<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1998
REGISTRATION NO. 333-44555
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
A. EXACT NAME OF TRUST:
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
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
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D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
LEE B. SPENCER, JR., ESQ. Copy to:
PRUDENTIAL SECURITIES INCORPORATED KENNETH W. ORCE, ESQ.
ONE SEAPORT PLAZA CAHILL GORDON & REINDEL
199 WATER STREET 80 PINE STREET
NEW YORK, NEW YORK 10292 NEW YORK, NEW YORK 10005
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
AN INDEFINITE NUMBER OF UNITS OF
NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 203
PURSUANT TO RULE 24F-2 PROMULGATED UNDER
THE INVESTMENT COMPANY ACT OF 1940 AS AMENDED.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
INDEFINITE
G. AMOUNT OF FILING FEE:
N/A
------------------------
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
OF THE REGISTRATION STATEMENT.
/x/ Check box if it is proposed that this filing will become effective on March
19, 1998 immediately upon filing pursuant to Rule 487.
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<PAGE>
NATIONAL EQUITY TRUST LOW PORTFOLIO SERIES 203
CROSS-REFERENCE SHEET
PURSUANT TO RULE 404 OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION AS
TO THE PROSPECTUS IN FORM S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
------------------------------------- -------------------------------------
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of Trust.................... Prospectus front cover
(b) Title of securities issued....... Prospectus front cover
2. Name and address of each depositor... Sponsor, Prospectus back cover
3. Name and address of trustee.......... Trustee
4. Name and address of each principal
underwriter........................ Sponsor
5. State of organization of trust....... The Trust
6. Execution and termination of trust
agreement.......................... Summary of Essential Information; The
Trust; Amendment and Termination of
the Indenture--Termination
7. Changes of Name...................... *
8. Fiscal year.......................... *
9. Litigation........................... *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer
securities..................... *
(b) Cumulative or distributive
securities..................... *
(c) Redemption....................... Rights of Unit Holders--Redemption
(d) Conversion, transfer, etc........ Rights of Unit Holders--Redemption
(e) Periodic payment plan............ *
(f) Voting rights.................... *
(g) Notice to certificateholders..... The Trust; Rights of Unit
Holders--Reports and Records;
Sponsor--Responsibility; Sponsor--
Resignation; Trustee--Resignation;
Amendment and Termination of the
Indenture
(h) Consents required................ The Trust; Amendment and Termination
of the Indenture
(i) Other provisions................. Tax Status
11. Type of securities comprising
units.............................. Prospectus front cover; The Trust
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* Inapplicable, answer negative or not required.
i
<PAGE>
12. Certain information regarding
periodic payment certificates...... *
13. (a) Load, fees, expenses, etc........ Summary of Essential Information;
Public Offering of Units--Public
Offering Price; Public Offering of
Units--Profit of Sponsor; Public
Offering of Units--Volume Discount;
Public Offering of Units--Employee
Discount; Exchange Option;
Reinvestment Program; Expenses and
Charges
(b) Certain information regarding
periodic payment certificates.. *
(c) Certain percentages.............. Summary of Essential Information;
Public Offering of Units--Public
Offering Price; Public Offering of
Units--Profit of Sponsor; Public
Offering of Units--Volume Discount;
Public Offering of Units--Employee
Discount; Exchange Option
(d) Price differentials.............. Public Offering of Units--Employee
Discount
(e) Certain other fees, etc. payable
by holders..................... Rights of Unit Holders--Certificates
(f) Certain other profits receivable
by depositor, principal
underwriter, trustee or
affiliated persons............. Rights of Unit Holders--Redemption--
Purchase by the Sponsor of Units
Tendered for Redemption
(g) Ratio of annual charges to
income......................... *
14. Issuance of trust's securities....... The Trust; Rights of Unit
Holders--Certificates
15. Receipt and handling of payments from
purchasers......................... *
16. Acquisition and disposition of
underlying securities.............. The Trust--Trust Formation; The
Trusts--Securities Selection;
Rights of Unit Holders--Redemption;
Sponsor--Responsibility
17. Withdrawal or redemption............. Rights of Unit Holders--Redemption
18. (a) Receipt, custody and disposition
of income...................... Rights of Unit Holders--
Distributions; Rights of Unit
Holders--Reports and Records
(b) Reinvestment of distributions.... Reinvestment Program
(c) Reserves or special funds........ Expenses and Charges; Rights of Unit
Holders--Distributions
(d) Schedule of distributions........ *
19. Records, accounts and reports........ Rights of Unit
Holders--Distributions; Rights of
Unit Holders--Reports and Records
20. Certain miscellaneous provisions of
trust agreement.................... Sponsor--Limitations on Liability;
(a) Amendment........................ Sponsor--Resignation;
(b) Termination...................... Trustee--Limitations on Liability;
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* Inapplicable, answer negative or not required.
ii
<PAGE>
(c) and (d) Trustee, removal and
successor...................... Trustee--Resignation;
(e) and (f) Depositor, removal and
successor...................... Amendment and Termination of the
Indenture
21. Loans to security holders............ *
22. Limitation on liability.............. The Trust; Sponsor--Limitations on
Liability; Trustee--Limitations on
Liability; Evaluator--Limitations
on Liability
23. Bonding arrangements................. Additional Information--Item A
24. Other material provisions of trust
agreement.......................... *
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor............ Sponsor
26. Fees received by depositor........... *
27. Business of depositor................ Sponsor
28. Certain information as to officials
and affiliated persons of
depositor.......................... Contents of Registration
Statement--Part II
29. Companies controlling depositor...... Sponsor
30. Persons controlling depositor........ *
31. Payments by depositor for certain
services rendered to trust......... *
32. Payments by depositor for certain
other services rendered to trust... *
33. Remuneration of employees of
depositor for certain services
rendered to trust.................. *
34. Remuneration of other persons for
certain services rendered to
trust.............................. *
35. Distribution of trust's securities in
states............................. Public Offering of Units--Public
Distribution
36. Suspension of sales of trust's
securities......................... *
37. Revocation of authority to
distribute......................... *
38. (a) Method of distribution........... Public Offering of Units
(b) Underwriting agreements.......... Public Offering of Units
(c) Selling agreements............... Public Offering of Units
39. (a) Organization of principal
underwriter.................... Sponsor
(b) N.A.S.D. membership of principal
underwriter.................... Sponsor
40. Certain fees received by principal
underwriter........................ *
41. (a) Business of principal
underwriter.................... Sponsor
(b) Branch offices of principal
underwriter.................... Sponsor
(c) Salesmen of principal
underwriter.................... *
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* Inapplicable, answer negative or not required.
iii
<PAGE>
42. Ownership of trust's securities by
certain persons.................... *
43. Certain brokerage commissions
received by principal
underwriter........................ *
44. (a) Method of valuation.............. Summary of Essential Information;
Public Offering of Units--Public
Offering Price; Public Offering of
Units--Public Distribution; Public
Offering of Units--Secondary
Markets
(b) Schedule as to offering price.... *
(c) Variation in offering price to
certain persons................ Public Offering of Units--Public
Distribution; Public Offering of
Units--Volume Discount; Public
Offering of Units--Employee
Discount; Exchange Option
45. Suspension of redemption rights...... *
46. (a) Redemption Valuation............. Summary of Essential Information;
Rights of Unit Holders--
Redemption--Computation of
Redemption Price per Unit
(b) Schedule as to redemption
price.......................... *
47. Maintenance of position in underlying
securities......................... Public Offering of Unit--Secondary
Market; Rights of Unit
Holders--Redemption--Computation
of Redemption Price per Unit;
Rights of Unit Holders--
Redemption--Purchase by
the Sponsor of Units Tendered for
Redemption
IV. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of
trustee............................ Trustee
49. Fees and expenses of trustee......... Expenses and Charges
50. Trustee's lien....................... Expenses and Charges--Other Charges
V. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's
securities......................... *
VI. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities..................... Prospectus front cover; The
Trust--Trust Formation; The
Trust--Objectives and Securities
Selection; Sponsor--Responsibility
(b) Transactions involving
elimination of underlying
securities..................... *
(c) Policy regarding substitution or
elimination of underlying
securities..................... Sponsor--Responsibility
(d) Fundamental policy not otherwise
covered........................ *
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* Inapplicable, answer negative or not required.
iv
<PAGE>
53. Tax status of trust.................. Prospectus front cover; Tax Status
VII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten
years.............................. *
55.
56. Certain information regarding
periodic payment certificates...... *
57.
58.
59. Financial statements
(Instruction 1(c) to Form S-6)..... Statement of Financial Condition
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* Inapplicable, answer negative or not required.
v
<PAGE>
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
[LOGO]
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The objective of the Trust is total return through an investment for
approximately two years in a portfolio consisting of the five lowest dollar
price per share common stocks of the ten common stocks in the Dow Jones
Industrial Average having the highest dividend yields on March 17, 1998. Dow
Jones & Company, Inc. has not participated in any way in the creation of the
Trust or in the selection of stocks included in the Trust and has not approved
any information included herein relating thereto. The value of the Units of the
Trust will fluctuate with the value of the portfolio of underlying Securities.
Units of the Trust may be suited for purchase by Individual Retirement Accounts,
Keogh Plans and other tax-deferred retirement plans.
Unit Holders may elect, prior to the Termination Date (approximately two years
after the creation of the Trust), one or more of the following options: (1)
receiving their pro rata share of the underlying Securities in kind, (2)
receiving cash upon the liquidation of their pro rata share of the underlying
Securities, (3) investing the amount of cash they would have received upon the
liquidation of their pro rata share of the underlying Securities in units of a
new trust (if one is offered) and (4) exchanging certain underlying Securities
received in kind for units of a new trust (if one is offered) in accordance with
the procedures set forth under 'Securities Disposition Options--Termination
Option--In-Kind Exchange'.
The minimum purchase is $250.00.
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SPONSOR: [LOGO] PRUDENTIAL
SECURITIES
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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.
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PLEASE READ AND RETAIN Prospectus dated March 19, 1998
THIS PROSPECTUS FOR FUTURE REFERENCE.
<PAGE>
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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.
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The NATIONAL EQUITY TRUST, Low Five Portfolio Series 203 (the 'Trust') is
composed of common stock issued by the five companies whose common stocks are
the five lowest dollar price per share common stocks of the ten common stocks in
the Dow Jones Industrial Average having the highest dividend yield on March 17,
1998 (the 'Securities' or 'Security' or 'Low Five', as the context requires),
and contracts and funds for the purchase thereof and/or cash (or a letter of
credit in lieu of cash) with instructions to the Trustee to purchase Securities.
Subsequent to the Date of Deposit, the Sponsor may, but is not obligated to,
deposit additional Securities, contracts to purchase additional Securities
together with a letter of credit and/or cash (or a letter of credit in lieu of
cash) with instructions to purchase additional Securities maintaining to the
extent practicable the proportionate relationship of the number of shares of
each Security in the portfolio of the Trust (the 'Portfolio') immediately prior
to such deposit thereby creating additional Units which Units the Sponsor
intends to offer by means of this Prospectus. (See Part B--'The Trust.')
THE OBJECTIVE of the Trust is total return through an investment for
approximately two years in a portfolio of the five lowest dollar price per share
common stocks of the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield on March 17, 1998. (See 'Summary of Essential
Information' for the Termination Date of the Trust.) There can be no assurance
that such objective can be realized. The factors affecting the value of the
Securities are those factors that have an impact upon the value of equity
securities in general and particularly those factors that affect the economic
and financial condition of each issuer of a Security in particular. (Total
return includes (i) the value per Unit of the Securities in the Portfolio of the
Trust at the termination of the Trust less the value per Unit of the Securities
in the Portfolio of the Trust at the commencement of the Trust plus (ii) the
dividends paid on the Securities during the life of the Trust.)
DISTRIBUTIONS of dividends received (net of expenses) and return of
capital, if any, by the Trust will be made quarterly on or shortly after the
Quarterly Distribution Date to Unit Holders of record on the Record Date
immediately preceding such Quarterly Distribution Date. (See Part B--'Rights of
Unit Holders--Distributions.') Because the expenses of the Trust may exceed the
dividend income received by the Trust there can be no assurance that there will
be any amounts available for distribution to Unit Holders.
PUBLIC OFFERING PRICE of the Units of the Trust during the initial offering
period is equal to the value of the underlying Securities in the Trust's
Portfolio divided by the number of Units outstanding in the Trust, plus the
applicable sales charge. A proportionate share of amounts, if any, in the Income
Account is also added to the Public Offering Price. (See Part B--'Public
Offering of Units--Public Offering Price.') In the case of Unit Holders
exchanging, redeeming or selling Units prior to the Second Year Commencement
Date, the total sales charge consists of an Initial Sales Charge and a Deferred
Sales Charge ($17.50 per 1,000 Units), the total of which equals 2.75% of the
Public Offering Price or 2.778% of the net asset value of the Trust. Unit
Holders holding Units on the Second Year Commencement Date will be charged an
additional Deferred Sales Charge of $17.50 per 1,000 Units, payable at the rate
of $1.75 per 1,000 Units for the first 10 months in the second year of the Trust
(the total Deferred Sales Charge for such Unit Holders will be $35.00 per 1,000
Units -- the Initial Sales Charge and the Deferred Sales Charge payable over 2
years of $35.00 will equal approximately 4.5% of the initial Public Offering
Price.) The Initial Sales Charge is computed by deducting the Deferred Sales
Charge ($17.50 per 1,000 Units) from the aggregate sales charge; thus, on the
date of the Summary of Essential Information, the Initial Sales Charge is $10
per 1,000 Units or 1% of the Public Offering Price. The Initial Sales Charge
will vary with changes in the aggregate sales charge and is deducted from the
purchase price of a Unit at the time of purchase and paid to the Sponsor. The
Initial Sales Charge will be reduced on a graduated basis on purchases of
$50,000 or more. The Deferred Sales Charge is paid through reduction of the net
asset value of the Trust by $1.75 per 1,000 Units monthly on each Deferred Sales
Charge Deduction Date commencing on the first Deferred Sales Charge Deduction
Date shown on the Summary of Essential Information. Units purchased pursuant to
the Reinvestment Program are subject only to remaining deductions of the
Deferred Sales Charge (see 'Reinvestment Program'). Unitholders investing the
proceeds of distribution from a previous terminating Series of National Equity
Trust Low Five Portfolio Series, upon purchase of Units of the Trust, will be
subject only to the Deferred Sales Charge on such Units. Any investor may
acquire Units by an in-kind deposit of securities which replicates
proportionately the portfolio of the Trust and cash, if any, in the Trust. If a
Unit Holder exchanges, redeems or sells his Units to the Sponsor prior to the
last Deferred Sales Charge Deduction Date, the Unit Holder is obligated to pay
any remaining Deferred Sales Charge except that if the exchange, redemption or
sale occurs prior to the Second Year Commencement Date, the Deferred Sales
Charge payable will be $17.50.
