<PAGE>
As filed with the Securities and Exchange Commission on January 28, 1999
Registration No. 33-65966
========================================================================
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
_____________________
POST-EFFECTIVE AMENDMENT NO. 5 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).
__
/__/ immediately upon filing on (date) pursuant to paragraph (b);
__
/X_/ on January 31, 1999 pursuant to paragraph (b);
__
/__/ 60 days after filing pursuant to paragraph (a);
__
/__/ on (date) pursuant to paragraph (a) of Rule 485.
<PAGE>
CUSIP: 383741600R
Government Securities Equity Trust Series 6
- --------------------------------------------------------------------------------
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 Class A 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 Prospectus dated
This Prospectus For Future Reference January 31, 1999
<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 Class A 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 Treasury Obligations held by the Trust mature approximately fifteen years
from the Date of Deposit.
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 Fund's investment goal is
long-term capital growth through a flexible policy of investing in the equity
and debt securities 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 $15.45 per Unit and consequently Unit Holders purchasing Units on
such date could anticipate realizing proceeds at maturity of the Treasury
Obligations less than their initial investment of approximately $15.45 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 the Summary of Essential Information. 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.
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 the equity and debt securities
of companies and governments of any nation. The Fund's investment goal is
long-term capital growth. This goal is fundamental, which means it may not be
changed without shareholder approval.
The Fund tries to achieve its goal by investing in the equity and debt
securities of companies and governments located anywhere in the world, including
emerging markets. The Fund may invest in junk bonds and may utilize futures and
options (see page B-6). Any income realized will be incidental.
A-i
<PAGE>
<PAGE>
Equity Securities generally entitle the holder to participate in a company's
general operating results. These include common stock and preferred stock. The
Fund also invests in American, European and Global Depositary Receipts. These
are certificates issued typically by a bank or trust company that give their
holders the right to receive securities issued by a foreign or domestic company.
Depending upon current market conditions, the Fund generally invests up to 25%
of its total assets in debt securities of companies and governments located
anywhere in the world. Debt securities represent an obligation of the issuer to
repay a loan of money to it, and generally provide for the payment of interest.
These include bonds, notes and debentures.
The Fund may buy both rated an unrated debt securities. Independent rating
organizations rate debt securities based upon their assessment of the financial
soundness of the issuer. Generally, a lower rating indicates higher risk. The
Fund may buy debt securities which are rated Caa by Moody's Investors Service,
Inc. ('Moody's') or CCC by Standard & Poor's Corporation ('S&P') or better; or
unrated debt which it determines to be of comparable quality. At present, the
Fund does not intend to invest more than 5% of its total assets in
non-investment grade securities (rated lower than BBB by S&P or Baa by Moody's).
The Templeton investment philosophy is 'bottom-up', value-oriented, and
long-term. In choosing equity investments, the Fund's manager will focus on the
market price of a company's securities relative to its evaluation of the
company's long-term earnings, asset value and cash flow potential. A company's
historical value measures, including price/earnings ratio, profit margins and
liquidation value, will also be considered.
Temporary Investments
The manager may take a temporary defensive position when the manager
believes the markets or the economy are experiencing excessive volatility or a
prolonged general decline, or other adverse conditions exist. Under these
circumstances, the Fund may be unable to pursue its investment goal, because it
may not invest or may invest less in global stocks.
Although the Fund investment goal seeks its investment goal 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.
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,
A-ii
<PAGE>
<PAGE>
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 in Part B). The Trust's objectives are to attempt to obtain safety of
capital through investment in the stripped United States Treasury issued notes
or bonds paying no current interest and to attempt to provide for capital
appreciation through an investment in Fund Shares. The Trust is 'concentrated'
in Fund Shares so investors should be aware that the potential for capital
appreciation is directly related to the investment performance of the Fund
itself. Additionally, changes in the price of the Treasury Obligations and
changes in the net asset value of the Fund Shares will affect the price of the
Trust's Units.
Portfolio Summary
$39,750,000 face amount of Treasury Obligations maturing on November 15,
2008 and 903,915 Fund Shares were held in the Trust. The Treasury Obligations
and the Fund Shares represented 61.9% and 38.1%, respectively, of the total of
the aggregate bid side evaluation of Treasury Obligations in the Trust and the
aggregate value of Fund Shares.
A-iii
<PAGE>
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
As of December 23, 1998
<TABLE>
<S> <C>
AGGREGATE MATURITY VALUE OF TREASURY OBLIGATIONS........................................... $ 39,750,000
AGGREGATE NUMBER OF FUND SHARES............................................................ 903,915
NUMBER OF UNITS............................................................................ 2,650,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED BY EACH UNIT........................ 1/2,650,000th
PUBLIC OFFERING PRICE
Aggregate bid side evaluation of Treasury Obligations in the Trust....................... $24,026,887.50
Aggregate value of Fund Shares(2)........................................................ $14,797,088.25
Aggregate cash value..................................................................... $ (21,981.71)
--------------
Total.................................................................................... $38,801,994.34
--------------
--------------
Divided by 2,650,000 Units............................................................... 14.642
Plus sales charge of 5.249% of Public Offering Price (5.540% of net amount
invested)(4).......................................................................... .811
--------------
Public Offering Price per Unit(3)........................................................ 15.453
--------------
--------------
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, $.811 less than
Public Offering Price per Unit)(2)....................................................... $ 14.642
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) $1.43 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 $50,520,000.
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 23, 1998 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-9.
