UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from to
Commission File Number: 000-17313
GOVERNMENT TRUST 2-F
(Exact name of registrant as specified in its charter)
Illinois 36-6915817
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
The Bank of New York Mellon Trust Company, N.A.
(formerly J.P. Morgan Trust Company, N.A.), Trustee
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (312) 827-8617
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Zero Coupon Certificates, Class 2-F
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. Not Applicable.
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [X] (Do not check if a smaller reporting company)
Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter. Not Applicable
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1 Any annual report to security holders; (2) Any proxy
information statement; and, (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended date December 24, 1980). None
PART I
Item 1. Business.
Not Applicable.
Item 1A. Risk Factors.
Not Applicable.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Not Applicable.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
Certificate Holders as of December 31, 2008, Trust 2-F: 360
Item 6. Selected Financial Data.
Not Applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Not Applicable.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
Item 8. Financial Statements and Supplementary Data.
See Item 15. Exhibits, Financial Statement Schedules.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 9A. Controls and Procedures.
As of the end of the period covered by this report, an evaluation was
carried out by Lawrence M. Kusch, Assistant Vice President of the
Trustee, of the effectiveness of the Trust's disclosure controls and
procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e).
Based on that evaluation, Mr. Kusch concluded that the Trust's
disclosure controls and procedures were effective because such
controls and procedures did ensure that a report by management on the
Trust's internal control over financial reporting as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f) was included in the Trust's
Form 10-K for the year 2008. Such report appears below.
Management of the Trustee is responsible for establishing and
maintaining adequate internal control over financial reporting for the
Trust, as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f). Management of the Trustee has assessed the effectiveness of
the Trust's internal control over financial reporting as of December
31, 2008. In making this assessment, management used the criteria
established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based upon such assessment, management of the Trustee believes that,
as of December 31, 2008, the Trust's internal control over financial
reporting is effective based upon those criteria. This annual report
does not include an attestation report of the Trust's registered
public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
Trust's registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Trust to
provide only management's report in this annual report.
There have not been any changes in the Trust's internal controls and
procedures for financial reporting as defined in Exchange Act Rule
13a-15(f) and 15d-15(f) during the fourth quarter of 2008 that have
materially affected, or are reasonably likely to materially affect,
the Trust's internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Not Applicable.
Item 11. Executive Compensation.
Not Applicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
Not Applicable.
Item 13. Certain Relationships and Related Transactions, and Director
Independence.
None.
Item 14. Principal Accounting Fees and Services.
Deloitte & Touche LLP 2008 Audit Expense = $26,459.73
PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following documents are filed as part of this report:
(1) The information presented in each semi annual report
(2) The report of the independent registered public accounting firm
regarding the annual audit of the financial statements of the
Trust required under the Declaration of Trust stating the
financial statements are presented in accordance with accounting
principles generally accepted in the United States of America.
(3) Exhibits:
31.1 Certification by Trustee pursuant to Rule 13a-14 or
15d-14 of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification by Trustee pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GOVERNMENT TRUST 2-F
By: The Bank of New York Mellon Trust Company, N.A.
(formerly J.P. Morgan Trust Company, N.A.)
Not in its individual capacity but solely
as Trustee on behalf of the Government Trust 2-F
By: /s/ Lawrence M. Kusch
-----------------------------------------
Name: Lawrence M. Kusch
Title: Assistant Vice President
Date: March 30, 2009
REPORTS TO HOLDERS OF GOVERNMENT TRUST
May 15, 2008
The Bank of New York Trust Company, N.A.
2 N LaSalle Street, Suite 1020
Chicago, IL 60602
1-800-254-2826
May 15, 2008
To The Holders of
Government Trust Certificates
Zero Coupon Class 2-F
In accordance with Section 4.1 of the Declaration of Trust ("Trust"), The Bank
of New York Trust Company, N.A. (formerly J.P. Morgan Trust Company, N.A.), as
Trustee and not in its individual capacity ("Trustee"), hereby provides the
holders of the above-mentioned certificates this Semi-annual Report relating to
the May 15, 2008 Certificate Payment Date.