SECONDARY MARKET--The Sponsor, although not obligated to do so, presently
intends to maintain a secondary market for the Units in the Trust as more fully
described under Part B--'Public Offering of Units--Secondary Market.' If such a
market is not maintained, a Unit Holder will be able to dispose of his Units
only by tendering his Units to the Trustee for redemption. (See Part B--'Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit.') The
Sponsor's Repurchase Price, like the Redemption Price, will reflect the
deduction from the value of the underlying Securities of any unpaid amount of
the Deferred Sales Charge. Investors should note that the Deferred Sales Charge
of $1.75 per 1,000 Units will be deducted from the net asset value on the first
day of each month commencing on the first Deferred Sales Charge Deduction Date
shown on the Summary of Essential Information, and to the extent the entire
Deferred Sales Charge has not been so deducted or paid at the time of
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<PAGE>
redemption of the Units, the remainder will be deducted from the proceeds of
redemption or in calculating an in-kind redemption. If the Unit Holder owns
Units on the Second Year Commencement Date and exchanges, redeems or sells his
Units prior to the last Deferred Sales Charge Deduction Date, the Unit Holder is
obligated to pay any remaining Deferred Sales Charge, i.e., $35.00 less the
Deferred Sales Charge previously deducted.
TRUST TERMINATION--The Trust will terminate on the Termination Date set
forth in the Summary of Essential Information, approximately two years after the
Date of Deposit (unless terminated earlier; see part B--'Amendment and
Termination of the Indenture--Termination'). A Unit Holder's Units will be
redeemed in kind on the Termination Date by distribution of the Unit Holder's
pro rata share of the Securities and any cash in the Portfolio of the Trust on
such date to the Distribution Agent who will act as agent for such Unit Holder.
SECURITIES DISPOSITION OPTIONS--A Unit Holder who so elects by notifying
the Trustee prior to the Termination Date of the Trust will have the Securities
received on the Termination Date disposed of on behalf of such Unit Holder by
The Chase Manhattan Bank, as 'Distribution Agent' in accordance with one or more
of the following four options as elected by such Unit Holder:
1. to have such underlying Securities distributed in kind no later
than the business day next following the Termination Date. Unit Holders
subsequently selling such distributed Securities will incur brokerage costs
when disposing of such Securities;
2. to receive the Unit Holder's pro rata share of the cash received
by the Distribution Agent (less expenses) upon the sale by the Distribution
Agent of the underlying Securities attributable to Unit Holders electing
this option over a period not to exceed 10 business days commencing on the
Termination Date. Amounts received by the Distribution Agent over such 10
business day period representing the proceeds of the underlying Securities
sold will be held by The Chase Manhattan Bank in accounts which are
non-interest bearing to Unit Holders and which are available for use by The
Chase Manhattan Bank pursuant to normal banking procedures and will be
distributed to Unit Holders within 5 business days after the settlement of
the trade for the last Security to be sold;
3. to invest the proceeds from the sale of the underlying Securities
attributable to Unit Holders electing this option within 30 days of the
Termination Date, as received by the Distribution Agent upon the sale of
such underlying Securities over a period not to exceed 10 business days
commencing on the Termination Date, in units of a subsequent series of
National Equity Trust as designated by the Sponsor (the 'New Series') if
such New Series is offered at such time. The Units of a New Series will be
purchased by the Unit Holder upon the settlement of the trade for the last
Security to be sold. Such purchaser will be entitled to a reduced sales
load upon the purchase of units of the New Series. It is expected that the
terms of the New Series will be substantially the same as the terms of the
Trust described in this Prospectus, and that similar options in a
subsequent series of the Trust will occur in each New Series of the Trust
approximately two years after that New Series' creation. The availability
of this option does not constitute a solicitation of an offer to purchase
Units of a New Series or any other security. A Unit Holder's election to
participate in this option will be treated as an indication of interest
only. At any time prior to the purchase by the Unit Holder of units of a
New Series, such Unit Holder may change his investment strategy and
receive, in cash, the proceeds of the sale of the Securities; and
4. Termination Option--In-Kind Exchange
Unit Holders desiring to exchange their interests in units of a
terminating series of National Equity Trust Low Five Portfolio Series
('Terminating Trust') for Units of the Trust ('New Trust') may do so by so
advising their account executive. Such exchange will be effected by an
in-kind redemption from the Terminating Trust and subsequent in-kind
deposit with the Trustee of the New Trust, as follows:
The number and types of securities constituting a Unit of the New
Trust will be deposited on behalf of a Unit Holder in connection with the
creation of a Unit by the Trustee. Certain of the stocks contained in the
Terminating Trust are likely to be included in the portfolio of the New
Trust ('Duplicated Stocks'). A Unit Holder in the Terminating Trust
electing to receive his interest in such Terminating Trust in-kind and
desiring to purchase Units in the New Trust by an in-kind contribution to
the New Trust would direct that The Chase Manhattan Bank act as agent (the
'Agent') for such Unit Holder to carry out the transactions necessary to
consummate the in-kind deposit. The Agent would be authorized to receive
the Unit Holder's in-kind distribution from the Terminating Trust and to
assemble and deposit, on the Unit Holder's behalf, the package of stocks
needed to make up a Unit in the New Trust. Such assembly and deposit would
include an in-kind contribution to the New Trust of an appropriate amount
of the Unit Holder's interest in Duplicated Stocks. Securities distributed
in-kind from the Terminating Trust not required to make up a Unit in the
New Trust would be sold by the Agent with the cash proceeds of each sale
utilized by the Agent to purchase the stocks, other than the Duplicated
Stocks, necessary to constitute a Unit of the New Trust. The proceeds of
such sales will be reduced and the cost of such purchases will be increased
by any applicable brokerage commissions. If additional cash is needed to
purchase stocks, such cash would be paid to the Agent by the Unit Holder.
Any cash not used to make up a Unit in the New Trust would be distributed
to the Unit Holder. Fractional interests received from the Terminating
Trust will be sold by the Agent with the cash proceeds of such sale used to
purchase securities for deposit in the New Trust or, if not so utilized,
distributed to the Unit Holder. Upon receipt of the in-kind deposit, the
Trustee will issue the appropriate number of Units in the New Trust to the
Unit Holder on whose behalf the Agent acted. Units acquired pursuant
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<PAGE>
to an in-kind deposit into a New Trust by a Unit Holder of a Terminating
Trust will not be subject to an Initial Sales Charge but only subject to a
Deferred Sales Charge.
The receipt in-kind from the Terminating Trust and the deposit in the
New Trust of the Duplicated Stocks will not be a taxable event to a Unit
Holder. (See Part B--'Tax Status of the Trust'.)
Unit Holders who do not elect as set forth above will have their Units
redeemed on the Termination Date and be deemed to have elected to receive the
cash proceeds from the sale of such Unit Holder's pro rata share of the
underlying Securities (option 2).
Under each option a Unit Holder will receive the Redemption Price per Unit
(net asset value) determined as of the Evaluation Time on the Termination Date.
The Distribution Agent will sell the underlying Securities in the case of the
second and third option over a period not to exceed 10 business days commencing
on the Termination Date. The proceeds of any such sales will be reduced by any
applicable brokerage commissions. The sale arrangement is one in which The Chase
Manhattan Bank will be selling the Securities as agent for the Unit Holder and
is separate from the Trust which terminates on the Termination Date. The
proceeds of such sales may be more or less than the value of the Securities on
the Termination Date. The Sponsor, on behalf of the Distribution Agent if the
Sponsor effects such sales, or the Distribution Agent if the Sponsor does not,
will, unless prevented by unusual and unforeseen circumstances, such as, among
other reasons, a suspension in trading of a Security, the close of a stock
exchange, outbreak of hostilities and collapse of the economy, sell on each
business day during the 10 business day period at least a number of shares of
each Security which then remains in the Portfolio equal to the number of such
shares in the Portfolio at the beginning of such day multiplied by a fraction
the numerator of which is one and the denominator of which is the number of days
remaining in the 10 business day sales period. The proceeds of sale will not be
distributed by the Distribution Agent until the settlement of the trade upon the
sale of the last Security during the 10 business day period.
Depending on the amount of proceeds to be invested in Units of the new
series and the number of other orders for Units in the new series, the Sponsor
may purchase a large amount of securities for the new series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these Securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 10
business day period commencing on the Termination Date; depending on the number
of sales required, the prices of, and demand for Securities, such sales may tend
to depress the market prices and thus reduce the proceeds to be credited to Unit
Holders. The Sponsor believes that the sale of underlying Securities over a 10
business day period as described above is in the best interest of Unit Holders
and may mitigate the negative market price consequences stemming from the
trading of large amounts of Securities. The Sponsor, in implementing such sales
of Securities on behalf of the Distribution Agent, will seek to maximize the
sales proceeds and will act in the best interest of the Unit Holder. The
proceeds of the sale of the Securities will be in an amount equal to amounts
realized upon the sale of the Securities over the 10 business day period. There
can be no assurance, however, that any adverse price consequences of heavy
trading will be mitigated.
RISK FACTORS--Since the Trust Portfolio consists of common stock, an
investment in Units of the Trust should be made with an understanding of the
risks inherent in any investment in common stocks. The risks of investing in
common stock include risks associated with the rights to receive payments from
the issuer which are generally inferior to creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Holders of common stock
have a right to receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stocks have the right to
receive dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis. Dividends on cumulative preferred
stock must be paid before any dividends are paid on common stock and any
cumulative preferred stock dividend which has been omitted is added to future
dividends payable to the holders of such cumulative preferred stock. Preferred
stocks are also entitled to rights on liquidation which are senior to those of
common stocks. For these reasons, preferred stocks generally entail less risk
than common stocks. Moreover, common stock does not represent an obligation of
the issuer and therefore does not offer any assurance of income or provide the
degree of protection of capital of debt securities. The issuance of debt
securities or even preferred stock by an issuer will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. Further, unlike debt securities which
typically have a stated principal amount payable at maturity (which value will
be subject to market fluctuations prior thereto), common stock has neither a
fixed principal amount nor a maturity and has values which are subject to market
fluctuations for as long as the common stock remains outstanding. The value of
the common stock in the Trust thus may be expected to fluctuate over the life of
the Trust to values higher or lower than those prevailing on the Date of
Deposit. The value of a Unit may be subject to greater volatility than an
investment in a more diversified portfolio since the Trust Portfolio contains
only five stocks.
The value of the Units will fluctuate depending on all the factors that
have an impact on the economy and the equity markets. These factors similarly
impact on the ability of an issuer to pay dividends. The Trust is not a
'managed' registered investment company and Securities will not be sold by the
Trustee as a result of ordinary market fluctuations.
A-3
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
AS OF MARCH 18, 1998*
<TABLE>
<S> <C>
AGGREGATE VALUE OF SECURITIES.......................... $ 247,500.00
NUMBER OF UNITS........................................ 250,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED
BY EACH UNIT......................................... 1/250,000th
Aggregate value of Securities in the Trust**...... $ 247,500.00
Divided by 250,000 Units (times 1,000)............ $ 990.00
Plus sales charge of 2.75% of Public Offering
Price, (2.778% of net amount
invested in Securities)***...................... $ 27.50
Less Deferred Sales Charge per 1,000 Units+....... (17.50)
------------
Public Offering Price per 1,000 Units****......... $ 1,000.00
Plus the amount per 1,000 Units in the Income
Account.......................................... $ 0.00
------------
Total per 1,000 Units........................ $ 1,000.00
------------
------------
REDEMPTION AND SPONSOR'S SECONDARY MARKET REPURCHASE
PRICE PER 1,000 UNITS*****
(based on the value of the underlying Securities less
the Deferred Sales Charge per 1,000 Units)........... $ 972.50
For units redeemed or repurchased on or after the
Second Year Commencement Date........................ $ 955.00
RECORD DATES: Quarterly on the tenth day of May,
August, November and February commencing May 10, 1998
QUARTERLY DISTRIBUTION DATES: Quarterly on the
twenty-fifth day of May, August, November and
February commencing May 25, 1998 or as soon
thereafter as possible.
MINIMUM PRINCIPAL DISTRIBUTION: No distribution need be
made from the Principal Account if the balance
therein is less than $1.00 per 1,000 Units.
TRUSTEE'S FEE AND ESTIMATED EXPENSES: 0.90 per 1,000
Units.++
ORGANIZATIONAL EXPENSES: $1.00 per 1,000 Units.++
SPONSOR'S PORTFOLIO SUPERVISION FEE++: Maximum of
$0.25 per 1,000 Units.
EVALUATION TIME: 4:00 P.M. New York Time
TERMINATION DATE: March 21, 2000+++
SPONSOR'S GAIN ON DEPOSIT: $1,959.25
MINIMUM VALUE OF TRUST: The Indenture may be terminated
if the value of the Trust is less than 40% of the
value of the Securities calculated after the last
deposit of Securities.
DEFERRED SALES CHARGE DEDUCTION DATES: The 1st day of
each month commencing June 1998.
SECOND YEAR COMMENCEMENT DATE: April 1, 1999
</TABLE>
- ------------------
* The Date of Deposit. 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.
** After deduction of the Deferred Sales Charge then payable (zero on the
date of this Summary of Essential Information).
*** The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred
Sales Charge in the first year of the Trust ($17.50 per 1,000 Units) from
the aggregate sales charge (a maximum of 2.75% of the Public Offering
Price); thus on the date of this Summary of Essential Information, the
maximum Initial Sales Charge is $10 per 1,000 Units or 1% of the Public
Offering Price. Unit Holders holding Units on the Second Year Commencement
Date will be charged an additional Deferred Sales Charge of $17.50 per
1,000 Units, payable at the rate of $1.75 per 1,000 Units for the first 10
months in the second year of the Trust (the total Deferred Sales Charge
for such Unit Holders will be $35.00 per 1,000 Units -- the Initial Sales
Charge and the Deferred Sales Charge payable over 2 years of $35.00 will
equal approximately 4.5% of the initial Public Offering Price.) The
Initial Sales Charge is deducted from the purchase price at the time of
purchase and is reduced on a graduated basis on purchases of $50,000 or
(Footnotes continued on next page)
A-4
<PAGE>
(Footnotes continued from previous page)
more (see Part B--'Public Offering of Units--Volume Discount'). The
Deferred Sales Charge is paid through reduction of the net asset value of
the Trust by $1.75 per 1,000 Units on each Deferred Sales Charge Deduction
Date. On an exchange, sale or redemption of Units before the last Deferred
Sales Charge Deduction Date, any remaining Deferred Sales Charge payments
will be deducted from the proceeds, except that if the exchange,
redemption or sale occurs prior to the Second Year Commencement Date, the
second year Deferred Sales Charge of $17.50 will be waived. Units
purchased pursuant to the einvestment Program are subject to that portion
of the Deferred Sales Charge remaining at the time of reinvestment (see
Part B--'Reinvestment Program').
**** This price is computed as of the Date of Deposit and may vary from such
price on the date of this Prospectus or any subsequent date.
***** This price is computed as of the Date of Deposit and may vary from such
price on the date of this Prospectus or any subsequent date. Reflects
deductions for remaining Deferred Sales Charge payments ($17.50 per 1,000
Units initially).The redemption and repurchase price will be further
reduced to reflect the Trust's costs of liquidating Securities to meet the
redemption currently estimated at $1.72 per 1,000 Units.