A-iv
<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, 1998, and the related statements of operations and changes
in net assets for each of the three years in the period then ended. These
financial statements are the responsibility of the Trustee (see Footnote
(a)(1)). Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of the securities owned as of
September 30, 1998 as shown in the statement of financial condition and
schedule of portfolio securities by correspondence with The Chase Manhattan
Bank, the Trustee. An audit also includes assessing the accounting
principles used and the significant estimates made by the Trustee, as well
as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Government
Securities Equity Trust Series 6 as of September 30, 1998 and the results of
its operations and the changes in its net assets for each of the three years
in the period then ended in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
January 13, 1999
New York, New York
</AUDIT-REPORT>
A-1
<PAGE>
STATEMENT OF FINANCIAL CONDITION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1998
<TABLE>
TRUST PROPERTY
<S> <C>
Investments in Securities at market value (amortized cost
$38,979,622, including accreted interest of $11,189,092)
(Note (a) and Schedule of Portfolio Securities Notes (4) and (5)) $42,790,228
Other receivable 41,287
Total 42,831,515
LIABILITIES AND NET ASSETS
Less Liabilities:
Cash overdraft 30,629
Accrued Trust fees and expenses 7,362
37,991
Net Assets:
Balance applicable to 2,830,000 Units of fractional
undivided interest issued and outstanding (Note (c)):
Capital, plus unrealized market appreciation
of $3,810,606 $42,790,228
Undistributed net investment income (Note (b)) 3,296
Net assets $42,793,524
Net asset value per Unit ($42,793,524 divided by 2,830,000 Units) $ 15.1214
</TABLE>
See notes to financial statements
A-2
<PAGE>
STATEMENTS OF OPERATIONS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
<TABLE>
<CAPTION>
For the years ended September 30,
1998 1997 1996
<S> <C> <C> <C>
Investment income:
Interest $1,465,007 $ 1,713,524 $2,136,826
Dividends (Note (a)(5)) 1,006,160 760,414 1,246,431
Other income 57,351 68,912 81,482
2,528,518 2,542,850 3,464,739
Less Expenses:
Trust fees and expenses 33,110 42,437 44,516
Total expenses 33,110 42,437 44,516
Investment income - net 2,495,408 2,500,413 3,420,223
Net gain on investments:
Realized gain on securities sold or
redeemed 874,290 855,679 196,204
Capital gain distributions received 2,932,607 1,173,162 2,907,980
Net unrealized market (depreciation)
appreciation (4,116,348) 7,213,042 (2,011,260)
Net gain on investments 309,451 9,241,883 1,092,924
Net increase in net assets resulting from
operations $2,185,957 $11,742,296 $4,513,147
</TABLE>
See notes to financial statements
A-3
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
<TABLE>
<CAPTION>
For the Years Ended September 30,
1998 1997 1996
<S> <C> <C> <C>
Operations:
Investment income - net $ 2,495,408 $ 2,500,413 $3,420,223
Realized gain on securities sold or
redeemed 874,290 855,679 196,204
Capital gain distributions received 2,932,607 1,173,162 2,907,980
Net unrealized market (depreciation)
appreciation (4,116,348) 7,213,042 (2,011,260)
Net increase in net assets
resulting from operations 2,185,957 11,742,296 4,513,147
Less Distributions to Unit Holders:
Principal (2,860,672) (1,160,013) (2,860,096)
Investment income - net (1,090,480) (718,741) (1,274,319)
Total distributions (3,951,152) (1,878,754) (4,134,415)
Capital Share Transactions:
Redemption of 620,000 Units, 1,020,000
Units and 1,720,000, Units, respec-
tively (9,363,815) (14,209,829) (21,987,445)
Income distribution on redemption (2,748) (11,370) (36,366)
Net capital share transactions (9,366,563) (14,221,199) (22,023,811)
Net decrease in net assets (11,131,758) (4,357,657) (21,645,079)
Net assets:
Beginning of year 53,925,282 58,282,939 79,928,018
End of year (including undistributed net
investment income of $3,296, $86,321,
and $32,165, respectively) $42,793,524 $53,925,282 $58,282,939
</TABLE> See notes to financial statements
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1998
(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.
(5) Investment Income
Included in dividends is a short-term capital gain distribution
received of $380,224.
A-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1998
(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
A reconciliation of the cost of Units to investors to the net amount
applicable to investors as of September 30, 1998 follows:
<TABLE>
<S> <C>
Cost to investors $103,767,456
Less: Gross underwriting commissions (sales charge) (5,176,049)
Net cost to investors 98,591,407
Cost of securities sold or redeemed (70,947,416)
Unrealized market appreciation 3,810,606
Accumulated interest accretion 11,335,631
Net amount applicable to investors $ 42,790,228
</TABLE>
(d) OTHER INFORMATION
Selected data for a Unit of the Trust during each year:
<TABLE>
<CAPTION>
For the years ended September 30,
1998 1997 1996
<S> <C> <C> <C>
Principal distributions during
year $ .8577 $ .2660 $ .4854
Net investment income distributions
during year $ .3270 $ .1651 $ .2165
Net asset value at end of year $15.1214 $15.6305 $13.0387
Trust Units outstanding at end
of year 2,830,000 3,450,000 4,470,000
</TABLE>
A-6
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1998
<TABLE>
<CAPTION>
Name of Issuer/Title of Portfolio Face Amount/ Market
Security <F1> Number of Shares Value<F4><F5>
<C> <S> <C> <S>
1. Stripped United States Treasury
Obligations Maturing on
November 15, 2008 <F2> $42,450,000 $25,877,944
2. Shares of the Templeton Growth
Fund, Inc. ($17.52 per
Fund Share) <F3> 965,313 16,912,284
$42,790,228
</TABLE>
See notes to Schedule of Portfolio Securities
A-7
<PAGE>
NOTES TO SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 6
September 30, 1998
<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 Global Advisors Limited.
<F4> The market value of the Treasury Obligations as of September 30,
1998 was determined by the Evaluator on the basis of bid side
evaluations for the Securities. 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, 1998, the unrealized market appreciation of
Securities was comprised of the following:
<TABLE>
<S> <C>
Gross unrealized market appreciation $3,810,606
Gross unrealized market depreciation -
Unrealized market appreciation $3,810,606
</TABLE>
The amortized cost of the Securities for Federal income tax
purposes was $38,979,622 at September 30, 1998.
A-8
<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 'Predecessor Trustee') and Kenny S&P Evaluation Services, a
division of J.J. Kenny Co., Inc. (the 'Evaluator'). The Chase Manhattan Bank is
the Trustee (the 'Trustee') of the Trust. The Sponsor, Prudential Securities
Incorporated, is a wholly-owned, indirect subsidiary of The Prudential Insurance
Company of America.
The objectives of the Trust are to attempt to obtain safety of capital
through investment in stripped United States Treasury issued notes or bonds
paying no current interest (the 'Treasury Obligations') and to attempt to
provide for capital appreciation through investment in shares ('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. 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 a recent date, each Unit represented the fractional undivided interest in
the Securities and net income of the Trust set forth under 'Summary of Essential
Information.' The Trust Portfolio has been structured so that a Unit Holder will
- ------------
* Reference is hereby made to said Indenture and any statements contained herein
are qualified in their entirety by the provisions of said Indenture.
B-1
<PAGE>
<PAGE>
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 circumstances described herein and because additional Securities may be
deposited into the Trust from time to time, the Trust is not expected to retain
its present size and composition. If any Units are redeemed by the Trustee, the
number of Securities in the Trust will be reduced by an amount allocable to
redeemed Units and the fractional undivided interest in such Trust represented
by each unredeemed Unit will be increased. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unit Holder (which may include the
Sponsor) or until the termination of the Trust pursuant to the Indenture.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units, if Units are available
to fill orders on the day that 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.
