and Exchange Commission the Sponsor has agreed to pay to the
Trust the 12b-1 fees it receives from Templeton Distributor 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
The Securities and Exchange Commission has issued an exemptive order
pursuant to which Fund Shares will be deposited by the Sponsor in the
Trust. An application for such 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 anticipating or taking advantage of such
opportunities as may occur. In addition, in the event of the inability of
the Investment Manager 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.
Fund Risk Factors
All Fund Investments involve risk and there can be no guarantee
against loss resulting from an investment in the Fund, nor can there be any
assurance that the Fund's investment objective will be attained. As with
any investment in securities, the value of, and income from, an investment
in the Fund can decrease as well as increase, depending on a variety of
factors which may affect the values and income generated by the Fund's
portfolio securities, including general economic conditions, market factors
and currency exchange rates. Additionally, investment decisions made by the
Investment Manager will not always be profitable or prove to have been
correct. The Fund is not intended as a complete investment program.
Successful use of stock index futures contracts and options on
securities indices by the Fund is subject to certain special risk
considerations. A liquid stock index option or futures market may not be
available when the Fund seeks to offset adverse market movements. In
addition, there may be an imperfect correlation between movements in the
securities included in the index and movements in the securities in the
Fund's portfolio. Successful use of stock index futures contracts and
options on securities indices is further dependent on the Investment
Manager's ability to predict correctly movements in the direction of the
stock markets and no assurance can be given that its judgment in this
respect will be correct.
The Fund has the right to purchase securities in any foreign country,
developed or underdeveloped. Investors should consider carefully the
substantial risks involved in investing in securities issued by companies
and governments of foreign nations, which are in addition to the usual
risks inherent in domestic investments. There is the possibility of
expropriation, nationalization or confiscatory taxation, taxation of income
earned in foreign nations or other taxes imposed with respect to
investments in foreign nations, foreign exchange controls (which may
include suspension of the ability to transfer currency from a given
country), default in foreign government securities, political or social
instability or diplomatic developments which could affect investment in
securities of issuers in foreign nations. Some countries may withhold
portions of interest and dividends at the source. In addition, in many
countries there is less publicly available information about issuers than
is available in reports about companies in the United States. Foreign
companies are not generally subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may
not be comparable to those applicable to United States companies. Further,
the Fund may encounter difficulties or be unable to pursue legal remedies
and obtain judgments in foreign courts. Commission rates in foreign
countries, which are sometimes fixed rather than subject to negotiation as
in the United States, are likely to be higher. Further, the settlement
period of securities transactions in foreign markets may be longer than in
domestic markets. In many foreign countries, there is less government
supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the United States. The
foreign securities markets of many of the countries in which the Fund may
invest may also be smaller, less liquid, and subject to greater price
volatility than those in the United States.
Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of Eastern European countries expropriated large
amounts of private property in the past, in many cases without adequate
compensation, and there can be no assurance that such expropriation will
not occur in the future. In the event of such expropriation, the Fund could
lose a substantial portion of any investments it has made in the affected
countries. Further, no accounting standards exist in Eastern European
countries. Finally, even though certain Eastern European currencies may be
convertible into United States dollars, the conversion rates may be
artificial to the actual market values and may be adverse to Fund
Shareholders.
The Fund considers at least annually the likelihood of the imposition
by any foreign government of exchange control restrictions which would
affect the liquidity of the Fund's assets maintained with custodians in
foreign countries, as well as the degree of risk from political acts of
foreign governments to which such assets may be exposed. The Fund also
considers the degree of risk involved through the holding of portfolio
securities in domestic and foreign securities depositories. No assurance
can be given that the Fund's appraisal of the risks will always be correct
or that such exchange control restrictions or political acts of foreign
governments might not occur.