+ The total Deferred Sales Charge for Units held on the Second Year
Commencement Date will be $35.00.
++ See: 'Expenses and Charge' herein. The fee and the organizational costs
accrue daily and are payable on each Distribution Date. Estimated
dividends from the Securities, based on the last dividends actually paid,
are expected by the Sponsor to be sufficient to pay the estimated expenses
of the Trust. In addition, brokerage fees borne by the Trust in connection
with the purchase of Securities by the Trustee with cash deposited in the
Trust are currently estimated at $1.72 per 1,000 Units.
+++ The Trust may be terminated prior to the Termination Date. See Part
B--'Amendment and Termination of the Indenture--Termination.' The sale of
Securities will occur during the 10 business day period commencing on the
Termination Date.
A-5
<PAGE>
FEE TABLE
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Part B--'Public Offering of
Units' and 'Expenses and Charges.' Although the Trust has a term of only
approximately two years, and is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees, assuming the
principal amount and distributions are rolled over each two year period into a
New Series subject only to the Deferred Sales Charge and trust expenses.
<TABLE>
<CAPTION>
AMOUNT PER
UNIT HOLDER TRANSACTION EXPENSES 1,000 UNITS
- ------------------------------------------------------- -----------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchase (as a
percentage of offering price)........................ 1.00%(a) $ 10.00
Deferred Sales Charge per Year (as a percentage of
original purchase price)............................. 1.75%(b) $ 17.50
----- -----------
Total............................................. 2.75% $ 27.50
----- -----------
----- -----------
Deferred Sales Charge per Year for Unit Holders on the
Second Year Commencement Date (as a percentage of
initial Public Offering Price)....................... 1.75% $ 17.50
Total (includes first and second year Deferred Sales
Charge).............................................. 4.50% $ 45.00
Maximum Sales Charge Imposed on Reinvested Dividends... $ 35.00(c)
Estimated Annual Trust Operating Expenses (as a
percentage of average net assets)(d)
Trustee's Fee........................................ 0.074% $ 0.74
Organizational Costs and Expenses(e)................... 0.100% $ 1.00
Other Annual Operating Expenses (including Portfolio
Supervision, Bookkeeping and Administrative Fees).... 0.041% $ 0.41
----- -----------
Total............................................. 0.215% $ 2.15
----- -----------
----- -----------
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
CUMULATIVE
EXPENSES PAID FOR
PERIOD:
-----------------
1 3
YEAR YEARS(F)
---- --------
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Trust's operating expense ratio of
0.215 and a 5% annual return on the investment throughout
the periods................................................ $30 $ 72
</TABLE>
The Example assumes a redemption and reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations applicable to mutual funds. For purposes of
the Example, the Deferred Sales Charge imposed on reinvestment of dividends is
not reflected until the year following payment of the dividend; the cumulative
expenses would be higher if sales charges on reinvested dividends were reflected
in the year of reinvestment. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF RETURN; THE ACTUAL
EXPENSES AND ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR
PURPOSES OF THE EXAMPLE.
- ------------------
(a) The maximum Initial Sales Charge is actually the difference between
2.75% and the Deferred Sales Charge ($17.50 per 1,000 Units) and would exceed 1%
if the Public Offering Price exceeds $1,000 per 1,000 Units.
(b) The actual fee is $1.75 per month per 1,000 Units, irrespective of
purchase or redemption price, deducted over 20 months commencing on the first
Deferred Sales Charge Deduction Date. If a Holder sells, exchanges or redeems
Units before all of these deductions have been made, the balance of the Deferred
Sales Charge will be deducted from the Unit proceeds except that if the
exchange, redemption or sale occurs prior to the Second Year Commencement Date,
the second year Deferred Sales Charge will be waived. If the Unit price exceeds
$1 per Unit, the Deferred Sales Charge in each year will be less than 1.75%; if
the Unit price is less than $1 per Unit, the Deferred Sales Charge will exceed
1.75%.
(c) Reinvested dividends will be subject only to the Deferred Sales Charge
remaining at the time of reinvestment (see 'Reinvestment Program' in Part B).
(d) The estimates do not include the costs borne by Unit Holders of
purchasing and selling Securities.
(e) Includes all or a portion of the cost of the preparation, printing and
execution of the Indenture, Registration Statement and other documents relating
to the Trust, federal and state registration fees and costs, the initial fees
and expenses of the Trustee, legal and auditing expenses and other out of pocket
expenses. The organizational costs will be amortized generally over the life of
the Trust, except that the registration fees included in the organizational cost
and expense amount will be charged directly to capital during the initial public
offering period.
(f) Although the Trust has a term of approximately two years and is a unit
investment trust rather than a mutual fund, this information is presented to
permit a comparison of fees and expenses, assuming the principal amount and
distributions are rolled over every two years into a New Series subject only to
the Deferred Sales Charge.
A-6
<PAGE>
SPECIAL CHARACTERISTICS OF THE TRUST
Securities Selection. The Trust Portfolio consists of the five lowest
dollar price per share common stocks of the ten common stocks in the Dow Jones
Industrial Average ('DJIA') having the highest dividend yield as of March 17,
1998. Dow Jones & Company, Inc. ('Dow Jones') has not participated in any way in
the creation of the Trust or in the selection of the stocks included in the
Trust and has not approved any of the information herein relating thereto. The
yield for each stock was calculated by the Sponsor by annualizing the last
quarterly ordinary dividend declared and dividing the annualized dividend by the
market value of the stock. Such formula (an objective determination) served as
the basis for the Sponsor's selection of the ten stocks in the Dow Jones
Industrial Average having the highest dividend yield (the 'Ten Highest-Yielding
Stocks'). The five lowest dollar price per share stocks from among the Ten
Highest-Yielding Stocks were then selected (the 'Low Five'). The Securities were
selected irrespective of any buy or sell recommendation by the Sponsor.
Investors should note that the above criteria were applied to the
Securities selected for inclusion in the Trust Portfolio as of March 17, 1998.
Subsequent to such date, the Securities may no longer rank among the five lowest
dollar price per share common stocks of the ten common stocks in the DJIA having
the highest dividend yield, the yields on the Securities in the Portfolio may
change or the Securities may no longer be included in the DJIA. However, the
Sponsor may, on and subsequent to the Date of Deposit, deposit additional
Securities and/or contracts to purchase additional Securities together with a
letter of credit which reflect the Portfolio as of the Date of Deposit, subject
to permitted adjustments, and/or cash (or a letter of credit in lieu of cash)
with instructions to purchase additional Securities and sell such additional
Units created. The original proportionate relationship between the number of
shares of each Security in the Trust will be adjusted to reflect the occurrence
of a stock dividend, a stock split, merger, reorganization or a similar event
which affects the capital structure of the issuer of a Security in the Trust but
which does not affect the Trust's percentage ownership of the common stock
equity of such issuer at the time of such event and adjust the proportionate
relationship accordingly for all future subsequent deposits. If the Trust
receives the securities of another issuer as the result of a merger or
reorganization of, or a spin-off, or split-up by the issuer of a Security
included in the original Portfolio, the Trust may under certain circumstances
hold those securities as if they were one of the Securities initially deposited
and adjust the proportionate relationship accordingly for all future subsequent
deposits. The sale of additional Units and the sale of Units in the secondary
market may continue even though the Securities would no longer be chosen for
deposit into the Trust if the selection process were to be made at such later
time.
THE DOW JONES INDUSTRIAL AVERAGE STOCKS
The Dow Jones Industrial Average is the property of Dow Jones & Company,
Inc., which has not participated in any way in the creation of the Trust or in
the selection of stocks included in the Trust, and has not approved any
information included herein.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. Taking into account a number of names changes, 1 of the original
companies is still in the DJIA today. For two periods of 17 consecutive years
each, there were no changes to the list: March 5, 1939-July 2, 1956 and June 2,
1959-August 8, 1976.
CURRENT LIST
Allied Signal
J.P. Morgan & Co. Incorporated
Minnesota Mining
Du Pont
Eastman Kodak
Goodyear
IBM
General Electric
General Motors
Hewlett-Packard Co.
McDonald's
Chevron
Caterpillar
Boeing
Merck
Procter & Gamble
American Express
International Paper
Johnson & Johnson
Philip Morris
United Technologies
Sears Roebuck & Company
Exxon
Travelers Group
Coca-Cola
Union Carbide
Walt Disney
AT&T
Wal-Mart Stores Inc.
Aluminum Co. of America
The Dow Jones Industrial Average is comprised of 30 common stocks chosen by
the editors of The Wall Street Journal, published by Dow Jones & Company, Inc.,
as representative of the broad market and of American industry. The companies
are major factors in their industries and their stocks are widely held by
individuals and institutional investors.
A-7
<PAGE>
Changes in the components are made entirely by the editors of The Wall
Street Journal without consultation with the companies, the Sponsor, the stock
exchange or any official agency. For the sake of continuity, such changes are
made rarely. Most substitutions have been the result of mergers, but from time
to time changes may be made to achieve a better representation. Notwithstanding
the foregoing, the components of the Dow Jones Industrial Average may be changed
by Dow Jones & Company, Inc. at any time for any reason.
The following table shows the actual performance of the Dow Jones
Industrial Average, the stocks comprising the Ten Highest-Yielding Stocks and
the stocks comprising the Low Five over the past twenty-five years as of the
dates indicated. Such returns do not take into account commissions, sales
charges, expenses or taxes. As demonstrated by the table, the Low Five
outperformed both the Ten Highest-Yielding Stocks and the stocks in the DJIA in
most of the two year periods over the past 25 years.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)
----------------------------------------------------
TWO YEAR TEN HIGHEST-
PERIOD DJIA(2) YIELDING STOCKS LOW FIVE
- ------------------------------------------ ------- --------------- --------
<S> <C> <C> <C>
1/1/1973 - 12/31/1974 -32.43 % -9.96% 4.18%
1/1/1975 - 12/31/1976 75.83 % 120.07% 142.13%
1/1/1977 - 12/31/1978 -10.48 % 6.83% 10.04%
1/1/1979 - 12/31/1980 32.84 % 46.70% 66.31%
1/1/1981 - 12/31/1982 20.01 % 35.94% 44.40%
1/1/1983 - 12/31/1984 26.95 % 46.36% 50.75%
1/1/1985 - 12/31/1986 67.14 % 66.72% 78.54%
1/1/1987 - 12/31/1988 22.33 % 29.36% 32.29%
1/1/1989 - 12/31/1990 30.98 % 27.10% 1.89%
1/1/1991 - 12/31/1992 32.78 % 60.15% 113.29%
1/1/1993 - 12/31/1994 22.34 % 36.99% 43.57%
1/1/1995 - 12/31/1996 74.30 % 78.51% 73.58%
1/1/1997 - 12/31/1997 (one year) 24.78 % 21.62% 19.95%
</TABLE>
- ------------------
(1) Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period and the last
trading day of a period and the total dividends paid on each group of stocks
during the period divided by the opening market value of each group of
stocks as of the first trading day of a period. Total return does not take
into consideration any sales charges, commissions, expenses or taxes.
(2) An index of 30 stocks compiled by Dow Jones & Company, Inc.
The total return figures shown above are not guarantees of future
performance and should not be used as a predictor of returns to be expected in
connection with the Portfolio. Such total return figures do not reflect sales
charges, commissions, expenses or taxes. As indicated in the above table, the
Low Five underperformed the Ten Highest-Yielding Stocks and the stocks in the
DJIA in certain years and there can be no assurance that the Portfolio of the
Trust will outperform the Ten Highest-Yielding Stocks or the stocks in the DJIA
over the life of the Trust.
A-8
<PAGE>
The chart below represents past performance of the stocks in the DJIA, the
Ten Highest-Yielding Stocks and the Low Five (but not the Trust) and should not
be considered indicative of future results. From January 1973 through December
31, 1997 the average annual total return for the stocks in the DJIA, the Ten
Highest-Yielding Stocks and Low Five was 12.812%, 17.424% and 20.584%,
respectively. The chart reflects a hypothetical assumption that $10,000 was
invested on January 1, 1973 and the investment strategy followed for 25 years.
For the Dow Jones Industrial Average, the chart assumes that all dividends
during a two year period are reinvested at the end of that period and does not
reflect sales charges, commissions, expenses or taxes. For the Ten
Highest-Yielding Stocks and the Low Five the chart assumes that all dividends
during each two year period are reinvested at the end of that period and assumes
an initial sales charge rate of 1% and a deferred rate of 3.50% in the first two
year period and 3.50% in each of the subsequent two year periods and an
estimated two year period expense rate of $45.00 per $10,000 invested. There can
be no assurance that the Trust will outperform the stocks in the DJIA or the Ten
Highest-Yielding Stocks over its approximately two-year life or over consecutive
rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED ON JANUARY 1, 1973
--------------------------------------------
TWO YEAR TEN HIGHEST-
PERIOD DJIA YIELDING STOCKS LOW FIVE
- ------------------------------------- -------- ---------------- ----------
<S> <C> <C> <C>
1/1/1973 - 12/31/1974 $ 6,757 $ 8,519 $ 9,919
1/1/1975 - 12/31/1976 $ 11,881 $ 18,411 $ 23,625
1/1/1977 - 12/31/1978 $ 10,636 $ 18,941 $ 25,063
1/1/1979 - 12/31/1980 $ 14,128 $ 27,039 $ 40,693
1/1/1981 - 12/31/1982 $ 16,956 $ 35,689 $ 57,153
1/1/1983 - 12/31/1984 $ 21,525 $ 50,824 $ 83,901
1/1/1985 - 12/31/1986 $ 35,977 $ 82,726 $ 146,483
1/1/1987 - 12/31/1988 $ 44,011 $103,747 $ 187,996
1/1/1989 - 12/31/1990 $ 57,645 $127,765 $ 184,123
1/1/1991 - 12/31/1992 $ 76,542 $199,569 $ 385,443
1/1/1993 - 12/31/1994 $ 93,641 $265,506 $ 538,156
1/1/1995 - 12/31/1996 $163,216 $463,467 $ 912,874
1/1/1997 - 12/31/1997 (one year) $203,661 $554,515 $1,076,963
</TABLE>
Past performance of any series may not be indicative of results of future
series. Trust performance may be compared to the performance on the same basis
of the DJIA, the S&P 500 Composite Price Stock Index, the Hang Seng Index, the
Financial Times Industrial Ordinary Share Index and the ten highest yielding
stocks in each of the Hang Seng Index and Financial Times Industrial Ordinary
Share Index, or performance data from publications such as Morningstar
Publications, Inc. This performance may also be compared for various periods
with an investment in short-term U.S. Treasury securities; however, the investor
should bear in mind that Treasury securities are fixed income obligations,
having the highest credit characteristics, while equity securities involve
greater risk because they have no maturities, and income thereon is subject to
the financial condition of, and declaration by, the issuers.