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
B-2
<PAGE>
<PAGE>
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. or its affiliates. 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 Class A shares (the 'Fund Shares')
of the Templeton Growth Fund, Inc. (the 'Fund'). On August 31, 1998, the net
assets of the Fund were $12,025,083,624. The Fund has retained an investment
manager, Templeton Global Advisors Limited (the 'Investment Manager').
The Fund's investment goal is long-term capital growth through a flexible
policy of investing in equity and debt securities of companies and governments
of any nation.
The Fund may invest up to 5% of its total assets in securities issued by any
one company or foreign government.
Equity Securities generally entitle the holder to participate in a company's
general operating results. These include common stocks and preferred stocks. The
Fund also invests in American, European and Global Depositary Receipts. These
are certificates issued typically by a bank or trust company that give their
holders the right to receive securities issued by a foreign or domestic company.
Depending upon current market conditions, the Fund generally invests up to 25%
of its total assets in debt securities of companies and governments located
anywhere in the world. Debt securities represent an obligation of the issuer to
repay a loan of money to it, and generally provide for the payment of interest.
These include bonds, notes and debentures.
The Fund may buy both rated an unrated debt securities. Independent rating
organizations rate debt securities based upon their assessment of the financial
soundness of the issuer. Generally, a lower rating indicates higher risk. The
Fund may buy debt securities which are rated Caa by Moody's Investors Service,
Inc. ('Moody's') or CCC by Standard & Poor's Corporation ('S&P') or better; or
unrated debt which it determines to be of comparable quality. At present, the
Fund does not intend to invest more than 5% of its total assets in
non-investment grade securities (rated lower than BBB by S&P or Baa by Moody's).
The Templeton investment philosophy is 'bottom-up', value-oriented, and
long-term. In choosing equity investments, the Fund's manager will focus on the
market price of a company's securities relative to its evaluation of the
company's long-term earnings, asset value and cash flow potential. A company's
historical value measures, including price/earnings ratio, profit margins and
liquidation value, will also be considered.
Temporary Investments
The manager may take a temporary defensive position when the manager
believes the markets or the economy are experiencing excessive volatility or a
prolonged general decline, or other adverse conditions exist. Under these
circumstances, the Fund may be unable to pursue its investment goal, because it
may not invest or may invest less in global stocks.
General. The Fund may invest without percentage limitation in domestic or
foreign securities. It may invest up to 100% of its total assets in emerging
markets, including up to 5% of its total assets in Russian securities. It may
invest up to 5% of its total assets in securities issued by any one company or
foreign government. It may invest any amount of its assets in U.S. government
securities. It may invest in any industry, although it will not concentrate
(invest more than 25% of its total assets) in any one industry. It may invest up
to 15% of its total assets in foreign securities that are not listed on a
recognized U.S. or foreign securities exchange, including up to 10% of its total
assets in securities with a limited trading market.
The Fund's principal investments are in equity securities, including common
and preferred stocks. It also invests in American, European and Global
Depositary Receipts. Depending upon current market conditions, it generally
invests up to 25% of its assets in rated and unrated debt securities.
B-3
<PAGE>
<PAGE>
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 growth. Providing current income is not a goal
of the Fund. An investor should not consider a purchase of Fund Shares as
equivalent to a complete investment program.
The Chase Manhattan Bank is the custodian of the Fund's assets. Franklin
Templeton Investor Services, Inc. serves as the Fund's dividend disbursing and
transfer agent. Franklin Templeton Services, 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 net 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').
B-4
<PAGE>
<PAGE>
SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout the periods indicated)
This table summarizes the Fund's financial history.
Class A Shares
<TABLE>
<CAPTION>
Year Ended August 31,
----------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(For a share outstanding throughout
the year)
Net asset value, beginning of year $ 22.47 $ 18.75 $ 18.96 $ 18.95 $ 17.47 $ 15.81
Income from investment operations:
Net investment income .50 .54 .50 .39 .29 .32
Net realized and unrealized gains
(losses) (2.76) 4.48 1.34 1.20 2.58 2.97
----------- ----------- ---------- ---------- ---------- ----------
Total from investment operations (2.26) 5.02 1.84 1.59 2.87 3.29
----------- ----------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income (.55) (.49) (.44) (.29) (.27) (.36)
Net realized gains (2.88) (.81) (1.61) (1.29) (1.12) (1.27)
----------- ----------- ---------- ---------- ---------- ----------
Total distributions (3.43) (1.30) (2.05) (1.58) (1.39) (1.63)
----------- ----------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 16.78 $ 22.47 $ 18.75 $ 18.96 $ 18.95 $ 17.47
----------- ----------- ---------- ---------- ---------- ----------
----------- ----------- ---------- ---------- ---------- ----------
Total Return* (12.61)% 28.28% 10.85% 9.51% 17.47% 23.57%
Ratios/Supplemental Data
Net assets, end of year (000's) $11,116,564 $12,129,283 $8,450,737 $6,964,298 $5,611,560 $4,033,911
Ratios to average net assets:
Expenses 1.08% 1.08% 1.09% 1.12% 1.10% 1.03%
Net investment income 2.53% 2.81% 2.87% 2.40% 1.76% 2.10%
Portfolio turnover rate............... 48.23% 41.81% 19.63% 35.21% 27.35% 28.89%
<CAPTION>
1992 1991 1990 1989
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per Share Operating Performance
(For a share outstanding throughout
the year)
Net asset value, beginning of year $ 16.14 $ 15.23 $ 16.62 $ 13.65
Income from investment operations:
Net investment income .41 .45 .57 .58
Net realized and unrealized gains
(losses) .92 1.68 (.87) 3.12
---------- ---------- ---------- ----------
Total from investment operations 1.33 2.13 (.30) 3.70
---------- ---------- ---------- ----------
Less distributions from:
Net investment income (.44) (.54) (.62) (.48)
Net realized gains (1.22) (.68) (.47) (.25)
---------- ---------- ---------- ----------
Total distributions (1.66) (1.22) (1.09) (.73)
---------- ---------- ---------- ----------
Net asset value, end of year $ 15.81 $ 16.14 $ 15.23 $ 16.62
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total Return* 9.22% 15.95% (2.01)% 28.38%
Ratios/Supplemental Data
Net assets, end of year (000's) $3,268,644 $2,895,684 $2,466,684 $2,355,306
Ratios to average net assets:
Expenses .88% .75% .67% .66%
Net investment income 2.62% 3.09% 3.70% 4.20%
Portfolio turnover rate............... 29.46% 30.28% 18.47% 11.55%
</TABLE>
- ---------------
* Total return does not reflect sales commissions.