The Fund is authorized to invest in medium quality or high risk, lower
quality debt securities that are rated between BBB and as low as CCC by
Standard & Poor's Corporation ("S&P") and between Baa and as low as Caa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, are of
equivalent investment quality as determined by the Investment Manager. As
an operating policy, which may be changed by the Board of Directors without
shareholder approval, the Fund will not invest more than 5% of its total
assets in debt securities rated BBB or lower by S&P or Baa or lower by
Moody's. The Board may consider a change in this operating policy if, in
its judgment, economic conditions change such that a higher level of
investment in high risk, lower quality debt securities would be consistent
with the interests of the Fund and its Shareholders. High risk, lower
quality debt securities, commonly referred to as "junk bonds," are
regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation and may be in default. Unrated debt securities
are not necessarily of lower quality than rated securities but they may not
be attractive to as many buyers. Regardless of rating levels, all debt
securities considered for purchase (whether rated or unrated) will be
carefully analyzed by the Investment Manager to insure, to the extent
possible, that the planned investment is sound. The Fund may, from time to
time, purchase defaulted debt securities if, in the opinion of the
Investment Manager, the issuer may resume interest payments in the near
future. The Fund will not invest more than 10% of its total assets in
defaulted debt securities, which may be illiquid.
The Fund usually effects currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign exchange
market. However, some price spread on currency exchange (to cover service
charges) will be incurred when the Fund converts assets from one currency
to another.
The Fund may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange between the currencies of
different nations, by exchange control regulations and by indigenous
economic and political developments. Through the Fund's flexible policy,
management endeavors to avoid unfavorable consequences and to take
advantage of favorable developments in particular nations where, from time
to time, it places the Fund's investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such
as changing the emphasis on investments from one nation to another and from
one type of security to another. Some of these decisions may later prove
profitable and others may not. No assurance can be given that profits, if
any, will exceed losses.
There are additional risks involved in stock index futures
transactions. These risks relate to the Fund's ability to reduce or
eliminate its futures positions, which will depend upon the liquidity of
the secondary markets for such futures. The Fund intends to purchase or
sell futures only on exchanges or boards of trade where there appears to
be an active secondary market, but there is no assurance that a liquid
secondary market will exist for any particular contract or at any
particular time. Use of stock index futures for hedging may involve risks
because of imperfect correlations between movements in the prices of the
stock index futures on the one hand and movements in the prices of the
securities being hedged or of the underlying stock index on the other.
There are several risks associated with transactions in options on
securities indices. For example, there are significant differences between
the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to
achieve its objectives. A decision as to whether, when and how to use
options involves the exercise of skill and judgment, and even a well-
conceived transaction may be unsuccessful to some degree because of market
behavior or unexpected events. There can be no assurance that a liquid
market will exist when the Fund seeks to close out ail option position. If
the Fund were unable to close out an option that it had purchased on a
securities index, it would have to exercise the option in order to realize
any profit or the option may expire worthless. If trading were suspended
in an option purchased by the Fund, it would not be able to close out the
option. If restrictions on exercise were imposed, the Fund might be unable
to exercise an option it has purchased. Except to the extent that a call
option on an index written by the Fund is covered by an option on the same
index purchased by the Fund, movements in the index may result in a loss
to the Fund; however, such losses may be mitigated by changes in the value
of the Fund's securities during the period the option was outstanding.
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 Fund Shares. 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 $15.00 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--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.
In the event of a notice that any Treasury Obligation will not be
delivered ("Failed Treasury Obligations"), the Sponsor is authorized under
the Indenture to direct the Trustee to acquire other Treasury Obligations
("Replacement Treasury Obligations") within a period ending on the earlier
of the first distribution of cash to Trust Unit Holders or 90 days after
the Date of Deposit. The cost of the Replacement Treasury Obligations may
not exceed the cost of the Treasury Obligations which they replace. Any
Replacement Treasury Obligation deposited in the Trust will be
substantially identical to every Treasury Obligation then in the Trust.
Whenever a Replacement Treasury Obligation has been acquired for the Trust,
the Trustee shall, within 5 days thereafter, notify Unit Holders of the
acquisition of the Replacement Treasury Obligation.
In the event a contract to purchase Securities fails and Replacement
Treasury Obligations are not acquired, the Trustee will distribute to Unit
Holders the funds attributable to the failed contract. The Sponsor will,
in such case, refund the sales charge applicable to the failed contract.
If less than all the funds attributable to a failed contract are applied
to purchase Replacement Treasury Obligations, the remaining money will be
distributed to Unit Holders.
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 the Date of Deposit, 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).
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.
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 The 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
as a regulated investment company 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.
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 iii Fund Shares held by the Trust.
Income received by the Fund may be subject to withholding and other
taxes imposed by foreign jurisdictions. In some instances, these taxes are
limited by treaty between the United States and the relevant foreign
jurisdiction. Treaty benefits may be available to the Fund to the same
extent as they would be to individual U.S. shareholders. However, in some
situations the Fund will be eligible for such benefits only if it can
establish that a minimum specified percentage of the capital of the Fund
is owned directly or indirectly by individual residents or citizens of the
United States.