PORTFOLIO SUMMARY AS OF DATE OF DEPOSIT
The Portfolio contains 5 issues of Securities all of which are traded on
the New York Stock Exchange. The Securities
are representative of industry groups as follows: Paper Products: 19.97%*;
Tobacco: 19.99%*; Diversified Chemicals: 20.03%*; Photographic: 20.01%*;
Petroleum Refining 20.00%*.
- ------------------
* Percentages computed on the basis of the aggregate net asset value of the
Securities in the Trust on the Date of Deposit.
A-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 203
We have audited the Statement of Financial Condition including Schedule of
Portfolio Securities of the National Equity Trust Low Five Portfolio Series 203
as of March 18, 1998. This financial statement is the responsibility of the
Trustee and Sponsor (see note (e) to the statement of financial condition). Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of the irrevocable letter of credit for the purchase of securities,
as shown in the Statement of Financial Condition and Schedule of Portfolio
Securities as of March 18, 1998, by correspondence with The Chase Manhattan
Bank, the Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of the National Equity Trust
Low Five Portfolio Series 203 as of March 18, 1998, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
March 18, 1998
A-10
<PAGE>
STATEMENT OF FINANCIAL CONDITION
NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 203
AS OF DATE OF DEPOSIT, MARCH 18, 1998
TRUST PROPERTY
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed
by an irrevocable letter of credit(a)..................... $247,500.00
Organizational Costs(f)..................................... 75,000.00
-----------
Total.................................................. 322,500.00
-----------
-----------
LIABILITIES AND INTEREST OF UNIT HOLDERS
Liabilities--
Payment of deferred portion of sales charge(b)......... $ 8,750.00
Accrued Liability(f)................................... 75,000.00
-----------
Subtotal............................................... 83,750.00
-----------
Interest of Holders--
Units of fractional undivided interest outstanding:
Cost to investors(c).............................. $250,000.00
Gross underwriting commission(d).................. (11,250.00)
-----------
Net amount applicable to investors.......................... 238,750.00
-----------
Total........................................ $322,500.00
-----------
-----------
</TABLE>
- ------------------
(a) The aggregate value of the Securities represented by Contracts to
Purchase listed under 'Schedule of Portfolio Securities' included herein and
their cost to the Trust are the same. An irrevocable letter of credit drawn on
Standard Chartered Bank in the amount of $10 million has been deposited with the
Trustee for the purchase of Securities pursuant to contracts to purchase such
Securities.
(b) Represents the aggregate amount of mandatory distributions of $1.75 per
1,000 Units per month payable on the 1st day of each month from June, 1998
through March, 1999. Distributions will be made to an account maintained by the
Trustee from which the Holders' Deferred Sales Charge obligation to the Sponsor
will be satisfied. If Units are redeemed prior to January 1, 2000 the remaining
portion of the distribution applicable to such Units will be transferred to such
account on the redemption date except that if the Units are redeemed prior to
the Second Year Commencement Date the last $17.50 of the Deferred Sales Charge
will be waived.
(c) The aggregate Public Offering Price is computed on the basis set forth
under 'Public Offering of Units--Public Offering Price.'
(d) The aggregate maximum sales charge of 4.5% of the Public Offering Price
per Unit over the life of the Trust is computed on the basis set forth under
'Public Offering of Units--Public Offering Price.'
(e) 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 Trustee determines the price for each underlying
Security included in the Trust's Schedule of Portfolio Securities on the basis
set forth in 'Public Offering of Units--Public Offering Price.' Under the
Securities Act of 1933, as amended (the 'Act'), the Sponsor is deemed to be an
issuer of the Trust's 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.
(f) Organizational costs borne by the Trust have been deferred and will be
amortized generally over the life of the Trust. Registration fees, which are
included in organizational costs, will be charged directly to capital during the
initial public offering period. Organizational costs have been estimated based
on a Trust with projected total assets of $75 million. To the extent the assets
of the Trust are fewer or greater, the estimate may vary.
A-11
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 203
ON DATE OF DEPOSIT, MARCH 18, 1998
<TABLE>
<CAPTION>
CURRENT PERCENTAGE OF
ANNUAL AGGREGATE PRICE COST OF
DIVIDEND NUMBER MARKET PER SECURITIES
PORTFOLIO PER OF VALUE SHARE TO TO
NO. NAME OF ISSUER SHARE(1) SHARES OF TRUST TRUST TRUST(2)
- --------- ------------------------------------------ -------- --------- ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1. Eastman Kodak Co.......................... $ 1.76 798 20.01% $62.0625 $ 49,525.88
2. Exxon Corporation......................... $ 1.64 766 20.00% $64.6250 $ 49,502.75
3. International Paper Company............... $ 1.00 986 19.97% $50.1250 $ 49,423.25
4. Philip Morris Companies, Inc.............. $ 1.60 1,166 19.99% $42.4375 $ 49,482.12
5. Union Carbide Corporation................. $ 0.90 1,056 20.03% $49.9375 $ 49,566.00
-----------
$247,500.00
-----------
-----------
</TABLE>
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(1) Based on the latest quarterly or semiannual declaration. There can be no
assurance that future dividend payments, if any, will be maintained in an
amount equal to the dividend listed above.
(2) The Securities were acquired by the Sponsor on March 18, 1998. All
Securities are represented entirely by contracts to purchase. Valuation of
Securities by the Trustee was made on the basis of the closing sale price on
the New York Stock Exchange on March 18, 1998. The aggregate purchase price
to the Sponsor for the Securities deposited in the Trust is $245,540.75.
The Sponsor may have acted as an underwriter, manager or co-manager of a
public offering of the Securities in the Trust during the last three years.
Affiliates of the Sponsor may serve as specialists in the Securities in this
Trust on one or more stock exchanges and may have a long or short position in
any of these stocks or in options on any of these stocks, and may be on the
opposite side of public orders executed on the floor of an exchange where the
Securities are listed. An officer, director or employee of the Sponsor may be an
officer or director of one or more of the issuers of the Securities in the
Trust. The Sponsor may trade for its own account as an odd-lot dealer, market
maker, block positioner and/or arbitrageur in any of the Securities or options
relating thereto. The Sponsor, its affiliates, directors, elected officers,
employees and employee benefits programs may have either a long or short
position in any Security or option relating thereto.
A-12
<PAGE>
PROSPECTUS--PART B:
- --------------------------------------------------------------------------------
Note that Part B of this Prospectus may not be distributed unless accompanied by
Part A.
- --------------------------------------------------------------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
THE TRUST
National Equity Trust, Low Five Portfolio Series 203 (the 'Trust') is one
of a series of similar but separate unit investment trusts created by the
Sponsor. The Trust 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'),* between Prudential
Securities Incorporated (the 'Sponsor') and The Chase Manhattan Bank (the
'Trustee'). On the Date of Deposit, the Sponsor deposited with the Trustee
common stock issued by the five companies whose common stocks are the five
lowest dollar price per share common stocks of the ten common stocks in the Dow
Jones Industrial Average having the highest dividend yield on the date set forth
on page A-1 (collectively, the 'Securities' or, singularly, the 'Security,' as
the context requires) and/or contracts and funds (represented by irrevocable
letter(s) of credit issued by major commercial bank(s)) for the purchase of such
equity securities at prices which reflect the value of the Securities as of the
close of the market as of the Date of Deposit and/or cash (or a letter of credit
in lieu of cash) with instructions to the Trustee to purchase such Securities
(see Schedule of Portfolio Securities). The Trustee then immediately delivered
to the Sponsor the units (the 'Units') comprising the entire ownership of the
Trust as of the Date of Deposit which Units the Sponsor, through this
Prospectus, is offering for sale to the public. Each such Unit represented on
the initial Date of Deposit an identical number and type of shares in identical
issuers.
The objective of the Trust is total return through an investment for
approximately two years in a portfolio of the five lowest dollar price per share
common stocks of the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield as of a date on or shortly before the Date of
Deposit (the 'Low Five'). There can be no assurance that such objective can be
realized. The factors affecting the value of the Securities are those factors
that have an impact upon the value of equity securities in general and those
factors that affect the economic and financial condition of each issuer of a
Security in particular.
Subsequent to the initial deposit of Securities on the Date of Deposit, the
Sponsor may, but is not obligated to, deposit from time to time additional
Securities (including contracts together with an irrevocable letter of credit
for the purchase thereof) and/or cash (or a letter of credit in lieu of cash)
with instructions to the Trustee to purchase additional Securities in the Trust,
to receive in exchange therefor additional Units, and to offer such Units to the
public by means of this Prospectus. Any such additional deposits during the 90
day period subsequent to the Date of Deposit will be in amounts which maintain,
to the extent practicable, the original proportionate relationship between the
number of shares of each Security in the Portfolio of the Trust. It may not be
possible to maintain the exact original proportionate relationship because of,
among other reasons, purchase requirements, price changes or unavailability of
Securities. Thus, for example in connection with the deposit by the Sponsor of
cash (or a letter of credit in lieu of cash) with instructions to purchase
additional Securities in order to create Additional Units, to the extent that
the price of a Security fluctuates between the time the cash is deposited and
the time the cash is used to purchase the Security, Units may represent more or
less of that Security and more or less of other Securities in the Portfolio of
the Trust. In addition, the brokerage fees incurred in purchasing Securities
with such deposited cash will be borne by the Trust. Any Unit Holder who
purchased Units prior to the purchase of Securities with such deposited cash
would experience dilution as a result of any such brokerage fees. Any cash
deposited with instruction to purchase Securities not used to purchase
Securities and any interest not used to pay Trust expenses will be distributed
to Unit Holders on the earlier of the first Distribution Date or 90 days after
the Date of Deposit. Additional Units may be continuously offered for sale to
the public by means of this Prospectus. Subsequent to the 90 day period
following the Date of Deposit any deposit of additional Securities and cash must
exactly replicate the Portfolio immediately prior to such deposit. The Sponsor
may acquire large volumes of additional Securities for deposit into the Trust
over a short period of time. Such acquisitions may tend to raise the market
prices of these Securities. The Sponsor cannot currently predict the actual
market impact of the Sponsor's purchases of additional Securities, because the
actual volume of Securities to be purchased and the supply and price of such
Securities is not known. 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.
The Sponsor may deposit additional Securities and may continue to sell
Units of the Trust even though one or more of the Securities no longer remains
among the Low Five on the date of deposit of the additional Securities or the
date of sale.
- ------------------
* 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>
Notwithstanding the availability of the above-mentioned irrevocable
letter(s) of credit, it is expected that the Sponsor will pay for the Securities
as the contracts for their purchase become due. A substantial portion of such
contracts have not become due by the date of this Prospectus. To the extent
Units are sold prior to the settlement of such contracts, the Sponsor will
receive the purchase price of such Units prior to the time at which it pays for
Securities pursuant to such contracts and have the use of such funds during this
period.
To minimize the risk of price fluctuations when purchasing or selling
Securities, the Trust may purchase or sell Securities at the closing price as of
the Evaluation Time by entering into trades with unaffiliated broker/dealers for
the purchase or sale of large quantities of shares. Such trades will be entered
into at an increased commission cost which will be borne by the Trust. (See
'Summary of Essential Information'). The Sponsor cannot currently predict the
actual market impact of the Sponsor's purchases or sales of Securities because
the actual volume of Securities to be purchased or sold and the supply and price
of such Securities is not known.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units, if Units are available
to fill orders on the day that that price is set. If Units are not available or
are insufficient to fill the order, 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
underlying Securities in amounts sufficient to maintain the proportionate
numbers of shares of each Security as 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 who agrees to this
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.
The holders of Units (the 'Unit Holders' the 'Unitholders' or the 'Unit
Holder,' as the context requires) will have the right to have their Units
redeemed at a price based on the net asset value (the 'Redemption Price') if
they cannot be sold in the secondary market which the Sponsor, although not
obligated to do so, proposes to maintain. The Sponsor, Prudential Securities
Incorporated, is a wholly-owned, indirect subsidiary of The Prudential Insurance
Company of America. The Trust has a mandatory termination date set forth under
Part A--'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 Part A--'Summary of Essential Information.'
On the Date of Deposit, a Unit represented the fractional undivided
interest in the Securities set forth under Part A--'Summary of Essential
Information' in the ratio of 1 Unit for each approximately $1.00 net asset value
of Securities initially deposited in such Trust. 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.
PORTFOLIO SUMMARY
Since the Trust consists of common stocks, an investment in Units of the
Trust should be made with an understanding of the risks inherent in any
investment in common stock. The risks of investing in common stock include risks
associated with the rights to receive payments from the issuer which are
generally inferior to creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Holders of common stock have a right to receive
dividends only when and if, and in the amounts, declared by the issuer's board
of directors and to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided for.
An investment in Units of the Trust should be made with an understanding
that the value of the underlying Securities, and therefore the value of Units,
will fluctuate, depending upon the full range of economic and market influences
which may affect the market value of such Securities. Certain risks are inherent
in an investment in equity securities, including the risk that the financial
condition of one or more of the issuers of the Securities may worsen or the
general condition of the common stock market may weaken. In each case, the value
of the Portfolio Securities and hence the value of Units may decline. Common
stocks are susceptible to general stock market movements and to volatile and
unpredictable increases and decreases in value as market confidence in and
perceptions of the issuers change from time to time. Such perceptions are based
upon varying reactions to such factors as expectations regarding domestic
economic, monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and political, economic or banking crises. The Sponsor
cannot predict the direction or scope of any of these factors. Additionally,
equity markets have been at historically high levels and no assurance can be
given that these levels will continue. Therefore there can be no assurance that
the Trust will be effective in achieving its objective over its life or that
future portfolios selected using the same methodology as the Trust during
consecutive periods will meet their objectives. The Trust is not designed
B-2
<PAGE>
to be a complete equity investment program. By contrast, holders of preferred
stocks have the right to receive dividends at a fixed rate when and as declared
by the issuer's board of directors, normally on a cumulative basis. Dividends on
cumulative preferred stock must be paid before any dividends are paid on common
stock and any cumulative preferred stock dividend which has been omitted is
added to future dividends payable to the holders of such cumulative preferred
stock. Preferred stocks are also entitled to rights on liquidation which are
senior to those of common stock. For these reasons, preferred stocks generally
entail less risk than common stock. Moreover, common stock does not represent an
obligation of the issuer and therefore does not offer any assurance of income or
provide the degree of protection of capital of debt securities. The issuance of
debt securities or even preferred stock by an issuer will create prior claims
for payment of principal, interest and dividends which could adversely affect
the ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to assets of
the issuer upon liquidation or bankruptcy. Further, unlike debt securities which
typically have a stated principal amount payable at maturity (which value will
be subject to market fluctuations prior thereto), common stock has neither a
fixed principal amount nor a maturity and has a value which is subject to market
fluctuations for as long as the common stock remains outstanding. The value of
the common stocks in the Trust thus may be expected to fluctuate over the life
of the Trust to values higher or lower than those prevailing on the Date of
Deposit.