B-5
<PAGE>
<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:
Temporary Investments. When the Investment Manager believes that the
securities trading markets or the economy are experiencing excessive volatility
or a prolonged general decline, or other adverse conditions exist, it may invest
the Fund's portfolio in a temporary defensive manner. Under such circumstances,
the Fund may invest up to 100% of its assets in: (1) U.S. government securities;
(2) bank time deposits denominated in the currency of any major nations; (3)
commercial paper rated A-1 by S&P or Prime-1 by Moody's or, if unrated, issued
by a company which, at the date of investment, had an outstanding debt issue
rated AAA or AA by S&P or Aaa or Aa by Moody's; and (4) repurchase agreements
with banks and broker-dealers.
Repurchase Agreements. The Fund will generally have a portion of its assets
in cash or cash equivalents for a variety of reasons including waiting for a
special investment opportunity or taking a defensive position. To earn income on
this portion of its assets, the Fund may enter into repurchase agreements with
certain banks and broker-dealers. Under a repurchase agreement, the Fund agrees
to buy a U.S. government security from one of these issuers and then to sell the
security back to the issuer after a short period of time (generally, less than
seven days) at a higher price. The bank or broke-dealer must transfer to the
Fund's custodian securities with an initial value of at least 102% of the dollar
amount invested by the Fund in each repurchase agreement.
Options on Securities Indices. Although the Fund has the authority to buy
and sell put and call options on securities indices in standardized contracts
traded on national securities exchanges, boards of trade, or similar entities or
quoted on NASDAQ, it does not currently intend to enter into such transactions.
An option on a securities index is a contract that allows the buyer of the
option the right to receive from the seller cash, in an amount equal to the
difference between the index's closing price and the option's exercise price.
The Fund may only buy options if the total premiums it paid for such options are
5% or less of its total assets.
Structured Investments. Included among the issuers of debt securities in
which the Fund may invest are entities organized and operated solely for the
purpose of restructuring the investment characteristics of various securities.
These entities are typically organized by investment banking firms which receive
fees in connection with establishing each entity and arranging for the placement
of its securities. This type of restructuring involves the deposit with or
purchases by an entity, such as a corporation or trust, of specified instruments
and the issuance by that entity of one or more classes of securities
('structured investments') backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued structured investments to create securities
with different investment characteristics such as varying maturities such as
varying maturities, payment priorities or interest rate provisions; the extent
of the payments made with respect to structured investments is dependent on the
extent of the cash flow on the underlying instruments. Because structured
investments of the type in which the Fund anticipates investing typically
involve no credit enhancement, their credit risk will generally be equivalent to
that the underlying instruments.
The Fund is permitted to invest in a class of structured investments that is
either subordinated or unsubordinated to the right of payment of another class.
Subordinated structured investments typically have higher yields and present
greater risks than unsubordinated structure investments. Although the Fund's
purchase of subordinated structured investments would have a similar economic
effect to that of borrowing against the underlying securities, the purchase will
not be deemed to be leverage for purposes of the limitations placed on the
extent of the Fund's assets that may be used for borrowing activities.
Certain issuers of structured investments may be deemed to be 'investment
companies' as defined in the Investment Company Act of 1940 (the '1940 Act'.) As
a result, the Fund's investment in these structure investments are typically
sold in private placement transactions, and there currently is no active trading
market for structured investments. To the extent such investments are illiquid,
they will be subject to the Fund's restrictions on investments in illiquid
securities.
B-6
<PAGE>
<PAGE>
Stock Index Futures Contracts. Changes in interest rates, securities price
or foreign currency valuations may affect the value of the Fund's investments.
To reduce its exposure to these factors, the Fund may buy and sell stock index
future contracts. A stock index futures contract is an agreement to take or make
delivery of an amount of cash based on the difference between the value of the
index at the beginning and end of the contract period. Although the Fund may
invest up to 20% of its total assets in stock index futures contracts, it
presently has no intention of entering into these transactions.
Securities Lending. 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. These 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 retains all or a portion of the
interest received on investment of the cash collateral or receives a fee from
the borrower. 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 have voting rights with respect to the securities. However, as with
other extensions of credit, there are risks of delay in recovery or even loss of
rights in collateral should the borrower fail.
Fundamental Investment Policies and Restrictions. The Fund has adopted the
following investment policies and restrictions as fundamental policies. This
means they may only be changed if the change is approved by (i) more than 50% of
the Fund's outstanding shares or (ii) 67% or more of the Fund's shares present
at a shareholder meeting if more than 50% of the Fund's outstanding shares are
represented at the meeting in person or by proxy, whichever is less.
The Fund seeks to achieve its investment goal of long-term capital growth
through a flexible policy of investing in stocks and debt obligations of
companies and governments of any nation. Although the Fund generally invests in
common stock, it may also invest in preferred stocks and certain debt securities
(which may include structured investments), rated or unrated, such as
convertible bonds and bonds selling at a discount. Whenever, in the judgment of
the 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 meeting
the quality ratings set forth under 'Temporary Investments', 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. The Fund may not
invest more than 10% of its assets in securities with a limited trading market.
In addition the Fund may 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.
B-7
<PAGE>
<PAGE>
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.
The Fund may also be subject to investment limitations imposed by foreign
jurisdictions in which the Fund sells its shares.
If a bankruptcy or other extraordinary event occurs concerning a particular
security the Fund owns, the Fund may receive stock, real estate, or other
investments that the Fund would not, or could not, buy. If this happens, the
Fund intends to sell such investments as soon as practicable while maximizing
the return to shareholders.
If a percentage restriction is met at the time of investment, a later
increase or decrease in the percentage due to a change in the value of liquidity
of portfolio securities or the amount of assets will not be considered a
violation of any of the foregoing restrictions. 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 (NAV) per share is paid and received when shares are
bought or sold.
The value of a mutual fund is determined by deducting the Fund's liabilities
from the total assets of the portfolio. The net asset value per share is
determined by dividing the net asset value of the Fund by the number of shares
outstanding.
The Fund calculates the NAV per share of each class each business day at the
close of trading on the New York Stock Exchange (normally 1:00 p.m. pacific
time). The Fund does not calculate the NAV on days the New York Stock Exchange
(NYSE) is closed for trading, which include New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
When determining its NAV, the Fund values cash and receivables at their
realizable amounts, and records interest as accrued and dividends on the
ex-dividend date. If market quotations are readily available for portfolio
securities listed on a securities exchange or on the NASDAQ National Market
System, the Fund values those securities at the last quoted sale price of the
day or, if there is no reported sale, within the range of the most recent quoted
bid and ask prices. The Fund values over-the-counter portfolio securities within
the range of the most recent quoted bid and ask prices. If portfolio securities
trade both in the over-the-counter market and on a stock exchange, the Fund
values them according to the broadest and most representative market as
determined by the manager.