Any capitalized terms used herein shall have the meaning assigned to them in the
Trust.
1. The aggregate dollar amount distributed to holders of Class 2-F
Certificates: $44,916,897.38
2. The Principal Balance of the Class 2-F Note after the May 5, 2008
Note Payment Date: $203,460.00
3. The Deficient amount of the Note Payment: $-0-
Neither a delinquency in payment under any of the Notes nor an Event of Default
has occurred and is continuing.
I, Lawrence M. Kusch, a Responsible Officer of the Trustee, to the best of my
knowledge and belief, certify that this Semi-annual Report is complete and
accurate. If you have any questions regarding this notice please contact our
Customer Service group directly at (800) 275-2048 for further assistance.
/s/ Lawrence M. Kusch
-------------------------
Lawrence M. Kusch
AVP, Relationship Manager
For The Bank of New York Trust Company, N.A.
(formerly J.P. Morgan Trust Company, N.A.), as
Trustee and not in its individual capacity.
REPORTS TO HOLDERS OF GOVERNMENT TRUST
November 17, 2008
The Bank of New York Mellon Trust Company, N.A.
2 N LaSalle Street, Suite 1020
Chicago, IL 60602
1-800-254-2826
November 17, 2008
To The Holders of
Government Trust Certificates
Zero Coupon Class 2-F
In accordance with Section 4.1 of the Declaration of Trust ("Trust"), The Bank
of New York Trust Mellon Company, N.A. (formerly J.P. Morgan Trust Company,
N.A.), as Trustee and not in its individual capacity ("Trustee"), hereby
provides the holders of the above-mentioned certificates this Semi-annual Report
relating to the November 17, 2008 Certificate Payment Date.
Any capitalized terms used herein shall have the meaning assigned to them in the
Trust.
1. The aggregate dollar amount distributed to holders of Class 2-F
Certificates: $39,521,889.55
2. The Principal Balance of the Class 2-F Note after the November 3, 2008
Note Payment Date: $173,849,000.00
3. The Deficient amount of the Note Payment: $-0-
Neither a delinquency in payment under any of the Notes nor an Event of Default
has occurred and is continuing.
I, Lawrence M. Kusch, a Responsible Officer of the Trustee, to the best of my
knowledge and belief, certify that this Semi-annual Report is complete and
accurate. If you have any questions regarding this notice please contact our
Customer Service group directly at (800) 275-2048 for further assistance.
/s/ Lawrence M. Kusch
-------------------------
Lawrence M. Kusch
AVP, Relationship Manager
For The Bank of New York Mellon Trust Company, N.A.
(formerly J.P. Morgan Trust Company, N.A.), as
Trustee and not in its individual capacity.
GOVERNMENT TRUST 2-F
Financial Statements as of and for the
Year Ended December 31, 2008 and Report of
Independent Registered Public Accounting Firm
- ----------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Government Trust 2-F
We have audited the accompanying balance sheet of Government Trust 2-F (the
"Trust") as of December 31, 2008, and the related statements of income, cash
flows and changes in Trust balance for the year then ended. These financial
statements are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Trust is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. Our procedures included confirmation of the securities held by the
Depository as of December 31, 2008 for the account of the Government of Israel,
for the purpose described in Note 4 of the notes to financial statements, by
correspondence with the Depository. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Government Trust 2-F at December 31, 2008,
the results of its operations, cash flows and changes in Trust balance for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte & Touche LLP
- -------------------------
Chicago, Illinois
March 27, 2009
GOVERNMENT TRUST 2-F
BALANCE SHEET
AS OF DECEMBER 31, 2008
- ------------------------------------------
ASSETS
LOAN NOTE RECEIVABLE - at amortized cost,
inclusive of unamortized premium of $763,237 $ 174,603,563
ACCRUED INTEREST RECEIVABLE 2,728,220
--------------
TOTAL $ 177,331,783
==============
LIABILITIES AND TRUST BALANCE
ACCRUED EXPENSES PAYABLE $ 2,101
TRUST BALANCE - Comprised of owners'
equity in Government Trust Certificates 177,329,682
--------------
TOTAL $ 177,331,783
==============
See notes to financial statements.