The value of the Units will fluctuate depending on all the factors that
have an impact on the economy and the equity markets. These factors similarly
impact on the ability of an issuer to distribute dividends. There is no
assurance that any dividends will be declared or paid in the future on the
Securities. The Trust is not a 'managed' registered investment company and
Securities will not be sold by the Trustee as a result of ordinary market
fluctuations. The Sponsor may direct the disposition by the Trustee of
Securities only upon the occurrence of certain events. (See
'Sponsor--Responsibility.')
As it is anticipated that Securities generally will not be sold to pay the
Deferred Sales Charge until after the last Deferred Sales Charge Deduction Date,
Holders will be at risk with respect to changes in the market value of
Securities between the accrual of each monthly deferred sales charge and the
actual sale of Securities to satisfy the payment of the Deferred Sales Charge.
The Trust consists of the Securities (and/or contracts to purchase such
Securities together with an irrevocable letter or letters of credit for the
purchase of such contracts and/or cash (or a letter of credit in lieu of cash)
with instructions to purchase such Securities) listed under Part A--'Schedule of
Portfolio Securities' herein, and the Securities deposited upon the creation of
additional Units as set forth above and substitute Securities acquired by the
Trust as long as such Securities may continue to be held from time to time in
the Trust together with uninvested cash realized from the disposition of
Securities. Neither the Sponsor nor the Trustee will be liable in any way for
any default, failure or defect in any Securities.
All of the Securities are publicly traded on the New York Stock Exchange.
The contracts to purchase Securities deposited initially in the Trust are
expected to settle in the ordinary manner for such Securities. Settlement of the
contracts for Securities is thus expected to take place prior to the settlement
of Units purchased on the date of this prospectus.
TAX STATUS OF THE TRUST
In the opinion of Cahill Gordon & Reindel, special counsel for the Sponsor,
under existing Federal income tax law:
The Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by 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 in the Trust under the grantor trust rules of Sections 671-678
of the Internal Revenue Code of 1986, as amended (the 'Code'). A Unit
Holder should determine the tax cost for each asset represented by the
Holder's Units by allocating the total cost for such Units (including the
Initial Sales Charge) among the assets in the Trust represented by the
Units in proportion to the relative fair market values thereof on the date
the Unit Holder purchases such Units. The proceeds received by a Unit
Holder upon termination of the Trust or redemption of Units will reflect
the actual amounts paid to them, net of the Deferred Sales Charge and the
charge for organizational expenses. The relevant tax reporting forms sent
to Unit Holders will reflect the actual amount paid to them net of the
Deferred Sales Charge and the charge for organizational expenses.
Accordingly, Unit Holders should not increase the total cost for their
Units by the amount of the Deferred Sales Charge and the charge for
organizational expenses.
A Unit Holder will be considered to have received all of the dividends
paid on the Holder's pro rata portion of each Security when such dividends
are received by the Trust including the portion of such dividend used to
pay operating expenses. In the case of a corporate Unit Holder, such
dividends will qualify for the 70% dividends received deduction for
corporations to the same extent as though the dividend paying stock were
held directly by the corporate Unit Holder. An individual Unit Holder who
itemizes deductions will be entitled to an itemized deduction for the
Holder's 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 miscellaneous
deductions exceeds 2% of the Holder's adjusted gross income. A corporate
Unit Holder will not be subject to this 2% floor.
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 the
Distribution Agent as the Holder's agent) of such Holder's pro rata share
of the Securities in kind upon redemption
B-3
<PAGE>
or termination of the Trust will not be a taxable event to the Unit Holder.
Such Unit Holder's basis for Securities so distributed will be equal to the
Holder's basis for the same Securities (previously represented by the
Holder's Units) prior to such distribution and the holding period for such
Securities will be the shorter of the period during which the Unit Holder
held the 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, when the Unit Holder
disposes of such Securities in a taxable transfer.
Under the income tax laws of the State and City of New York, the Trust
is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unit Holders.
The receipt in-kind from the Terminating Trust and the deposit in the New
Trust of the Duplicated Stocks will not be a taxable event to a Unit Holder. The
Unit Holder's basis in such Duplicated Stocks will be the Unit Holder's basis in
such securities prior to the distribution from the Terminating Trust and the
holding period of such Duplicated Stocks will be the shorter of the period
during which the Unit Holder held the Units and the period for which the
Duplicated Stocks were held in the Terminating Trust. To the extent securities
received in-kind are sold by the Agent on behalf of the Unit Holder of such
securities, 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.
If the proceeds received by the Distribution Agent upon the sale or
redemption of an underlying Security exceed a Unit Holder's adjusted tax cost
allocable to the Security disposed of, that Unit Holder will realize a taxable
gain to the extent of such excess. Conversely, if the proceeds received by the
Distribution Agent upon the sale or redemption of an underlying Security are
less than a Unit Holder's adjusted tax cost allocable to the Security disposed
of, that Unit Holder will realize a loss for tax purposes to the extent of such
difference except that upon reinvestment of proceeds in a New Series the
Internal Revenue Service may seek to disallow such loss to the extent that the
underlying securities in each trust are substantially identical and the purchase
of units of the New Series takes place less than thirty-one days after the sale
of the underlying Security. Under the Code, capital gain of individuals, estates
and trusts from Securities held for more than one year, but not more than 18
months, is subject to a maximum nominal tax rate of 28% and for Securities held
for more than 18 months the maximum nominal tax rate is 20%. Such capital gain
may, however, result in a disallowance of itemized deductions and/or affect a
personal exemption phase-out.
Each Unit Holder should consult his, her or its tax advisor with respect to
the application of the above general information to his, her or its own personal
situation.
RETIREMENT PLANS
Units of the Trust may be suited for purchase by Individual Retirement
Accounts and pension plans or profit sharing and other qualified retirement
plans. Investors considering participation in any such plan should review
specific tax laws and pending legislation relating thereto and should consult
their attorneys or tax advisors with respect to the establishment and
maintenance of any such plan.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units during the initial public offering
period and thereafter is computed by determining the value (as set forth below)
of the Securities in the Trust, dividing such sum by the number of Units
outstanding and then adding a sales charge as set forth in the table under
'Volume Discount,' herein. The Units outstanding may be split (or split in
reverse). A proportionate share of money in the Income and Principal Accounts
and amounts receivable in respect of stocks trading ex-dividend other than money
required to redeem previously tendered Units or money required to be distributed
to Unit Holders on a Distribution Date will be added to the Public Offering
Price. (See 'Rights of Unit Holders--Distributions.')
The Public Offering Price on the date of this Prospectus or on any
subsequent date will vary from the Public Offering Price as of the Date of
Deposit set forth in the 'Summary of Essential Information' in accordance with
fluctuations in the value of the Securities in the Trust.
The aggregate value of the Securities is determined in good faith by the
Trustee on each 'Business Day' as defined in the Indenture in the following
manner: the evaluation is generally based on the closing trade prices on the New
York Stock Exchange as of the Evaluation Time (unless the Trustee deems these
prices inappropriate as a basis for valuation) or, if there is no closing trade
price at that time on that exchange, at the mean between the closing bid and
asked prices. If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange, the evaluation shall
generally be based on the current bid price on the over-the-counter market
(unless the Trustee deems these prices inappropriate as a basis for evaluation).
If current bid or closing prices are unavailable, the evaluation is determined
(a) on the basis of current bid prices for comparable securities, (b) by
appraising the value of the Securities on the bid side of the market or by such
other appraisal deemed appropriate by the Trustee, (c) on the basis of the last
trade price of the Security or (d) by any combination of the above, each as of
the Evaluation Time.
The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge ($17.50 per 1,000 Units) from the aggregate sales charge; thus on the
date of the Summary of Essential Information, the maximum Initial Sales Charge,
1% of the Public Offering Price, is $10 per 1,000 Units in the case of Unit
Holders
B-4
<PAGE>
disposing of Units prior to the Second Year Commencement Date. The Initial Sales
Charge is deducted from the purchase price and paid to the Sponsor at the time
of purchase. The Deferred Sales Charge will initially be $17.50 per 1,000 Units
but will be reduced each month by one tenth; the Deferred Sales Charge will be
paid through monthly deductions of $1.75 per 1,000 Units per month commencing on
the first Deferred Sales Charge Deduction Date as shown in the Summary of
Essential Information. Unit Holders holding Units on the Second Year
Commencement Date will be charged an additional Deferred Sales Charge of $17.50
per 1,000 Units, payable at the rate of $1.75 per 1,000 Units for the first 10
months in the second year of the Trust (the total Deferred Sales Charge for such
Unit Holders will be $35.00 per 1,000 Units--the Initial Sales Charge and the
Deferred Sales Charge payable over 2 years of $35.00 will equal approximately
4.5% of the initial Public Offering Price.) To the extent the entire Deferred
Sales Charge has not been so deducted at the time of repurchase, redemption or
exchange of the Units, any unpaid amount will be deducted from the proceeds or
in calculating an in kind distribution except that if the exchange, redemption
or sale occurs prior to the Second Year Commencement Date, the second year
Deferred Sales Charge of $17.50 will not be charged. For purchases of Units with
a value of $50,000 or more, the Initial Sales Charge is reduced on a graduated
basis as shown below under 'Volume Discount.' Units purchased pursuant to the
Reinvestment Program are subject only to any remaining Deferred Sales Charge
deductions (see 'Reinvestment Program'). Unit Holders investing the proceeds of
distribution from a previous terminating Series of National Equity Trust Low
Five Portfolio Series, upon purchase of Units of the Trust, will be subject only
to the Deferred Sales Charge on such Units. Unit Holders acquiring Units of the
Trust pursuant to an exchange of units of a different unit investment trust will
not be charged an initial sales charge at the time of the exchange but such
Units acquired will be subject to the Deferred Sales Charge.
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. The Sponsor reserves the right to
reject, in whole or in part, any order for the purchase of Units.
In addition, sales of Units may be made pursuant to distribution
arrangements with certain banks which are acting as agents for their customers.
These banks are making Units of the Trust available to their customers on an
agency basis. A portion of the sales charge paid by these customers is retained
by or remitted to the banks in amounts comparable to the dealer concession. The
Glass-Steagall Act prohibits banks from underwriting certain securities,
including Units of the Trust; however, this Act does permit certain agency
transactions, and banking regulators have not indicated that these particular
agency transactions are impermissible under this Act. In certain states, any
bank making Units available must be registered as a broker-dealer in that state.
SECONDARY MARKET
While not obligated to do so, it is the Sponsor's present intention to
maintain a secondary market for Units of the Trust and to offer continuously to
repurchase Units from Unit Holders at the Sponsor's Repurchase Price which
price, subject to change at any time, will be computed as stated under 'Rights
of Unit Holders--Redemption--Computation of Redemption Price.' The Sponsor, of
course, does not in any way guarantee the enforceability, marketability or price
of any Securities in the Portfolio or of the Units. There is no sales charge
incurred when a Unit Holder sells Units back to the Sponsor other than the
payment of any Deferred Sales Charge then due. Any Units repurchased by the
Sponsor may be reoffered to the public by the Sponsor at the then current Public
Offering Price. The Sponsor will become the owner of Units repurchased as of the
trade date. Any profit or loss resulting from the resale of such Units will
belong to 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. In such event Unit Holders wishing to
dispose of their Units may redeem their Units through the Trustee. (See 'Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit.') If the
Sponsor repurchases Units in the secondary market at the 'Redemption Price,' it
may reoffer these units in the secondary market at the 'Public Offering Price,'
or the Sponsor may tender Units so purchased to the Trustee for redemption. In
no event will the price offered by the Sponsor for the repurchase of Units be
less than the current Redemption Price for those Units. (See 'Rights of Unit
Holders--Redemption.') The Sponsor may, of course, redeem any Units that it has
purchased in the secondary market to the extent that it determines that it is
undesirable to continue to hold such Units in its inventory. Factors which the
Sponsor will consider in making such a determination will include the number of
units of all series of unit trusts which it has in its inventory, the
saleability of such units and its estimate of the time required to sell such
units and general market conditions.
B-5
<PAGE>
PROFIT OF SPONSOR
The Sponsor receives a sales charge as set forth in the table below in the
primary market and secondary market. The Sponsor may have also realized a book
profit (or a loss) on the deposit of the Securities in the Trust representing
the difference between the cost of the Securities to the Sponsor and the cost of
the Securities to the Trust. (For the amount of such difference on the initial
deposit, see Part A--'Summary of Essential Information.') The Sponsor may also
realize profits or sustain losses in respect of Securities which were acquired
from the Sponsor or from underwriting syndicates of which it was a member. (See
Part A--'Portfolio Summary as of the Date of Deposit.') An underwriter or
underwriting syndicate purchases common stock from the issuer on a negotiated or
competitive bid basis as principal with the motive of marketing such common
stock to investors at a profit. In addition, the Sponsor may realize profits (or
sustain losses) due to daily fluctuations in the value of the Securities 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 Securities 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 charge for the Trust in the primary market will be reduced
pursuant to the following graduated scale for sales to any person of Units with
a value of $50,000 or more. The sales charge in the secondary market consists of
an Initial Sales Charge which will be reduced pursuant to the following
graduated scale and the remaining portions of the Deferred Sales Charge.
<TABLE>
<CAPTION>
ADDITIONAL
DEALER SECOND
PRIMARY MARKET CONCESSION SECONDARY MARKET YEAR
------------------------------------ ---------- ---------------------- DEFERRED
PERCENT OF DEFERRED PERCENT OF PERCENT OF SALES
PUBLIC PERCENT OF SALES CHARGE PUBLIC PUBLIC PERCENT OF CHARGE
OFFERING NET AMOUNT PER 1,000 OFFERING OFFERING NET AMOUNT PER 1,000
PURCHASES PRICE INVESTED UNITS PRICE PRICE INVESTED UNITS
- ------------------- ---------- ---------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than
$50,000.......... 2.75 % 2.778 % $ 17.50 2.10 % 1.00 % 1.010 % $17.50
$50,000-$99,999.... 2.50 % 2.519 % 17.50 1.90 % 0.75 % 0.756 % 17.50
$100,000-$249,999... 2.00 % 2.005 % 17.50 1.40 % 0.50 % 0.503 % 17.50
$250,000 or more... * * 17.50 1.20 % 0.25 % 0.251 % 17.50
</TABLE>
- ------------------
* Deferred Sales Charge only.
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, in the name of a
purchaser's child under the age of 21 or in the name of an entity controlled by
the purchaser are deemed for the purposes hereof to be acquired in the name of
the purchaser. The reduced sales charges are also applicable to a trustee or
other fiduciary, including a partnership or corporation, purchasing Units for a
single trust estate or single fiduciary account.
EMPLOYEE DISCOUNT
The Sponsor intends, at the discretion of the Sponsor, to permit employees
of Prudential Securities Incorporated and its subsidiaries and affiliates to
purchase Units of the Trust at a price equal to the net asset value of the
Securities in the Trust divided by the number of Units outstanding plus a
reduced sales charge equal to the Deferred Sales Charge per Unit, subject to a
limit of 5% of the Units.
B-6
<PAGE>
EXCHANGE OPTION
Unit Holders may elect to exchange any or all of their Units of this Series
of the National Equity Trust for units of one or more of any other series in the
Prudential Securities Incorporated family of unit investment trusts 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. Units of the Low Five Portfolio Series received in exchange for Units
of other unit investment trusts will be subject to a deferred sales charge only.