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The Fund values portfolio securities underlying actively traded call options
at their market as determined above. The current market value of any option the
Fund holds is its last sale price on the relevant exchange before the Fund
values its assets. If there are no sales that day or if the last sale price is
outside the bid and ask prices, the Fund values options within the range of the
current closing bid and ask prices if the Fund believes the valuation fairly
reflects the contract's market value.
Trading in securities on European, Far Eastern and some other securities
exchanges and over-the-counter markets is normally completed well before the
close of business of the NYSE on each day that the NYSE is open. Trading in
European or Far Eastern securities generally, or in a particular country or
countries, may not take place on every NYSE business day. Furthermore, trading
takes place in various foreign markets on days that are not business days for
the NYSE and on which the Fund's NAV is not calculated. Thus, the calculation of
the Fund's NAV does not take place contemporaneously with the determination of
the prices of many of the portfolio securities used in the calculation and, if
events materially affecting the values of these foreign securities occur, the
securities will be valued at fair value as determined by management and approved
in good faith by the board.
Generally, trading in corporate bonds, U.S. government securities and money
market instruments is substantially completed each day at various times before
the close of the NYSE. The value of these securities used in computing the NAV
is determined as of such times. Occasionally, events affecting the values of
these securities may occur between the times at which they are determined and
the close of the NYSE that will not be reflected in the computation of the NAV.
If events materially affecting the values of these securities occur during this
period, the securities will be valued at their fair value as determined in good
faith by the board.
Other securities for which market quotations are readily available are
valued at the current market price, which may be obtained from a pricing
service, based on a variety of factors including recent trades, institutional
size trading in similar types of securities (considering yield, risk and
maturity) and/or developments related to specific issues. Securities and other
assets for which market prices are not readily available are valued at fair
value as determined following procedures approved by the board. With the
approval of the board, the Fund may use a pricing service, bank or securities
dealer to perform any of the above described functions.
The Fund's Investment Manager
The Fund has a board of directors. The board is responsible for the overall
management of the Fund, including general supervision and review of the Fund's
investment activities. The board, in turn, elects the administering the Fund's
day-to-day operations. The board also monitors the Fund to ensure no material
officers of the Fund who are responsible for conflicts exist among share
classes. While none is expected, the board will act appropriately to resolve any
material conflict that may arise.
The Investment Manager of the Fund is Templeton Global Advisors Limited,
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. During the fiscal year ended August 31,
1998, management fees totaling 0.61% of the average daily net assets of the Fund
were paid to the Investment Manager. Total expenses for Class A shares were
1.08% of average daily net assets.
The Investment Manager performs similar services for other funds and
accounts and there may be times when the actions taken with respect to the
Fund's portfolio will differ from those taken by the Investment Manager on
behalf of other funds and accounts. Neither the Investment Manager and its
affiliates, its officers, directors or employees, nor the Officers and Directors
of the Fund are prohibited from investing in securities held by the Fund or
other funds and accounts which are managed or administered by the Investment
Manager to the extent such transactions comply with the Fund's Code of Ethics.
Since October 1, 1996, Franklin Templeton Services, Inc. (the 'Fund
Administrator') provides certain administrative facilities and services for the
Fund. Prior to that date Templeton Global Investors, Inc. provided the same
services to the Fund.
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The Fund's Plan of Distribution
The Fund, pursuant to Rule 12b-1 under the 1940 Act, has adopted a
Distribution Plan (the 'Plan') for each class of its shares. Under the Plan for
the Class A Shares, the Fund may pay up to a maximum of 0.25% per year of Class
A's average daily net assets, payable quarterly, for expenses incurred in the
promotional and distribution of Class A Shares. The terms and provisions of the
Plan are consistent with Rule 12b-1. In no event shall the aggregate asset-based
sales charges, which include payments made under the Plan, plus any other
payment deemed to be made under the Plan, exceed the amount permitted to be paid
under the rules of the National Association of Securities Dealers. To the extent
fees are for distribution or marketing functions, as distinguished from
administrative servicing or agency transactions, certain banks will not entitled
to participate in the Plan as a result of applicable federal law prohibiting
certain banks from engaging in the distribution of mutual fund shares. The Plan
is renewable annually by a vote of the Board, including a majority vote of the
Board members who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan, cast in person at a
meeting called for that purpose.
Under the Plan, costs and expenses not reimbursed in any one given month to
the principal underwriter (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, 1998, there
were no unreimbursed expenses under the Plan. As of August 31, 1998, the Fund
had no 12b-1 fee carryforwards. 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. In
the 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
General Risk There is no assurance that the Fund's investment goal will be
met. The Fund will seek to spread investment risk by diversifying its
investments but the possibility of losses remains. Generally, if the securities
owned by the Fund increase in value, the value of the shares of the Fund which
are owned by the Trust will increase. Similarly, if the securities owned by the
Fund decrease in value, the value of the Fund's shares will also decline. In
this way, the Trust participates in any change in the value of the securities
owned by the Fund.
Stocks. While stocks have historically outperformed other asset classes over
the long term, they tend to go up and down more dramatically over the shorter
term. These price movements may result from factors affecting individual
companies, industries or the securities markets as a whole. Value stock prices
are considered 'cheap' relative to the company's perceived value. They may not
increase in value, as anticipated by the manager, if other investors fail to
recognize the company's value and bid up the price or in markets favoring
faster-growing companies.
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Foreign Securities. Securities of companies and governments located outside
the U.S. may involve risks that can increase the potential for losses in the
Fund. Investments in Depositary Receipts also involve some or all of the
following risks.
Country. General securities market movements in any country where the Fund
has investments are likely to affect the value of the securities the Fund owns
that trade in that country. These movements will affect the Fund's share price
and Fund performance.
The political, economic and social structures of some countries the Fund
invests in may be less stable and more volatile than those in the U.S. The risks
of investing in these countries include the possibility of the imposition of
exchange controls, currency devaluations, foreign ownership limitations,
expropriation, restrictions on removal of currency or other assets,
nationalization of assets, punitive taxes and certain custody and settlement
risks.
The Fund's investments in developing or emerging markets are subject to all
of the risks of foreign investing generally, and have additional heightened
risks due to a lack of established legal, political, business and social
frameworks to support securities markets. Foreign securities markets, including
emerging markets, may have substantially lower trading volumes than U.S.
markets, resulting in less liquidity and more volatility than experienced in the
U.S. While short-term volatility in these markets can be disconcerting, declines
in excess of 50% are not unusual.
Company. Foreign companies are not subject to the same disclosure,
accounting, auditing and financial reporting standards and practices as U.S.
companies and their securities may not be as liquid as securities of similar
U.S. companies. Foreign stock exchanges, trading systems, brokers and companies
generally have less government supervision and regulation than in the U.S. The
Fund may have greater difficulty voting proxies, exercising shareholder rights,
pursuing legal remedies and obtaining judgments with respect to foreign
investments in foreign courts than with respect to U.S. companies in U.S.
courts.