If more than 50% of the value of the Fund's total assets at the close
of a taxable year for which the Fund qualifies as a regulated investment
company consists of stock or securities in foreign corporations and the
Fund so elects, the Fund will forego any claim to a deduction or credit for
any foreign income taxes paid or accrued during the taxable year by the
Fund but the amount of such taxes will be allowed as an addition to the
Fund's dividends paid deduction for such year. In such a case, each Fund
shareholder (including a Trust Unit Holder) is required to include in gross
income and treat as paid by him his proportionate share of such taxes and
to treat as gross income from sources within the respective foreign
countries the sum of his proportionate share of such taxes and the portion
of any dividend paid by the Fund which represents income derived from
sources within foreign countries. The Fund expects to qualify for and
intends to make this election.
Each Fund shareholder (including a Trust Unit Holder) who is a citizen
or resident of the United States will be entitled either to (i) deduct the
amount of such foreign taxes (if in the case of a Fund shareholder who is
an individual, he itemizes deductions), or (ii) subject to applicable
limitations, credit the amount of such taxes against the Fund shareholder's
U.S. federal income tax liability. A Fund shareholder (including a Trust
Unit Holder) who is a non-resident alien individual or which is a foreign
corporation will be entitled to a deduction or credit of the foreign tax
only if the income received from the Fund is effectively connected with the
conduct of a trade or business within the United States. Fund shareholders
should be aware that, for purposes of computing applicable limitations on
the foreign tax credit, dividends and interest received by the Fund in
respect of securities of foreign issuers are expected to give rise to
foreign source income but that gains from the sale or exchange of such
securities will be treated as U.S. source income. Because availability of
the foreign tax credit and application of the foreign tax credit limitation
depends on the particular circumstances of each Fund shareholder (including
a Trust Unit Holder) each Unit Holder should consult his own tax adviser
in this regard.
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 will file its 1994 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
1994 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 taxable years beginning
on or before December 31, 1995. The 1993 limitation applies to individual
taxpayers with adjusted gross income in excess of a $114,700 threshold
amount ($57,350 for a married taxpayer filing separately). The $114,700 (or
$57,350) threshold amount will be indexed for inflation after 1995. 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.
The Fund may invest in passive foreign investment companies, various
options and futures contracts and hedging transactions and may be subject
to foreign currency fluctuations, all of which have unique Federal income
tax consequences. Such investments and currency fluctuations may affect the
character, timing and amount of gain or ordinary income to be recognized
by persons holding Fund Shares.
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.
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 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.
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
of Deposit 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
Templeton Growth 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 Templeton Growth Fund, Inc.
On the Date of Deposit, the Public Offering Price per Unit (based
on the offering side evaluation of the Treasury Obligations and the net
asset value of Fund Shares in the Trust) exceeded the Redemption Price
and the Sponsor's Secondary Market Repurchase Price per Unit (each based
upon the bid side evaluation of the Treasury Obligations and the net
asset value of Fund Shares in the Trust) by the amounts set forth in
"Summary of Essential Information".
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 of 68% per Unit, 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.
A dealer will receive a concession of 75% of the sales charge per
Unit upon a sale to such dealer of 40,000 or more Units and such dealer
will continue to receive a concession of 75% on all other purchases from
the Sponsor during the initial offering period.
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." Templeton Distributor
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 $300,000. On the sale of Units to
dealers, the Sponsor will retain the difference between the dealer
concession and the sales 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. (For a
description of such profit (or loss) and the amount of such difference
see "Schedule of Portfolio Securities," herein.) 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.
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 2,000 Units.
Sales Charge
Primary and Secondary Market
Percent Percent
of Public of Net
Offering Amount
Price Invested
Number of Units
Less than 2,000 Units 5.25% 5.541%
2,000-7,999 Units 5.00% 5.263%
8,000-19,999 Units 4.50% 4.712%
20,000-39,999 Units 4.00% 4.167%
40,000-79,999 Units 3.00% 3.092%
80,000 Units or more 2.00% 2.041%
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 this 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 its 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.