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. Sixty days notice will be given prior to the date of the
termination of or a material amendment to the Exchange Option except that no
notice need be given in certain circumstances approved by the Securities and
Exchange Commission. 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.
Upon the exchange of Units of the Trust, any Deferred Sales Charge balance will
be deducted from the exchange proceeds. 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 aggregate bid side evaluation per unit of the securities in that
portfolio and the applicable sales charge of $15 per unit of the Exchange Trust
for a trust with a 1 unit minimum purchase. 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,
if any, plus a reduced sales charge of $25 per Exchange Trust unit. 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. Units of any Exchange Trust acquired during the initial offering period
for such units may be sold at a price equal to the ask side evaluation per unit
of the securities in the Portfolio plus a reduced sales charge of $25 per unit.
To exercise this option, the owner should notify his retail broker. He will be
given a prospectus of each series in which he indicates interest, units of which
are available. The Sponsor reserves the right to modify, suspend or terminate
the option at any time without further notice, including the right to increase
the reduced sales charge applicable to this option (but not in excess of $5 more
per unit than the corresponding fee then charged for a unit of an Exchange Trust
which is being exchanged).
For example, assume that a Unit Holder, who has three units of a Trust with
a 4.25% sales charge and a current price of $1,100 per unit, sells his units and
exchanges the proceeds for units of a series of an Exchange Trust with a current
price of $950 per unit and an ordinary sales charge of 4.25%. The proceeds from
the Unit Holder's units will aggregate $3,300. Since only whole units of an
Exchange Trust may be purchased under the Exchange Option, the Holder would be
able to acquire four units in the Exchange Trust for a total cost of $3,860
($3,800 for units and $60 for the $15 per unit sales charge) by adding an extra
$560 in cash. Were the Unit Holder to acquire the same number of units at the
same time in the regular secondary market maintained by the Sponsor, the price
would be $3,968.68 [$3,800 for the units and $168.68 for the 4.25% sales charge
(4.439% of the net amount invested)].
B-7
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange Option will constitute a
'taxable event' under the Code, i.e., a Unit Holder will recognize gain or loss
at the time of the exchange except that upon an exchange of Units of this Series
of the National Equity Trust for units of any other series of the Exchange
Trusts which are grantor trusts for United States 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.
REINVESTMENT PROGRAM
Unit Holders may elect to have the distributions with respect to their
Units automatically reinvested in additional Units of the Trust subject only to
any remaining deductions of the Deferred Sales Charge. (Reinvestment Units are
not subject to the Initial Sales Charge.)
A Unit Holder holding Units in 'street name' may participate in the Trust's
reinvestment program (the 'Program') by contacting his broker, dealer or
financial institution. The Unit Holder's completed notice of election to
participate in the Program must be received by the Trustee at least ten days
prior to the Record Date applicable to any distribution in order for the Program
to be in effect as to such distribution. Elections may be modified or revoked on
similar notice.
Such distributions, to the extent reinvested in the Trust, will be used by
the Trustee at the direction of the Sponsor in one or both of the following
manners. (i) The distributions may be used by the Trustee to purchase Units of
this Series of the Trust held in the Sponsor's inventory. The purchase price
payable by the Trustee for each of such Units will be equal to the applicable
Trust evaluation per Unit on (or as soon as possible after) the close of
business on the Distribution Date. The Units so purchased by the Trustee will be
issued or credited to the accounts of Unit Holders participating in the Program.
(ii) If there are no Units in the Sponsor's inventory, the Sponsor may purchase
additional Securities for deposit into the Trust (as described in Part B, 'The
Trust'). The additional Securities with any necessary cash will be deposited by
the Sponsor with the Trustee in exchange for new Units. The distributions may
then be used by the Trustee to purchase the new Units from the Sponsor. The
price for such new Units will be the applicable Trust evaluation per Unit on (or
as soon as possible after) the close of business on the Distribution Date. (See
'Public Offering of Units--Public Offering Price.') The Units so purchased by
the Trustee will be issued or credited to the accounts of Unit Holders
participating in the Program. The Sponsor may terminate the Program if it does
not have sufficient Units in its inventory or if it is no longer deemed
practical to create additional Units. The cost of administering the reinvestment
program will be borne by the Trust and thus will be borne indirectly by all Unit
Holders.
B-8
<PAGE>
TERMINATION OPTIONS
The Trust will terminate on the Termination Date set forth in the Summary
of Essential Information, approximately two years after the Date of Deposit
(unless terminated earlier; see part B--'Amendment and Termination of the
Indenture--Termination'). A Unit Holder's Units will be redeemed in kind on the
Termination Date by distribution of the Unit Holder's pro rata share of the
Securities and any cash in the Portfolio of the Trust on such date to the
Distribution Agent who will act as agent for such Unit Holder.
SECURITIES DISPOSITION OPTIONS--A Unit Holder who so elects by notifying
the Trustee prior to the Termination Date of the Trust will have the Securities
received on the Termination Date disposed of on behalf of such Unit Holder by
the Distribution Agent in accordance with one or more of the following four
options as elected by such Unit Holder:
1. to have such underlying Securities distributed in kind no later
than the business day next following the Termination Date. Unit Holders
subsequently selling such distributed Securities will incur brokerage costs
when disposing of such Securities;
2. to receive the Unit Holder's pro rata share of the cash received
by the Distribution Agent (less expenses) upon the sale by the Distribution
Agent of the underlying Securities attributable to Unit Holders electing
this option over a period not to exceed 10 business days commencing on the
Termination Date. Amounts received by the Distribution Agent over such 10
business day period representing the proceeds of the underlying Securities
sold will be held by The Chase Manhattan Bank in accounts which are
non-interest bearing to Unit Holders and which are available for use by The
Chase Manhattan Bank pursuant to normal banking procedures and will be
distributed to Unit Holders within 5 business days after the settlement of
the trade for the last Security to be sold;
3. to invest the proceeds from the sale of the underlying Securities
attributable to Unit Holders electing this option within 30 days of the
Termination Date, as received by the Distribution Agent upon the sale of
such underlying Securities over a period not to exceed 10 business days
commencing on the Termination Date, in units of a subsequent series of
National Equity Trust as designated by the Sponsor (the 'New Series') if
such New Series is offered at such time. The Units of a New Series will be
purchased by the Unit Holder upon the settlement of the trade for the last
Security to be sold. Such purchaser will be entitled to a reduced sales
load upon the purchase of units of the New Series. It is expected that the
terms of the New Series will be substantially the same as the terms of the
Trust described in this Prospectus, and that similar options in a
subsequent series of the Trust will occur in each New Series of the Trust
approximately two years after that New Series' creation. The availability
of this option does not constitute a solicitation of an offer to purchase
Units of a New Series or any other security. A Unit Holder's election to
participate in this option will be treated as an indication of interest
only. At any time prior to the purchase by the Unit Holder of units of a
New Series, such Unit Holder may change his investment strategy and
receive, in cash, the proceeds of the sale of the Securities; and
4. Termination Option--In-Kind Exchange
Unit Holders desiring to exchange their interests in units of a
terminating series of National Equity Trust Low Five Portfolio Series
('Terminating Trust') for Units of the Trust ('New Trust') may do so by so
advising their account executive. Such exchange will be effected by an
in-kind redemption from the Terminating Trust and subsequent in-kind
deposit with the Trustee of the New Trust, as follows:
The number and types of securities constituting a Unit of the New
Trust will be deposited on behalf of a Unit Holder in connection with the
creation of a Unit by the Trustee. Certain of the stocks contained in the
Terminating Trust are likely to be included in the portfolio of the New
Trust ('Duplicated Stocks'). A Unit Holder in the Terminating Trust
electing to receive his interest in such Terminating Trust in-kind and
desiring to purchase Units in the New Trust by an in-kind contribution to
the New Trust would direct that The Chase Manhattan Bank act as agent (the
'Agent') for such Unit Holder to carry out the transactions necessary to
consummate the in-kind deposit. The Agent would be authorized to receive
the Unit Holder's in-kind distribution from the Terminating Trust and to
assemble and deposit, on the Unit Holder's behalf, the package of stocks
needed to make up a Unit in the New Trust. Such assembly and deposit would
include an in-kind contribution to the New Trust of an appropriate amount
of the Unit Holder's interest in Duplicated Stocks. Securities distributed
in-kind from the Terminating Trust not required to make up a Unit in the
New Trust would be sold by the Agent with the cash proceeds of each sale
utilized by the Agent to purchase the stocks, other than the Duplicated
Stocks, necessary to constitute a Unit of the New Trust. The proceeds of
such sales will be reduced and the cost of such purchases will be increased
by any applicable brokerage commissions. If additional cash is needed to
purchase stocks, such cash would be paid to the Agent by the Unit Holder.
Any cash not used to make up a Unit in the New Trust would be distributed
to the Unit Holder. Fractional interests received from the Terminating
Trust will be sold by the Agent with the cash proceeds of such sale used to
purchase securities for deposit in the New Trust or, if not so utilized,
distributed to the Unit Holder. Upon receipt of the in-kind deposit, the
Trustee will issue the appropriate number of Units in the New Trust to the
Unit Holder on whose behalf the Agent acted. Units acquired pursuant to an
in-kind deposit into a New Trust by a Unit Holder of a Terminating Trust
will not be subject to an Initial Sales Charge but only subject to a
Deferred Sales Charge.
B-9
<PAGE>
The ability to purchase Units of the New Trust by the deposit of
securities in-kind will also be offered to persons who were not Unit
Holders in a prior Trust and any such person may contribute whole shares
in-kind to a New Trust. Such person will be required to pay the Initial
Sales Charge to the Sponsor in connection with the in-kind purchase of
Units, which Units will be subject to a Deferred Sales Charge.
The receipt in-kind from the Terminating Trust and the deposit in the
New Trust of the Duplicated Stocks will not be a taxable event to a Unit
Holder. (See Part B--'Tax Status of the Trust'.)
Unit Holders who do not elect as set forth above will have their Units
redeemed on the Termination Date and be deemed to have elected to receive the
cash proceeds from the sale of such Unit Holder's pro rata share of the
underlying Securities (option 2).
Under each option a Unit Holder will receive the Redemption Price per Unit
(net asset value) determined as of the Evaluation Time on the Termination Date.
The Distribution Agent will sell the underlying Securities in the case of the
second and third option over a period not to exceed 10 business days commencing
on the Termination Date. The proceeds of any such sales will be reduced by any
applicable brokerage commissions. The sale arrangement is one in which The Chase
Manhattan Bank will be selling the Securities as agent for the Unit Holder and
is separate from the Trust which terminates on the Termination Date. The
proceeds of such sales may be more or less than the value of the Securities on
the Termination Date. The Sponsor, on behalf of the Distribution Agent if the
Sponsor effects such sales, or the Distribution Agent if the Sponsor does not,
will, unless prevented by unusual and unforeseen circumstances, such as, among
other reasons, a suspension in trading of a Security, the close of a stock
exchange, outbreak of hostilities and collapse of the economy, sell on each
business day during the 10 business day period at least a number of shares of
each Security which then remains in the Portfolio equal to the number of such
shares in the Portfolio at the beginning of such day multiplied by a fraction
the numerator of which is one and the denominator of which is the number of days
remaining in the 10 business day sales period. The proceeds of sale will not be
distributed by the Distribution Agent until the settlement of the trade upon the
sale of the last Security during the 10 business day period.
Depending on the amount of proceeds to be invested in Units of the new
series and the number of other orders for Units in the new series, the Sponsor
may purchase a large amount of securities for the new series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these Securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 10
business day period commencing on the Termination Date; depending on the number
of sales required, the prices of, and demand for Securities, such sales may tend
to depress the market prices and thus reduce the proceeds to be credited to Unit
Holders. The Sponsor believes that the sale of underlying Securities over a 10
business day period as described above is in the best interest of Unit Holders
and may mitigate the negative market price consequences stemming from the
trading of large amounts of Securities. The Sponsor, in implementing such sales
of Securities on behalf of the Distribution Agent, will seek to maximize the
sales proceeds and will act in the best interest of the Unit Holder. The
proceeds of the sale of the Securities will be in an amount equal to amounts
realized upon the sale of the Securities over the 10 business day period. There
can be no assurance, however, that any adverse price consequences of heavy
trading will be mitigated.
It should also be noted that Unit Holders will realize taxable capital
gains or losses on the liquidation of the Securities representing their Units,
but, due to the procedures for investing in the New Series, no cash would be
distributed at that time to pay any taxes.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unit Holder. If the Sponsor so decides, the Sponsor will notify
the Trustee of that decision, and the Trustee will notify the Unit Holders
before the Termination Date. All Unit Holders will then elect either option 1 or
option 2.
By electing to reinvest in the New Series, the Unit Holder indicates his
interest in having his terminating distribution from the Trust invested only in
the New Series created next following termination of the Trust; the Sponsor
expects, however, that a similar reinvestment program will be offered with
respect to all subsequent series of the Trust, thus giving Unit Holders a
biannual opportunity to elect to 'rollover' their terminating distributions into
a New Series. The availability of the reinvestment privilege does not constitute
a solicitation of offers to purchase units of a New Series or any other
security. A Unit Holder's election to participate in the reinvestment program
will be treated as an indication of interest only. The Sponsor intends to
coordinate the date of deposit of a future series so that the terminating trust
will terminate within a few weeks of the creation of a New Trust.
The Sponsor reserves the right to modify, suspend or terminate the
reinvestment privilege at any time.
B-10
<PAGE>
EXPENSES AND CHARGES
EXPENSES
All or a portion of the Organizational expenses and charges incurred in
connection with the establishment of the Trust including the cost of the
preparation, printing and execution of the Indenture, Registration Statement and
other documents relating to the Trust, Federal and State registration fees and
costs, the initial fees and expenses of the Trustee, legal and auditing expenses
and other out-of-pocket expenses, will be paid by the Trust. Historically, the
costs of establishing unit investment trusts have been borne by a trust's
sponsor. Advertising and selling expenses will be paid by the Sponsor and the
underwriters, if any, at no cost to the Trust.
FEES
The Sponsor's fee (the 'Supervisory Fee'), earned for portfolio supervisory
services, is based upon the largest number of Units outstanding during the life
of the Trust. The Supervision Fee is as set forth in Part A, 'Summary of
Essential Information' and may exceed the actual costs of providing portfolio
supervisory services for this Trust, but at no time will the total amount the
Sponsor receives for portfolio supervisory services rendered to all series of
the National Equity Trust in any calendar year exceed the aggregate cost to it
of supplying such services in such year. The Supervisory Fee will be paid to the
Sponsor by the Trust. (See 'Sponsor--Responsibility.') For its service as
Trustee under the Indenture, the Trustee receives an annual fee in the amount
set forth under Part A--'Summary of Essential Information.' The Trustee's fee
and the Trust expenses accrue monthly and are payable quarterly on or before
each Distribution Date from the Income Account, to the extent funds are
available and thereafter from the Principal Account. Such Trustee's fee 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 but such fee will not be
increased in excess of increases in the Trustee's costs. In addition to the
Trustee's fee, the Trustee receives income to the extent that it holds funds on
deposit in various accounts which are non-interest bearing to Unit Holders
created under the Indenture.