Currency. Many of the Fund's investments are denominated in foreign
currencies. Changes in foreign currency exchange rates will affect the value of
what the Fund owns and the Fund's share price. Generally, when the U.S. dollar
rises in value against a foreign currency, an investment in that country loses
value because that currency is worth fewer U.S. dollars. Devaluation of currency
by a country's government or banking authority also has a significant impact on
the value of any securities denominated in that currency.
Euro. On January 1, 1999, the European Monetary Union (EMU) introduced a new
single currency, the euro, which will replace the national currency for the
eleven participating member countries. If the Fund holds investments in
countries with currencies replaced by the euro, the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting will be impacted.
Because this change to a single currency is new and untested, the
establishment of the euro may result in market volatility. For the same reason,
it is not possible to predict the impact of the euro on the business or
financial condition of European issuers which the Fund may hold in its
portfolio, and their impact on the value of fund shares and fund performance. To
the extent the Fund holds non-U.S. dollar (euro or other) denominated
securities, it will still be exposed to currency risk due to fluctuations in
those currencies versus the U.S. dollar.
Illiquid Securities. The Fund may invest up to 10% of its total assets in
securities with a limited trading market. Such a market can result from
political or economic conditions affecting previously established securities
markets, particularly in emerging market countries.
Interest Rate. When interest rates rise, debt security prices fall. The
opposite is also true: debt security prices go up when interest rates fall.
Generally, interest rates rise during times of inflation or a growing economy,
and fall during an economic slowdown or recession. Securities with longer
maturities usually are more sensitive to interest rate changes than securities
with shorter maturities.
Credit. This is the possibility that an issuer will be unable to make
interest payments or repay principal. Changes in an issuer's financial strength
or in a security's credit rating may affect its value and, thus, impact the
value of Fund shares.
Year 2000. When evaluating current and potential portfolio positions, Year
2000 is one of the factors the Fund's manger considers. The Fund's business
operations depend on a worldwide network of computer systems that contain date
fields, including securities trading systems, securities transfer agent
operations and stock market links. Many of the systems currently use a two digit
date field to represent the date, and unless these systems are changed or
modified, they
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may not be able to distinguish the Year 1900 from the Year 2000 (commonly
referred to as the Year 2000 problem). In addition, the fact that the Year 2000
is a non-standard leap year may create difficulties for some systems.
The manager will rely upon public filings and other statements made by
companies about their Year 2000 readiness. Issuers in countries outside the
U.S., particularly in emerging markets, may not be required to make the same
level of disclosure about Year 2000 readiness as is required in the U.S. The
manager, of course, cannot audit any company and its major suppliers to verify
their Year 2000 readiness.
If a company in which the Fund is invested is adversely affected by Year
2000 problems, it is likely that the price of its security will also be
adversely affected. A decrease in the value of one or more of the Fund's
portfolio holdings will have a similar impact on the price of the Fund's shares.
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
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predict whether any such litigation may be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trust.
The Units
On a recent date, each Unit represented a fractional undivided interest in
the Securities and the net income of the Trust set forth under 'Summary of
Essential Information.' Thereafter, if any Units are redeemed by the Trustee,
the amount of Securities in the Trust will be reduced by amounts allocable to
redeemed Units, and the fractional undivided interest represented by each Unit
in the balance will be increased, although the actual interest in the Trust
represented by each Unit will remain unchanged. Units will remain outstanding
until redeemed upon tender to the Trustee by any Unit Holder (which may include
the Sponsor) or until the termination of the Trust itself (see 'Rights of Unit
Holders--Redemption' and 'Amendment and Termination of the
Indenture--Termination,' herein).
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, capital gain of individuals, estates and trusts from Securities
held for more than 1 year is subject to a maximum nominal tax rate of 20%. Net
capital gain may result in a disallowance of itemized deductions and/or affect a
personal exemption phase-out.
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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 as required, 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
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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 the difference between the amount of
undistributed capital gains required to be so included in computing such Fund
shareholder's long-term capital gains and the tax deemed paid on such
undistributed capital gains by such shareholder in respect of such shares.
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 in
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.
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 Taxpayer Relief Act of 1997 has added a requirement that no foreign tax
credit be allowed for any withholding tax on a dividend unless the recipient of
the dividend satisfies a specified holding period and meets certain other
requirements. Under the 1997 Act's amendment, the Fund will have to notify
shareholders of the amount of foreign taxes that are not allowable as a credit
by reason of this holding period requirement.
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
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<PAGE>
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 1999 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 1999 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. The 1999 limitation applies to individual
taxpayers with adjusted gross income in excess of a $126,600 threshold amount
($63,300 for a married taxpayer filing separately). The $126,600 (or $63,300)
threshold amount will be indexed for inflation after 1999. 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.
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<PAGE>
<PAGE>
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 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.
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.
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
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<PAGE>
<PAGE>
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. 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.
<TABLE>
<CAPTION>
Sales Charge, Primary
and Secondary Market
------------------------
Percent Percent
of Public of Net
Offering Amount
Number of Units Price Invested
--------------------------------------------------------------- ---------- --------
<S> <C> <C>
Less than 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 or more Units........................................... 2.00% 2.041%
</TABLE>
The reduced sales charges as shown on the chart above will apply to such
purchases of Units in any fourteen-day period which qualify for the volume
discount by the same person, including a partnership or corporation, other than
a dealer, in the amounts stated herein, and for this purpose, purchases of Units
of 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
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<PAGE>
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 bid 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
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<PAGE>
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 The Chase Manhattan
Bank, acting as distribution agent, to invest such amounts on behalf of the
participating Unit Holder in Fund Shares at such shares' net asset value which
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
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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.
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<PAGE>
Government Securities Equity Trust
REINVESTMENT APPLICATION
I/We hereby authorize and direct The Chase Manhattan Bank to apply all
distributions that I/we have elected to be reinvested as a registered
unitholder(s) of a Government Securities Equity Trust Series towards the
purchase of additional shares of the 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.
<TABLE>
<S> <C>
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:
</TABLE>
Forward application to: The Chase Manhattan Bank
P.O. Box 5185
New York, NY 10274-5185
<PAGE>
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<PAGE>
<PAGE>
RIGHTS OF UNIT HOLDERS
Certificates
Ownership of Units is evidenced by registered certificates executed by the
Trustee and the Sponsor. Certificates are transferable or interchangeable upon
presentation at the corporate trust office of the Trustee, properly endorsed or
accompanied by an instrument of transfer satisfactory to the Trustee and
executed by the Unit Holder or his authorized attorney, together with the
payment of $2.00, if required by the Trustee (not currently required), or such
other amount as may be determined by the Trustee and approved by the Sponsor,
and any other tax or governmental charge imposed upon the transfer of
Certificates. The Trustee will replace any mutilated, lost, stolen or destroyed
Certificate upon proper identification, satisfactory indemnity and payment of
charges incurred. Any mutilated Certificate must be presented to the Trustee
before any substitute Certificate will be issued.