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 $.20 per Unit for Units purchased in the secondary market and
$.30 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 was 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
exchange of Units of this series of the Government Securities Equity
Trust for units of any other series of the 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 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 advisers 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, 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 United States Trust Company of New York,
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 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 and Templeton Distributor.
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.
<PAGE>
Government Securities Equity Trust
REINVESTMENT APPLICATION
I/We hereby authorize and direct United States Trust Company of New York
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 Templeton Growth Fund,
Inc.
I/We hold Government Securities Equity Trust Series 6 (This Series can
only reinvest into the Templeton Growth 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: United States Trust Company of New York
P.O. Box 888 - Cooper Station
New York, NY 10276
<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, distributions 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").
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 770 Broadway, New York, New York 10003, 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 he canceled.
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").
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 Unit--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 date 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 for any
loss or damage that may result from any such suspension or postponement.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION PRICE
While the Public Offering Price of Units during the initial
offering period is determined on the basis of the current offering
prices of the Treasury Obligations and the net asset value of Fund
Shares, the Public Offering Price of Units in the secondary market and
the Redemption Price of Units is determined on the basis of the current
bid prices of the Treasury Obligations and the net asset value of the
Fund Shares. On the Date of Deposit, the Public Offering Price (which
includes a sales charge) exceeded the Redemption Price by the amount
indicated under "Summary of Essential Information" above. The bid prices
for the Securities are expected to be less than the offering prices. 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 is distributor for Prudential
Government Securities Trust (Intermediate Term Series), The Target
Portfolio Trust, and for Class B shares of The Blackrock Government
Income Trust and Prudential Adjustable Rate Securities Fund, Inc., and
for Class B and C shares of Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund),
Prudential Allocation Fund, Prudential California Municipal Fund
(California Income Series and California Series), Prudential Europe
Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity
Income Fund, Prudential Global Fund, Inc., Prudential Global Genesis
Fund, Inc., Prudential Global Natural Resources Fund, Inc., Prudential
GNMA Fund, Inc., Prudential Government Income Fund, Inc., Prudential
Growth Opportunity Fund, Inc., Prudential High Yield Fund, Inc.,
Prudential IncomeVertible [TRADEMARK SYMBOL] Plus Fund, Inc., Prudential
Intermediate Global Income Fund, Inc., Prudential Multi-Sector Fund,
Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund
(except Connecticut Money Market Series, Massachusetts Money Market
Series, New York Money Market Series and New Jersey Money Market
Series), Prudential National Municipals Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential Short-Term Global Income Fund, Inc.,
Prudential Strategist Fund, Inc., Prudential Structured Maturity Fund,
Inc., Prudential U.S. Government Fund and Prudential Utility Fund, Inc.
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.
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.
TRUSTEE
The Trustee is United States Trust Company of New York, with its
principal place of business at 114 West 47th Street, New York, New York
10036 and a unit investment trust office at 770 Broadway, New York, New
York 10003. United States Trust Company has, since its establishment in
1853, engaged primarily in the management of trust and agency accounts
for individuals and corporations. The Trustee is a member of the New
York Clearing House Association and is subject to supervision and
examination 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 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 Kenny
Information Systems, Inc., with main offices located at 65 Broadway, New
York, New York 10006.
Limitations and 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
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 a 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.
<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.
GOVERNMENT SECURITIES EQUITY TRUST
Series 6
Table of Contents Page
Summary of Essential Information A-7
Independent Auditors' Report A-9
Statement of Financial Condition A-10
Schedule of Portfolio Securities A-12 [LOGO]
The Trust B-1
Trust Formation B-1
Securities Selection B-4
Stripped U.S. Treasury Obligations B-4
Templeton Growth Fund, Inc. B-5
General Information Regarding the Fund B-6
Investment Policies and Restrictions B-9 Sponsor
Net Asset Value of the Fund Shares B-24
The Fund's Investment Manager B-25 Prudential
Securities
Incorporated
The Fund's Plan of Distribution B-28
Risk of Investment in Units B-30 One Seaport Plaza
Fund Risk Factors B-31 199 Water Street
NY, NY 10292
Tax Status of the Trust B-33
Retirement Plans B-40
Public Offering of Units B-40 Trustee
Public Offering Price B-40 U.S. Trust Company
Secondary Market B-42 Company of New
York
Profit of Sponsor B-43
Volume Discount B-43 114 West 47th Street
Employee Discount B-44 New York, New York
10036
Exchange Option B-44
Federal Income Tax Consequences B-47
Reinvestment of Trust Distributions B-47 Evaluator
Expenses and Charges B-48
Initial Expenses B-48 Kenny Information
Fees B-48 Systems, Inc.