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 losses, liabilities or expenses incurred by it in the administration of
the Trust without 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 so long as the Sponsor is maintaining a market for the Units.
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 property of
the Trust. If the balance in the Income and Principal Accounts are insufficient
to provide for amounts payable by the Trust, the Trustee has the power to sell
Securities to pay such amounts. To the extent Securities are sold, the size of
such Trust will be reduced and the proportions of the various Securities in the
Trust may change. Such sales might be required at a time such as to result in
lower prices than might otherwise be realized. Moreover, due to the minimum
proceeds of sale of a Security the proceeds of such sales may exceed the amount
necessary for the payment of such fees and expenses.
RIGHTS OF UNIT HOLDERS
OWNERSHIP OF UNITS
Unit Holders are required to hold their Units in uncertificated form. The
Trustee will credit a Unit Holder's account with the number of Units held by the
Unit Holder. Units are transferable only on the records of the Trustee upon
presentation of evidence satisfactory to the Trustee for each transfer and any
sums payable for taxes or other governmental charges imposed upon these
transactions and compliance with the formalities necessary to redeem Units.
B-11
<PAGE>
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'). Unit Holders shall have no right to control the
operation or administration of the Trust in any manner.
DISTRIBUTIONS
Cash amounts received by the Trust will be distributed as set forth below
on a pro rata basis to Unit Holders of record as of the preceding Record Date.
All distributions will be net of applicable expenses and funds required for the
redemption of Units. (See 'Summary of Essential Information,' 'Expenses and
Charges' and 'Rights of Unit Holders--Redemption.') Because the expenses of the
Trust may exceed the dividend income received by the Trust there can be no
assurance that there will be any amounts available for distribution to Unit
Holders. See 'Expenses and Charges--Other Charges.'
The Trustee will credit to the Income Account all cash dividends received
by and payable to the Trust. Other cash receipts will be credited to the
Principal Account. The pro rata share of the Income Account and the pro rata
share of cash in the Principal Account represented by each Unit will be computed
by the Trustee as of the Record Date. (See 'Summary of Essential Information' in
Part A.) Proceeds received from the disposition of any of the Securities not
used to redeem Units or pay Trust expenses will be distributed on the fifth
business day following the receipt of such proceeds to Unit Holders of record on
the business day following the receipt of such proceeds by the Trustee. The
distribution to Unit Holders as of each Record Date will be made on the
following Distribution Date or shortly thereafter (approximately 15 days after
the Record Date) and shall consist of an amount equal to such Unit Holders' pro
rata share of the income credited to the Income Account after deducting
estimated expenses (the 'Income Distribution'). Persons who purchase Units
between a Record Date and a Distribution Date will receive their first
distribution on the second Distribution Date following their purchase of Units.
The Trustee may make additional distributions to Unit Holders on such dates as
the Sponsor shall direct. No distribution need be made from the Principal
Account if the balance therein is less than an amount sufficient to distribute
$1.00 per 1,000 Units. Funds which are available for future distributions,
payments of expenses and redemptions are in accounts which are non-interest
bearing to Unit Holders and are available for use by The Chase Manhattan Bank,
pursuant to normal banking procedures.
As of each Distribution Date the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Principal
Account, amounts necessary to pay the expenses of the Trust. (See 'Expenses and
Charges.') The Trustee may also withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental charges
payable out of the Trust. Amounts so withdrawn shall not be considered a part of
a Trust's assets for purposes of determining the amount of distributions until
such time as the Trustee shall return all or any part of such amounts to the
appropriate account. In addition, the Trustee may withdraw from the Income
Account and the Principal Account such amounts as may be necessary to cover
redemption of Units by the Trustee. (See 'Rights of Unit Holders--Redemption.')
It is anticipated that the deferred sales charge will reduce the Principal
Account and that amounts in the Principal Account will be sufficient to cover
the cost of the deferred sales charge. Distributions of amounts necessary to pay
the deferred portion of the sales charge will be made to an account maintained
by the Trustee for purposes of satisfying Unit Holders' deferred sales charge
obligations. Although the Sponsor has the right to collect the deferred sales
charge monthly, in order to keep Unit Holders as fully invested as possible, it
is anticipated that no Securities will be sold to pay the deferred sales charge
to the Sponsor until on or after the Termination Date set forth in the Summary
of Essential Information.
The Trustee will follow a policy that it will place securities acquisition
or disposition transactions with a broker or dealer only if it expects to obtain
the most favorable prices and executions of orders. Transactions in securities
held in the Trust are generally made in brokerage transactions (as distinguished
from principal transactions) and the Sponsor may act as broker therein and
receive commissions thereon if the Trustee expects thereby to obtain the most
favorable prices and execution. The furnishing of statistical and research
information to the Trustee by any of the securities dealers through which
transactions are executed will not be considered in placing securities
transactions.
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
B-12
<PAGE>
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, for fees and expenses of the Trust, for portions of the Deferred Sales
Charge 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; and (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. The accounts of the Trust shall be audited not less
frequently than annually by independent certified public accountants designated
by the Sponsor, and the report of such accountants will be furnished by the
Trustee to Unit Holders upon request.
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 unit investment
trust office at 4 New York Plaza, New York, New York 10004, upon delivery of a
request for redemption and payment of any relevant tax. No redemption fee will
be charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
cancelled.
Unit Holders must have their 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. 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, a
Unit Holder (including the Sponsor) will be entitled to receive in kind 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' in
Part A 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 the New York Stock
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.
The Trustee will redeem Units in kind. A Unit Holder will be able (except
during a period described below), not later than the seventh calendar day
following such tender (or if the seventh calendar day is not a business day on
the first business day prior thereto), to receive in kind an amount per Unit
equal to the Redemption Price per Unit as determined as of the day of tender. In
kind distributions (the 'In Kind Distribution') will take the form of whole
shares of Securities. Cash will be distributed in lieu of fractional shares and
will be distributed in cash. The cash and the whole shares will aggregate an
amount equal to the Redemption Price per Unit.
Distributions in kind on redemption of Units shall be held by The Chase
Manhattan Bank, as the Distribution Agent, whom each Unit Holder shall be deemed
to have designated as his agent upon purchase of a Unit, for the account, and
for disposition in accordance with the instructions of, the tendering Unit
Holder as follows:
(a) The Distribution Agent shall sell the In Kind Distribution as of
the close of business on the date of tender or as soon thereafter as
possible and remit to the Unit Holder not later than seven calendar days
thereafter the net proceeds of sale, after deducting brokerage commissions
and transfer taxes, if any, on the sale unless the tendering Unit Holder
requests a distribution of the Securities as set forth in paragraph (b)
below. The Distribution Agent may sell the Securities through the Sponsor,
and the Sponsor may charge brokerage commissions on those sales.
(b) If the tendering Unit Holder requests distribution in kind and
tenders Units with a value in excess of $250,000, the Trustee shall sell
any portion of the In Kind Distribution represented by fractional interests
in shares in accordance with the foregoing and distribute the net cash
proceeds plus any other distributable cash to the tendering Unit Holder
together with certificates representing whole shares of each of the
Securities comprising the In Kind Distribution. (In a case in which the
Unit Holder requests a distribution in kind, the Trustee may, in lieu of
distributing Securities in kind to the Unit Holder, offer the Sponsor the
opportunity to acquire the tendered Units in exchange for the number of
shares of each Security and cash which the Unit Holder is otherwise
entitled to receive from the Trust. The federal income tax consequences to
the Unit Holder would be identical in either case.)
B-13
<PAGE>
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available. In
addition, in implementing the redemption procedures described above, the Trustee
and the Distribution Agent shall make any adjustments necessary to reflect
differences between the Redemption Price of the Units and the value of the In
Kind Distribution in whole shares as of the date of tender. To the extent that
Units are redeemed, the size of the Trust will be reduced.
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.
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 secondary market
for Units, the Sponsor, prior to the close of business on the day of tender, may
purchase any Units tendered to the Trustee for redemption 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 offering price of any Units
resold by the Sponsor will be the Public Offering Price determined in the manner
provided in this Prospectus (see 'Public Offering of Units--Public Offering
Price'). Any profit resulting from the resale of such Units will belong to the
Sponsor, which likewise will bear any loss resulting from a reduction in the
offering or redemption price subsequent to its acquisition of such Units (see
'Public Offering of Units--Profit of Sponsor').
COMPUTATION OF REDEMPTION PRICE PER UNIT
The Redemption Price per Unit of the Trust is determined by the Trustee as
of the Evaluation Time on the date any such determination is made. The
Redemption Price per Unit is each Unit's pro rata share, determined by the
Trustee of: (1) the aggregate value of the Securities in the Trust, (2) cash on
hand in the Trust including dividends receivable on stocks trading ex-dividend
as of the date of computation and (3) any other assets of the Trust, less (a)
amounts representing taxes or governmental charges payable out of a Trust, (b)
the accrued but unpaid expenses of the Trust and accrued Deferred Sales Charges
and any Deferred Sales Charge balance, and (c) cash held for distribution to
Unit Holders of record as of a date prior to the evaluation.
The aggregate value of the Securities is determined in good faith by the
Trustee in the following manner: the evaluation is generally based on the
closing trade prices as of the Evaluation Time on the New York Stock Exchange
(unless the Trustee deems these prices inappropriate as a basis for valuation)
or, if there is no closing trade price on that exchange, at the mean between the
closing bid and asked prices. If the Securities are not so listed or, if so
listed and the principal market therefor is other than on that exchange, the
evaluation shall generally be based on the current bid price on the
over-the-counter market (unless the Trustee deems these prices inappropriate as
a basis for evaluation). If current bid or closing prices are unavailable, the
evaluation is generally determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee,
(c) on the basis of the last trade price of the Security or (d) by any
combination of the above, each as of the Evaluation Time.
B-14
<PAGE>
SPONSOR
Prudential Securities Incorporated ('Prudential Securities') 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, 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 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 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 series of Prudential Government
Securities Trust, The Blackrock Government Income Trust, Command Government
Fund, Command Money Fund, Command Tax-Free Fund, Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc., Prudential Allocation Fund, Prudential California
Municipal Fund, Prudential Distressed Securities Fund, Inc., Prudential
Diversified Bond Fund, Inc., Prudential Dryden Fund, Prudential Emerging Growth
Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund,
Prudential Europe Growth Fund, Inc., Prudential Global Genesis Fund, Inc., The
Global Government Plus Fund, Inc., Prudential Global Limited Maturity Fund,
Inc., Prudential Global Natural Resources Fund, Inc., The Global Total Return
Fund, Inc., Prudential Government Income Fund, Prudential High Yield Fund, Inc.,
Prudential Institutional Liquidity Portfolio, Inc., Prudential Intermediate
Global Income Fund, Inc., Prudential Jennison Series Fund, Inc., Prudential
MoneyMart Assets, Inc., Prudential Mortgage Income Fund, Inc., Prudential
MultiSector Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential National Municipals Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential Small Companies Fund, Inc., Prudential Special
Money Market Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential
Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc., and Prudential World
Fund, Inc.
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 taking any action in good faith
or for errors in judgment or be liable 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 of 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 upon the happening of certain events, including, without
limitation, default under certain documents or other occurrences, including
legal actions which might adversely affect future declaration and payment of
dividends, institution of certain legal proceedings, and a decline in market
price to such an extent, or such other adverse market or credit factor, as in
the opinion of the Sponsor would make retention of a Security detrimental to the
Trust and to the interests of the Unit Holders or if required to pay the
Deferred Sales Charge. The Sponsor may instruct the Trustee to tender a Security
for cash or sell the Security on the open market when in its opinion it is in
the best interest of the Unit Holders to do so in the event of a public tender
offer or merger or acquisition announcement.
The Sponsor and/or an affiliate thereof intend to continuously monitor
developments affecting the Securities in the Trust in order to determine whether
the Trustee should be directed to dispose of any such Securities.
It is the responsibility of the Sponsor to instruct the Trustee to reject
any offer made by an issuer of any of the Securities to issue new securities in
exchange and substitution for any Security pursuant to a recapitalization or
reorganization, except that the Sponsor may instruct the Trustee to accept such
an offer or to take any other action with respect thereto as the Sponsor may
deem proper if the issuer failed to declare or pay or the Sponsor anticipates
such issuer will fail to pay or declare anticipated dividends with respect
thereto. If the Trust receives the securities of another issuer as the result of
a merger or reorganization of, or a spin-off, or split-up by the issuer of a
Security included in the original Portfolio, the Trust may under certain
circumstances hold those securities as if they were one of the Securities
initially deposited and adjust the proportionate relationship accordingly for
all future subsequent deposits.
Any securities so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Indenture to the same extent
as Securities originally deposited thereunder. Within five days after the
deposit of securities in
B-15
<PAGE>
exchange or substitution for any of the underlying Securities, the Trustee is
required to give notice thereof to each Unit Holder, identifying the Securities
eliminated and the Securities substituted therefor. Except as otherwise set
forth in the Prospectus, the acquisition by the Trust of any securities other
than the Securities initially deposited is prohibited.
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
to perform 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 located 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 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, negligence or reckless disregard of 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
Securities or by reason of the failure of the Sponsor to give directions to the
Trustee.
Additionally, the Trustee may sell Securities designated by the Sponsor, or
if not so directed, in its own discretion, for the purpose of redeeming Units
tendered for redemption.
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 Record Date next
prior to a 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 if it
determines (i) that a material deterioration in the creditworthiness of the
Trustee or (ii) one or more negligent acts on the part of the Trustee having a
materially adverse effect has occurred such that replacement of the Trustee is
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
B-16
<PAGE>
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.
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 (or the performance
of any of the provisions of the Indenture may be waived) 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 requiring the consent of Unit Holders, 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 is less than 40% of the Securities
deposited in the Trust on the Date of Deposit and subsequent thereto. However,
in no event may the Trust continue beyond the Termination Date set forth under
'Summary of Essential Information' in Part A. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit Holders.
Section 17(a) of the Investment Company Act of 1940 restricts purchases and
sales between affiliates of registered investment companies and those companies.
Pursuant to a recent exemptive order, each terminating Low Five Portfolio Series
can sell securities to the next Series if those securities continue to be
included in the Low Five by remaining among the five lowest dollar priced stocks
of the ten highest dividend-yielding securities in the DJIA. The exemption will
enable each Series to eliminate commission costs on these transactions. The
price for those securities will be the closing sale price on the sale date on
the exchange where the securities are principally traded, as certified and
confirmed by the Trustee of each Series.
LEGAL OPINIONS
Certain legal matters in connection with the Units offered hereby have been
passed upon by Messrs. Cahill Gordon & Reindel, a partnership including a
professional corporation, 80 Pine Street, New York, New York 10005, as special
counsel for the Sponsor.
INDEPENDENT AUDITORS
The financial statements included in this Prospectus have been audited 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-17
<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.