Certain Limitations
The death or incapacity of any Unit Holder will not operate to terminate the
Trust nor entitle the legal representatives or heirs of such Unit Holder to
claim an accounting or to take any other action or proceeding in any court for a
partition or winding up of the Trust.
No Unit Holder shall have the right to vote except with respect to removal
of the Trustee or amendment and termination of the Trust as prescribed in the
Indenture (see 'Administration of the Trust--Amendment' and 'Administration of
the Trust--Termination,' herein). Unit Holders shall have no right to control
the operation or administration of the Trust in any manner.
Distributions
The terms of the Treasury Obligations do not provide for periodic payment to
the holders thereof of the annual accrual of discount. To the extent that
dividends, 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.')
B-23
<PAGE>
<PAGE>
Reports and Records
With each distribution, the Trustee will furnish to the Unit Holders a
statement of the amount of dividends and other receipts, if any, distributed,
expressed in each case as a dollar amount per Unit.
Within a reasonable time after the end of each calendar year, the Trustee
will furnish to each person who was a Unit Holder of record at any time during
the calendar year a statement setting forth: (1) as to the Income Account:
dividends and other cash amounts received, deductions for payment of applicable
taxes and for fees and expenses of the Trust, redemptions of Units, and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (2) as to
the Principal Account: the dates of disposition and identity of any Securities
and the net proceeds received therefrom, deductions for payments of applicable
taxes and for fees and expenses of the Trust and redemptions of Units, and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (3) a list
of the Securities held and the number of Units outstanding on the last business
day of such calendar year; (4) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; (5) amounts actually
distributed during such calendar year from the Income Account and from the
Principal Account, separately stated, expressed both as total dollar amounts and
as dollar amounts representing the pro rata share of each Unit outstanding on
the last business day of such calendar year; and (6) an annual report of
original issue discount accrual.
The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of Unit
Holders, a current list of Securities in the portfolio and a copy of the
Indenture.
Redemption
Tender of Units
Units may be tendered to the Trustee for redemption at its corporate trust
office at 4 New York Plaza, New York, New York 10004, upon delivery of a request
for redemption and the Certificates for the Units requested to be redeemed and
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of the Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will 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').
B-24
<PAGE>
<PAGE>
Purchase by the Sponsor of Units Tendered for Redemption
The Indenture requires that the Trustee notify the Sponsor of any tender of
Units for redemption. So long as the Sponsor is maintaining a bid in the
secondary market, the Sponsor, prior to the close of business on the second
succeeding business day, may purchase any Units tendered to the Trustee for
redemption at the price so bid by making payment therefor to the Unit Holder in
an amount not less than the Redemption Price and not later than the day on which
the Units would otherwise have been redeemed by the Trustee, i.e., the Unit
Holder will receive the Redemption Price from the Sponsor within 7 days of the
date of tender (see 'Public Offering of Units--Secondary Market'). Units held by
the Sponsor may be tendered to the Trustee for redemption as any other Units.
The price of any Units resold by the Sponsor will be the Public Offering Price
determined in the manner provided in this Prospectus (see 'Public Offering of
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.
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, The BlackRock Government Income Trust, Command Government Fund, Command
Money Fund, Command Tax-Free Fund, Global Utility Fund, Inc., Nicholas-Applegate
Fund, Inc., Prudential Allocation Fund, Prudential California Municipal Fund,
Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond Fund,
Inc., Prudential Dryden Fund, Prudential Emerging Growth Fund, inc., Prudential
Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe Growth Fund,
Inc., Prudential Global Genesis Fund, Inc., The Global Government Plus Fund,
Inc., Prudential Global Limited Maturity Fund, Inc., Prudential Global Natural
Resources Fund, Inc., The Global Total Return Fund, Inc., Prudential Government
Income Fund, Inc., Prudential High Yield Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential Intermediate Global Income Fund, Inc.,
Prudential Jennison Series Fund, Inc., Prudential MoneyMart Assets, Inc.,
B-25
<PAGE>
<PAGE>
Prudential Mortgage Income Fund, Inc., Prudential Multi-Sector Fund, Inc.,
Prudential Municipal Bond Fund, Prudential Municipal Series Fund, Prudential
National Municipals Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential
Small Companies Fund, Inc., Prudential Special Money Market Fund, Inc.,
Prudential Structured Maturity Fund, Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential Utility Fund, Inc. and Prudential World Fund.
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 The Chase Manhattan Bank, a New York bank with its principal
executive office at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, New York, New York 10004. The
Trustee is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System. In connection with the storage and handling of
certain Securities deposited in the Trust, the Trustee may use the services of
The Depository Trust Company. These services may include safekeeping of the
Securities and coupon-clipping, computer book-entry transfer and institutional
delivery services. The Depository Trust Company is a limited purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System and a clearing agency registered under the Securities
Exchange Act of 1934.
Limitations on Liability
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the disposition of any moneys, Securities or
Certificates or in respect of any evaluation or for any action taken in good
faith reliance on prima facie properly executed documents except in cases of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties. In addition, the Indenture provides that the Trustee
shall not be personally liable for any taxes or other governmental charges
imposed upon or in respect of the Trust which the Trustee may be required to pay
under current or future laws of the United States or any other taxing authority
having jurisdiction.
Responsibility
The Trustee shall not be liable for any default, failure or defect in any
Security or for any depreciation or loss by reason of any such sale of Fund
Shares or by reason of the failure of the Sponsor to give directions to the
Trustee.
B-26
<PAGE>
<PAGE>
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 J.J. Kenny
Co., Inc., with main offices located at 65 Broadway, New York, New York 10006.
Limitations on Liability
The Trustee, Sponsor and Unit Holders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Indenture shall be made in good faith
upon the basis of the best information available to it; provided, however, that
the Evaluator shall be under no liability to the Trustee, Sponsor or Unit
Holders for errors in judgment. The Evaluator shall, however, be liable for its
own willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties under the Indenture.
Responsibility
The Indenture requires the Evaluator to evaluate the Treasury Obligations on
the basis of their bid prices on the last business day of June and December in
each year, on the day on which any Unit is tendered for redemption and on any
other day such evaluation is desired by the Trustee or is requested by the
Sponsor. For information relating to the responsibility of the Evaluator to
evaluate the Treasury Obligations, see 'Public Offering of Units--Public
Offering Price.'