GOVERNMENT TRUST 2-F
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2008
- -------------------------------------
INTEREST INCOME ON THE LOAN NOTE $ 19,950,492
TRUSTEE FEES AND OTHER EXPENSES (15,702)
--------------
NET INCOME $ 19,934,790
==============
See notes to financial statements.
GOVERNMENT TRUST 2-F
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2008
- ------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Principal and interest received on the loan note $ 84,455,330
Trustee fees and other expenses paid (16,512)
-------------
Net cash provided by operating activities 84,438,818
-------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to certificate owners (84,438,818)
--------------
NET INCREASE IN CASH -
--------------
CASH BALANCE - Beginning of year -
--------------
CASH BALANCE - End of year $ -
==============
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 19,934,790
Amortization of premium on loan note receivable 441,882
Decrease in loan note receivable 63,010,000
Decrease in accrued interest receivable 1,052,956
Decrease in accrued expenses (810)
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 84,438,818
===============
See notes to financial statements.
GOVERNMENT TRUST 2-F
STATEMENT OF CHANGES IN TRUST BALANCE
FOR THE YEAR ENDED DECEMBER 31, 2008
- ------------------------------------------
Trust Balance, Distributions to Trust Balance,
January 1, 2008 Net Income Certificate Owners December 31, 2008
$ 241,833,710 $ 19,934,790 $ (84,438,818) $ 177,329,682
=============== ============== ================== =================
See notes to financial statements.
GOVERNMENT TRUST 2-F
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2008
- ----------------------------------------------
1. ORGANIZATION AND OPERATIONS
Government Trust 2-F (the "Trust") is a limited purpose trust established
under the laws of the state of Illinois pursuant to a Declaration of Trust
(the "Declaration") between the Trust and The Bank of New York Mellon
Trust Company, N.A. (formerly, The Bank of New York Trust Company, N.A.,
formerly, JPMorgan Trust Company, N.A., formerly, Bank One Trust Company,
N.A., formerly, First National Bank of Chicago), as Trustee (the
"Trustee"). The Trust was created for the sole purpose of the issuance and
sale of a single class of Zero Coupon Certificates (the "Certificates").
The assets of the Trust consist of a Promissory Note (a "Loan Note") from
the Government of Israel ("Israel"). The Loan Note is backed by a full
faith and credit guaranty (the "Guaranty") issued by the United States of
America, acting through the Defense Security Assistance Agency of the
Department of Defense (the DSA), of the due and punctual payment of 90% of
all payments of principal and interest due on the Loan Note (the
"Guaranteed Portion") and a security interest in certain collateral,
consisting of non-callable securities issued or guaranteed by the United
States Government, sufficient to pay the remaining 10% of all payments of
principal and interest due on the Loan Note (the "Unguaranteed Secured
Portion"). The Loan Note and Certificates will not be subject to
prepayment or acceleration.
2. LOAN NOTE RECEIVABLE
The Loan Note in the original principal amount of $978,626,000 evidences a
loan made by the Trust to Israel subject to the terms and conditions of a
Loan Agreement (the "Loan Agreement") dated as of November 29, 1988,
between the Trust and Israel. The Loan Note is carried at amortized cost
on the accompanying Balance Sheet because of the Trust's intent and
ability to hold the Loan Note to maturity. The proceeds from the Loan Note
were used to prepay certain loans made to Israel from the Federal
Financing Bank. Semi-annual payments of interest at an annual rate of
9.7410% are due on the Loan Note on each May 3 and November 3 (each a
"Note Payment Date"). On May 3, 2008 and November 3, 2008, Note Payment
Dates, Israel made its scheduled payments of principal on the Loan Note in
the amounts of $33,339,000 and $29,620,000, respectively. Scheduled
principal payments are due on each Note Payment Date as follows:
Payment Principal Payment Principal
Date Payment Date Payment
May 3, 2009 $30,629,000 November 3, 2011 $20,279,000
November 3, 2009 29,620,000 May 3, 2012 20,620,000
May 3, 2010 28,539,000 November 3, 2012 8,888,000
November 3, 2010 5,326,000 May 3, 2013 8,885,000
May 3, 2011 12,154,000
The Government of the United States, acting through the DSA, has agreed to
guarantee the repayment of the Guaranteed Portion due to the Trust under
the Loan Note. Israel has agreed to pledge certain collateral as security
for the repayment of the Unguaranteed Secured Portion, as more fully
described in Note 4. The estimated fair value of the Loan Note
approximates the fair value of the Certificates. The estimated fair value
of the Certificates at December 31, 2008 was approximately $205,093,000.