- --------------------------------------------------------------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors...................................... A-3
Summary of Essential Information.................. A-4
Fee Table......................................... A-6
Independent Auditors' Report...................... A-10
Statement of Financial Condition.................. A-11
Schedule of Portfolio Securities.................. A-12
The Trust......................................... B-1
Portfolio Summary............................... B-2
Tax Status of the Trust........................... B-3
Retirement Plans.................................. B-4
Public Offering of Units.......................... B-4
Public Offering Price........................... B-4
Public Distribution............................. B-5
Secondary Market................................ B-5
Profit of Sponsor............................... B-6
Volume Discount................................. B-6
Employee Discount............................... B-6
Exchange Option................................... B-7
Federal Income Tax Consequences................. B-8
Reinvestment Program.............................. B-8
Termination Options............................... B-9
Expenses and Charges.............................. B-11
Expenses........................................ B-11
Fees............................................ B-11
Other Charges................................... B-11
Rights of Unit Holders............................ B-11
Ownership of Units.............................. B-11
Certain Limitations............................. B-12
Distributions................................... B-12
Reports and Records............................. B-12
Redemption...................................... B-13
Purchase by the Sponsor of Units Tendered for
Redemption.................................... B-14
Computation of Redemption Price Per Unit........ B-14
Sponsor........................................... B-15
Limitations on Liability........................ B-15
Responsibility.................................. B-15
Resignation..................................... B-16
Trustee........................................... B-16
Limitations on Liability........................ B-16
Responsibility.................................. B-16
Resignation..................................... B-16
Amendment and Termination of the Indenture........ B-17
Amendment....................................... B-17
Termination..................................... B-17
Legal Opinions.................................... B-17
Independent Auditors.............................. B-17
</TABLE>
------------------------------------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
------------------------------------------------------
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
- --------------------------------------------------------------------------------
UTS 253 3/98
<PAGE>
PART II.
ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
ITEM A-BONDING ARRANGEMENTS
The employees of Prudential Securities Incorporated are covered under
Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of
$62,500,000.
ITEM B-CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The cross-reference sheet.
The Prospectus.
Signatures.
Written consents of the following persons:
Cahill Gordon & Reindel (included in Exhibit 5).
*Deloitte & Touche LLP.
The following Exhibits:
<TABLE>
<S> <C>
***Ex- 3.(i) -- Certificate of Incorporation of Prudential Securities
Incorporated dated March 29, 1993.
******Ex- 3.(ii) -- Revised By-Laws of Prudential Securities Incorporated as
amended through June 21, 1996.
*****Ex- 4.a -- Trust Indenture and Agreement dated April 25, 1995.
*Ex- 4.b -- Reference Trust Agreement dated March 18, 1998.
*Ex- 5 -- Opinion of counsel as to the legality of the securities
being registered.
****Ex-24 -- Powers of Attorney executed by a majority of the Board of
Directors of Prudential Securities Incorporated.
*Ex-27.1 -- Financial Data Schedule.
**Ex-99.1 -- 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 15b1-1 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 -- Distribution Agency Agreement among Prudential Securities
Incorporated, as Depositor, United States Trust Company of
New York, as Trustee, and United States Trust Company of New
York, as Distribution Agent.
+Ex-99.5 -- Amendment to Distribution Agency Agreement among Prudential
Securities Incorporated, as Depositor, The Chase Manhattan
Bank, as Trustee, and The Chase Manhattan Bank, as
Distribution Agent.
++Ex-99.6 -- Amendment to Distribution Agency Agreement dated September
23, 1996 among Prudential Securities Incorporated, as
Depositor, The Chase Manhattan Bank, as Trustee, and The
Chase Manhattan Bank, as Distribution Agent included as part
of the Reference Trust Agreement filed as Exhibit 4.b to
National Equity Trust Top Ten Portfolio Series 1.
</TABLE>
- ------------------
* 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 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 Government Securities
Equity Trust Series 5, Registration No. 33-57992.
**** Incorporated by reference to exhibits 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.
(Footnotes continued on next page)
II-1
<PAGE>
(Footnotes continued from previous page)
***** Incorporated by reference to exhibits 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 Equity Trust, Low
Five Portfolio Series 1, Registration No. 33-55475.
****** 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.
+ 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 Equity Trust Low
Five Portfolio Series 6, Registration No. 333-01889.
++ 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 Equity Trust Top
Ten Portfolio Series 1, Registration No. 333-02753.
II-2
<PAGE>
SIGNATURES
The registrant, National Equity Trust, Low Five Portfolio Series 203 hereby
identifies Series 6 of the Low Five Portfolio Series for purposes of the
representations required by rule 487 and represents the following:
(1) That portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not
differ materially in type or quality from those deposited in such previous
series;
(2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those
contained in the registration statements for such previous series as to
which the effective dates were determined by the Commission or the staff;
and
(3) That it has complied with rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the registrant,
National Equity Trust, Low Five Portfolio Series 203, has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of New York, and State of New York on March 18,
1998.
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By: /s/ KENNETH SWANKIE
------------------------------
Kenneth Swankie
Senior Vice President
By the following persons,* who constitute a majority of the
Board of Directors of Prudential Securities Incorporated
Alan D. Hogan
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
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* Pursuant to Powers of Attorney previously filed.
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<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.
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<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated March 18, 1998, accompanying the
financial statement of the National Equity Trust Low Five Portfolio Series 203
included herein and to the reference to our Firm as experts under the heading
'Independent Auditors' in the prospectus which is a part of this registration
statement.
DELOITTE & TOUCHE LLP
New York, New York
March 18, 1998
II-5
<PAGE>
Executed in 6 Parts
Counterpart No. ( )
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated March 18, 1998 among Prudential
Securities Incorporated, as Depositor and The Chase Manhattan Bank, as Trustee,
sets forth certain provisions in full and incorporates other provisions by
reference to the document entitled "National Equity Trust Low Five Portfolio
Series, Trust Indenture and Agreement" (the "Basic Agreement") dated April 25,
1995. Such provisions as are set forth in full herein and such provisions as are
incorporated by reference constitute a single instrument (the "Indenture").
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I.
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Basic Agreement are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and to the same
extent as though said provisions had been set forth in full in this instrument
except that the Basic Agreement is hereby amended in the following manner:
<PAGE>
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A. Article I, entitled "Definitions", paragraph 22, shall be amended as
follows:
"Trustee shall mean The Chase Manhattan Bank
or any successor trustee appointed as
hereinafter provided."
B. Article II, entitled "Deposit of Securities; Acceptance of Trust", shall
be amended as follows:
The second sentence of Section 2.03 Issue of Units shall be amended by
deleting the words "on any day on which the Depositor is the only Unit
Holder."
C. Article III, entitled "Administration of Trust", shall be amended as
follows:
(i) The first part of the first sentence of Section 3.01 Initial Costs
shall be amended to substitute the following language before the
phrase "provided, however":
"With respect to the Trust, the cost of the preparation and printing
of the Indenture, Registration Statement and other documents
relating to the Trust, Federal and State registration fees and
costs, the initial fees and expenses of the Trustee, legal and
auditing expenses and other out-of-pocket organizational expenses,
to the extent not borne by the Depositor, shall be paid by the
Trust;"
Section 3.01 shall be further amended to add the following language:
"To the extent the funds in the Income and Principal Accounts of the
Trust shall be insufficient to pay the expenses borne by the Trust
specified in this Section 3.01, the Trustee shall advance out of its
own funds and cause to be deposited and credited to the Income
Account such amount as may be required to permit payment of such
expenses. The Trustee shall be reimbursed for such
<PAGE>
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advance on each Record Date from funds on hand in the Income Account
or, to the extent funds are not available in such Account, from the
Principal Account in the amount deemed to have accrued as of such
Record Date as provided in the following sentence (less prior
payments on account of such advances, if any), and the provisions of
Section 6.04 with respect to the reimbursement of disbursements for
Trust expenses, including, without limitation, the lien in favor of
the Trustee therefor and the authority to sell Securities as needed
to fund such reimbursement, shall apply to the payment of expenses
and the amounts advanced pursuant to this Section. For the purposes
of the preceding sentence and the addition provided in clause (a)(3)
of Section 5.01, the expenses borne by the Trust pursuant to this
Section shall be deemed to have been paid on the date of the
Reference Trust Agreement and to accrue at a daily rate over the
time period specified for their amortization provided in the
Prospectus; provided, however, that nothing herein shall be deemed
to prevent, and the Trustee shall be entitled to, full reimbursement
for any advances made pursuant to this Section no later than the
termination of the Trust. For purposes of calculating the accrual of
organizational expenses under this Section 3.01, the Trustee shall
rely on the written estimates of such expenses provided by the
Depositor pursuant to Section 5.01."
(ii) The third paragraph of Section 3.05 Distribution shall be amended to
add the following sentence at the end thereof:
"The Trustee shall make a special distribution of the cash balance
in the Income and Principal accounts available for such distribution
to Unit Holders of record on such dates as the Depositor shall
direct."
(iii) The second to the last paragraph of Section 3.08 Sale of Securities
shall be amended to replace the word "equal" with the following
phrase: "be sufficient to pay."
<PAGE>
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D. Article V, entitled "Trust Evaluation, Redemption, Transfer of Units,"
Section 5.01 Trust Evaluation shall be amended as follows:
(i) the second sentence of the first paragraph of
Section 5.01 shall be amended by deleting the
word "and" appearing at the end of subsection
(a)(2) of such sentence and inserting the follow-
ing after "(a)(3)": "amounts representing organ-
izational expenses paid from the Trust less
amounts representing accrued organizational ex-
penses of the Trust, and (a)(4)."
(ii) The following shall be added at the end of the first paragraph of
Section 5.01:
Until the Depositor has informed the Trustee that there will be
no further deposits of Additional Securities pursuant to section
3.06, the Depositor shall provide the Trustee with written estimates
of (i) the total organizational expenses to be borne by the Trust
pursuant to Section 3.01 and (ii) the total number of Units to be
issued in connection with the initial deposit and all anticipated
deposits of Additional Securities. For purposes of calculating the
value of the Trust and Unit Value, the Trustee shall treat all such
anticipated expenses as having been paid and all liabilities
therefor as having been incurred, and all Units as having been
issued, in each case on the date of the Reference Trust Agreement,
and, in connection with each such calculation, shall take into
account a pro rata portion of such expense and liability based on
the actual number of Units issued as of the date of such
calculation. In the event the Trustee is informed by the Depositor
of a revision in its estimate of total expenses or total Units and
upon the conclusion of the deposit of Additional Securities, the
Trustee shall base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such adjustment
shall not affect calculations made prior thereto and no adjustment
shall be made in respect thereof.
<PAGE>
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(iii) The second paragraph of Section 5.01 shall be amended by replacing
"(a)(3)" with "(a)(4)" in the first line.
E. Reference to United States Trust Company of New York in its capacity as
Trustee is replaced by the Chase Manhattan Bank throughout the Basic
Agreement.
Part II.
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
A. The Trust is denominated National Equity Trust, Low
Five Portfolio Series 203.
B. The Units of the Trust shall be subject to a deferred sales charge.
C. The contracts for the purchase of common stock listed in Schedule A
hereto are those which, subject to the terms of this Indenture, have been or
are to be deposited in Trust under this Indenture as of the date hereof.
D. The term "Depositor" shall mean Prudential Securities Incorporated.
E. The aggregate number of Units referred to in Sections 2.03 and 9.01 of
the Basic Agreement is 250,000 as of the date hereof.
F. A Unit of the Trust is hereby declared initially equal to 1/250,000th
of the Trust.
G. The term "First Settlement Date" shall mean March 24, 1998.
H. The terms "Computation Day" and "Record Date" shall mean quarterly on
the tenth day of May, August, November, and February commencing May 10, 1998.
I. The term "Distribution Date" shall mean quarterly on the
twenty-fifth day of May, August, November, and February commencing May 25,
1998 or as soon thereafter as possible.
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J. The term "Termination Date" shall mean March 21, 2000.
K. The Trustee's Annual Fee shall be $0.79 (per 1,000 Units) for
100,000,000 and above units outstanding; $0.85 (per 1,000 Units) for
50,000,000 - 99,999,999 units outstanding; $0.91 (per 1,000 Units) for
49,999,999 and below units outstanding. In calculating the Trustee's annual
fee, the fee applicable to the number of units outstanding shall apply to all
units outstanding.
L. The Depositor's Portfolio supervisory service fee shall be $0.25 per
1,000 Units.
[Signatures and acknowledgments on separate pages]
<PAGE>
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The Schedule of Portfolio Securities in Part A of the prospectus included
in this Registration Statement for National Equity Trust, Low Five
Portfolio Series 203 is hereby incorporated by reference herein as
Schedule A hereto.
<PAGE>
[Letterhead of Cahill Gordon & Reindel]
March 18, 1998
Prudential Securities Incorporated
One Seaport Plaza
New York, New York 10292
Re: National Equity Trust,
Low Five Portfolio Series 203
-----------------------------
Gentlemen:
We have acted as special counsel for you as Depositor of the National
Equity Trust, Low Five Portfolio Series 203 (the "Trust"), in connection with
the issuance under the Trust Indenture and Agreement, dated April 25, 1995, and
related Reference Trust Agreement, dated March 18, 1998 (such Trust Indenture
and Agreement and Reference Trust Agreement collectively referred to as the
"Indenture"), among you, as Depositor and The Chase Manhattan Bank, as Trustee,
of units of fractional undivided interest in said Trust (the "Units") comprising
the Units of National Equity Trust, Low Five Portfolio Series 203. In rendering
our opinion expressed below, we have relied in part upon the opinions and
representations of your officers and upon opinions of counsel to Prudential
Securities Incorporated.
<PAGE>
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Based upon the foregoing, we advise you that, in our opinion, when the
Indenture has been duly executed and delivered on behalf of the Depositor and
the Trustee and when the Receipt For Units evidencing the Units has been duly
executed and delivered by the Trustee to the Depositor in accordance with the
Indenture, the Units will be legally issued, fully paid and nonassessable by the
Trust, and will constitute valid and binding obligations of the Trust and the
Depositor in accordance with their terms, except that enforceability of certain
provisions thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors generally
and by general equitable principles.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-44555) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and the related Prospectus. Our consent to such reference
does not constitute a consent under Section 7 of the Securities Act, as in
consenting to such reference we have not certified any part of the Registration
Statement and do not otherwise come within the categories of persons whose
consent is required under said Section 7 or under the rules and regulations of
the Commission thereunder.
Very truly yours,
Cahill Gordon & Reindel
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 203 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<SERIES>
<NUMBER> 203
<NAME> NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 203
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-18-1998
<PERIOD-START> MAR-18-1998
<PERIOD-END> MAR-18-1998
<INVESTMENTS-AT-COST> 247,500
<INVESTMENTS-AT-VALUE> 247,500
<RECEIVABLES> 0
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<TOTAL-ASSETS> 322,500
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,750
<TOTAL-LIABILITIES> 83,750
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 238,750
<SHARES-COMMON-STOCK> 250,000
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