Other Charges B-48
Rights of Unit Holders B-51 65 Broadway
Certificates B-51 New York, New York
10006
Certain Limitations B-51
Distributions B-51 Fund
Shares
Reports and Records B-52
Redemption B-53 Templeton Growth
Fund, Inc.
Comparison of Public Offering Price and 700 Central Avenue
Redemption Price B-56 St. Petersburg,
Florida
33701-3628
Sponsor B-56
Limitations on Liability B-58
Responsibility B-58
Resignation B-59
Trustee B-59
Limitations on Liability B-59
Responsibility B-60
Resignation B-60
Evaluator B-61
Limitations on Liability B-61
Responsibility B-61
Resignation B-61
Amendment and Termination of the Indenture B-62
Amendment B-62
Termination B-62
Tax Impact of In Kind Distribution
Upon Termination B-63
Legal Opinions B-63
Independent Auditors B-64
<PAGE>
<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 March 5, 1993.
**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-27.1 - 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.
** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the
II-1
<PAGE>
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.
33-54681.
***** 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 Trust, 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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Government Securities Equity Trust Series 6, 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 19th
day of January, 1995.
Government Securities Equity Trust Series 6
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By the following persons,* who
constitute a majority of the
Board of Directors of Prudential
Securities Incorporated
Alan D. Hogan
George A. Murray
John P. Murray
Leland B. Paton
Vincent T. Pica
Richard A. Redeker
Hardwick Simmons
Lee B. Spencer, Jr.
By __/s/ Kenneth Swankie
(Kenneth Swankie,
First 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 Cahill Gordon & Reindel 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
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated December 29, 1994,
accompanying the financial statements of the Government Securities
Equity Trust Series 6 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
January 19, 1995
New York, New York
II-5
<PAGE>
Exhibit 23
Letterhead of Kenny S&P Evaluation Services
(a division of J.J. Kenny Co., Inc.)
January 19, 1995
Prudential Securities Incorporated
One New York Plaza
14th Floor
New York, NY 10292-2014
Re: Government Securities Equity Trust,
Post-Effective Amendment No. 1
Government Securities Equity Trust Series 6
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-65966 for the above-captioned trust.
We hereby acknowledge that Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc. is currently acting as the evaluator for the trust.
We hereby consent to the use in the Amendment of the reference to Kenny
S&P Evaluation Services, a division of J.J. Kenny Co., Inc. as
evaluator.
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.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
Donald H. Totter
Donald H. Totter
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR GOVERNMENT SECURITIES EQUITY
TRUST
SERIES 6 AND IS QUALIFIED IN ITS ENTIRETY
BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000907009
<NAME> GOVERNMENT SECURITIES EQUITY TRUST
SERIES 6
<SERIES>
<NAME> GOVERNMENT SECURITIES EQUITY TRUST
SERIES
<NUMBER> 6
<MULTIPLIER> 1
<PERIOD-TYPE> 0THER
<FISCAL-YEAR-END> Sep-30-1994
<PERIOD-START> Oct-20-1993
<PERIOD-END> Sep-30-1994
<INVESTMENTS-AT-COST> 97,403,439
<INVESTMENTS-AT-VALUE> 90,034,809
<RECEIVABLES> 21,503
<ASSETS-OTHER> 64,795
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 90,121,107
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,707
<TOTAL-LIABILITIES> 9,707
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 97,399,660
<SHARES-COMMON-STOCK> 8,060,000
<SHARES-COMMON-PRIOR> 100,000
<ACCUMULATED-NII-CURRENT> 80,370
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7,368,630)
<NET-ASSETS> 90,121,107
<DIVIDEND-INCOME> 260,592
<INTEREST-INCOME> 0
<OTHER-INCOME> 3,175,536
<EXPENSES-NET> 58,177
<NET-INVESTMENT-INCOME> 3,377,951
<REALIZED-GAINS-CURRENT> 232,406
<APPREC-INCREASE-CURRENT> (7,368,630)
<NET-CHANGE-FROM-OPS> (3,758,273)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 234,840
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 434,720
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 310,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (88,931,701)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