Resignation
The Evaluator may resign or may be removed by the Sponsor, and the Sponsor
is to use its best efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment by the
successor Evaluator. If upon resignation of the Evaluator no successor accepts
appointment within thirty days after notice of resignation, the Evaluator may
apply to a court of competent jurisdiction for the appointment of a successor.
B-27
<PAGE>
<PAGE>
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.
B-28
<PAGE>
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Portfolio Securities of
the Government Securities Equity Trust included in this Prospectus have been
examined by Deloitte & Touche LLP, certified public accountants, as stated in
their report appearing herein, and are included in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
B-29
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
No person is authorized to give any information or to make any
representations with respect to this investment company not contained in this
Prospectus; and any information or representation not contained herein must not
be relied upon as having been authorized. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state to
any person to whom it is not lawful to make such offer in such state.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES EQUITY TRUST
Series 6
Table of Contents
Page
-----
<S> <C>
Summary of Essential Information........................ A-iv
Independent Auditors' Report............................ A-1
Statement of Financial Condition........................ A-2
Schedule of Portfolio Securities........................ A-9
The Trust............................................... B-1
Trust Formation..................................... B-1
Securities Selection................................ B-2
Stripped U.S. Treasury Obligations.................. B-2
Templeton Growth Fund, Inc.......................... B-3
General Information Regarding the Fund.............. B-3
Investment Strategies and Restrictions.............. B-5
Net Asset Value of the Fund Shares.................. B-6
The Fund's Investment Manager....................... B-7
The Fund's Plan of Distribution..................... B-7
Risk of Investment in Units......................... B-8
What are the Fund's Potential Risks?................ B-8
The Units........................................... B-11
Tax Status of the Trust................................. B-11
Retirement Plans........................................ B-14
Public Offering of Units................................ B-14
Public Offering Price............................... B-14
Public Distribution................................. B-15
Secondary Market.................................... B-15
Profit of Sponsor................................... B-16
Volume Discount..................................... B-16
Employee Discount................................... B-16
Exchange Option......................................... B-17
Federal Income Tax Consequences..................... B-18
Reinvestment of Trust Distributions..................... B-18
Expenses and Charges.................................... B-18
Initial Expenses.................................... B-18
Fees................................................ B-18
Other Charges....................................... B-18
Rights of Unit Holders.................................. B-21
Certificates........................................ B-21
Certain Limitations................................. B-21
Distributions....................................... B-21
Reports and Records................................. B-22
Redemption.......................................... B-22
Sponsor................................................. B-23
Limitations on Liability............................ B-24
Responsibility...................................... B-24
Resignation......................................... B-25
Trustee................................................. B-25
Limitations on Liability............................ B-25
Responsibility...................................... B-25
Resignation......................................... B-25
Evaluator............................................... B-26
Limitations on Liability............................ B-26
Responsibility...................................... B-26
Resignation......................................... B-26
Amendment and Termination of the Indenture.............. B-26
Amendment........................................... B-26
Termination......................................... B-26
Tax Impact of In Kind Distribution Upon
Termination......................................... B-27
Legal Opinions.......................................... B-27
Independent Auditors.................................... B-27
</TABLE>
Sponsor
Prudential Securities Incorporated
One Seaport Plaza
199 Water Street
New York, New York 10292
Trustee
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Evaluator
Kenny S&P Evaluation
Services, a division of
J.J. Kenny Co., Inc.
65 Broadway
New York, New York 10006
Fund Shares
Templeton Growth
Fund, Inc.
700 Central Avenue
St. Petersburg, FL 33701-3628
<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 September 28, 1998.
**Ex-4.a - Trust Indenture and Agreement dated
May 16, 1989.
*Ex-23 - Consent of Kenny S&P Evaluation
Services, a division of J.J. Kenny
Co., Inc. (as evaluator)
****Ex-24 - Powers of Attorney executed by a
majority of the Board of Directors of
Prudential Securities Incorporated.
*Ex-27 - Financial Data Schedule.
Ex-99 - Information as to Officers and
Directors of Prudential Securities
Incorporated is incorporated by
reference to Schedules A and D of
Form BD filed by Prudential
Securities Incorporated pursuant to
Rules 15b-1 and 15b3-1 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 Registration Statement under the Securities Act of 1933 of
II-1
<PAGE>
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, National Equity Trust, Top Ten Portfolio Series 3,
Registration No. 333-15919 and National Equity Trust, Low Five
Portfolio Series 17, Registration No. 333-44543.
***** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
Prudential Unit Trusts, Insured Tax-Exempt Series 1,
Registration No. 2-89263.
****** Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
National Municipal Trust, Insured Series 43, Registration
No. 33-29314.
******* Incorporated by reference to exhibit of same designation filed
with the Securities and Exchange Commission as an exhibit to
the Registration Statement under the Securities Act of 1933 of
National Municipal Trust, Series 186, Registration No. 33-54697
and National Equity Trust, S&P 500 Strategy Trust Series 2,
Registration No. 333-39521.
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 28th day of January, 1999.
Government Securities Equity Trust Series 6
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By the following persons,a who
constitute a majority of the
Board of Directors of Prudential
Securities Incorporated
A. Laurence Norton, Jr.
Leland B. Paton
Martin Pfinsgraff
Vincent T. Pica II
James D. Price
Hardwick Simmons
Lee B. Spencer, Jr.
Brian M. Storms
By /s/ Kenneth Swankie
(Kenneth Swankie,
Senior Vice President,
Manager--Unit Investment
Trust Department, as
authorized signatory for
Prudential Securities
Incorporated and Attorney-
in-Fact for the persons
listed above)
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF COUNSEL
The consent of counsel to the use of its name in the Prospectus
included in this Registration Statement is contained in its opinion filed
as Exhibit 5 to this Registration Statement.
II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report, dated January 13, 1999, 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
DELOITTE & TOUCHE LLP
January 25, 1999
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 28, 1999
Prudential Securities Incorporated
1 New York Plaza
New York, NY 10292
Re: Government Securities Equity Trust
Post-Effective Amendment No. 5
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 Registration Statement of the
references to Kenny S&P Evaluation Services, a division of J.J. Kenny
Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in
the above-referenced Amendment to the Registration Statement for the
respective bonds comprising the Trust portfolio are the ratings currently
indicated in our KENNYBASE database as of the date of the evaluation
report.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange commission.
Sincerely,
Frank A. Ciccotto
Frank A. Ciccotto
Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR GOVERNEMENT SECURITIES TRUST
SERIES 6 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
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<NAME> GOVERNEMENT SECURITIES EQUITY TRUST
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<NAME> GOVERNMENT SECURITIES EQUITY TRUST
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<FISCAL-YEAR-END> Sep-30-1998
<PERIOD-START> Oct-1-1997
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