The estimate of the fair value of the Certificates is based upon the
present values of the cash flows using risk-adjusted spreads to the U.S.
Treasury curve.
3. THE ZERO COUPON CERTIFICATES
On November 29, 1988, the Trust issued 49 separate series of Certificates,
Class 2-F. Forty of such series of Certificates matured prior to December
31, 2008. Each of the remaining series of Certificates will mature on one
of the semi-annual certificate payment dates from May 15, 2009 to May 15,
2013 (each, a "Maturity Date"). Scheduled distributions are due on the
Maturity Dates as follows:
Maturity Distribution Maturity Distribution
Date Amount Date Amount
May 15, 2009 $39,089,358 November 15, 2011 $23,572,427
November 15, 2009 36,589,721 May 15, 2012 31,926,499
May 15, 2010 34,057,190 November 15, 2012 9,752,967
November 15, 2010 9,375,755 May 15, 2013 9,317,411
May 15, 2011 16,038,932
Each of the Certificates evidences an undivided fractional interest in the
Trust, and represents the right to receive a portion of the semi-annual
payments due on the Loan Note held by the Trust.
4. THE COLLATERAL
In accordance with the Collateral Depository Agreement (the "Depository
Agreement") between Israel, the Trustee, and The Bank of New York, as
depository (the "Depository"), and in order to provide security for the
payment of the Unguaranteed Secured Portion, Israel has pledged certain
collateral, consisting of non-callable securities issued or guaranteed by
the United States Government (together with the proceeds thereof, the
"Collateral"). The Collateral is of such amounts and has such payment
dates as to enable the Trustee to receive on or immediately prior to each
semi-annual Maturity Date an amount sufficient to pay the Unguaranteed
Secured Portion if timely payment on the Loan Note has not been received
by the related Note Payment Date. All of the Collateral was deposited with
the Depository on the date that the loans evidenced by the Loan Note were
made by the Trust to Israel.
5. THE TRUSTEE
Pursuant to the Declaration, the Trustee established a separate trust
account for the Trust. All payments received with respect to the Loan
Note, the Guaranty, and any relevant Collateral are deposited in the trust
account for the benefit of the holders of the Certificates after deducting
fees of the Trustee and any additional expenses of the Trust. Any excess
funds remaining in the trust account after the payment of principal on the
Certificates will revert back to Israel to the extent such funds were
provided by Israel but not needed for the above purpose.
6. INCOME TAXES
The Trust is classified as a Grantor Trust and will not be subject to
Federal income taxes. Each Certificate holder will be treated for Federal
income tax purposes as the owner of a pro rata undivided fractional
interest in the assets held by the Trust. The difference between the
financial reporting and income tax bases of the Trust's assets and
liabilities is not significant.
In July 2006, the Financial Accounting Standards Board ("FASB") released,
Accounting for Uncertainty in Income Taxes -- ("FIN 48"), which is
effective for fiscal years beginning after December 15, 2006. FIN 48
clarifies accounting for income taxes recognized in the financial
statements in accordance with FASB Statement 109, Accounting for Income
Taxes. This interpretation prescribes a comprehensive model for how an
entity should recognize, measure, present, and disclose in its financial
statements uncertain tax positions that the entity has taken or expects to
take on a tax return. The Trust adopted FIN 48 effective January 1, 2007
for all open tax years and has determined that no material uncertain tax
positions exist. As a result, the Trust has not recorded any liabilities
for material unrecognized tax benefits as of December 31, 2008.
******